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Tunisia: CDC supports 115 companies, seeks to invest 600 million dinars in capital

The balance sheet of the Fund of Deposits and Consignment (CDC), its mechanisms, its business plan and its relationship with commercial banks were at the centre of an interview conducted by Africanmanager with Jamel Belhaj, CEO of CDC.

Interview:

Which conclusions can be drawn from the work of the CDC?

The assessment to be made is that we have put in place all the structures of the body. We worked with an international office for the implementation of our policy of governance, risk and investment. Today, we have an investment doctrine and can claim to be able to partner with both foreign and local investors.

As part of infrastructure projects, we have created our first investment fund and implemented stricter procedures for participation in the Fund particularly with regard to financing through the “El Theemar” fund, the first collective investment fund that meets Islamic standards.

The fund, a subsidiary of the CDC, has a capital of 50 million dinars and aims, initially, to create 30 companies and 1,000 jobs. It will also support small and medium enterprises over 4 to 5 years.

We are also undertaking procedures for participation in the fund. We will do it shortly. The closing is expected by the end of the year.

We are probably not making much progress in terms of ideas, regarding major infrastructure projects. This is why we must find partners to identify projects and studies particularly in the water, energy and sanitation areas. In these sectors, projects remain simple ideas, since this requires authorization from the State which monopolizes the STEG and SONEDE. Therefore, there is a need to take political decisions. We are already negotiating with operators to arrive at strategic decisions.

Where are the resources of the CDC coming from?

We have an investment fund of 50 million dinars allocated by the state. We have also management resources of 3.5 billion dinars from postal savings and consignments in cash. These are management resources. In our model plan which we have set over 5 years, a portion of these resources will be allocated to investment. We will not let these 3.5 billion dinars in physical investment. There are liquidity ratios and especially risks. We believe that over the next 5 years, we can invest in capital about 600 million dinars.

Are there methods of guidance for CDC?

Yes! We have developed a business plan for the next 5 years which contains all resources that are assigned especially through the net banking income which will be generated from the year 2012. However, with regard to major infrastructure projects, there is no strategy or planning. However, we are moving quickly at the level of insurance in support of SMEs.

How will the CDC intervene with confiscated businesses?

CDC will buy assets on the basis of the revelation made by accounting firms. The evaluation was initiated by the Ministry of Finance. We are at a value of 300 million dinars. Once acquired, the development subsidiary that was created to this end will take charge of them.

We bought, in this framework, two agricultural projects: Zitouna 1 and 2. In the property sector, the CDC also bought Carthago Palace and Marina Gammarth in the tourism sector. In total, the CDC will support 115 companies and will develop a rehabilitation plan in partnership particularly with industrial and financial investors who are interested in these assets.

To what extent could the mechanisms established by the CDC meet the financial needs of SMEs?

There are many tools for corporate finance in particular SMEs. In parallel, we will try to provide new tools and enhance existing ones, especially in regard to venture capital. We are also negotiating with Sotugrad on guarantee mechanisms. We also want to establish credit lines for SMEs. With regional SICARs, which do not have resources, we will also find solutions mainly through granting of subordinated debt, as these SICARs manage risk directly with SMEs.

What are the quantitative targets of this fund?

The objectives are wider if we can implement all major projects. We are expecting 6 million dinars in investment over 5 years, 1.5 million dinars of which from equity.

Which relationship between the CDC and commercial banks?

We have a relationship of continuity with commercial banks in particular as regards the financing of SMEs. Thus, we will invest a portion of our cash in commercial banks. We have also discussed with certain banks that are willing to invest in regions and reserve resources for the creation of regional investment funds.

In 2011, the Ministry of Finance signed sponsorship agreements so that each bank sponsors a region. This measure is not yet fully effective, but we will try to involve banks in regions.

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