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HomeInterviewTunisian banks need to become more commercial, according to EBRD President

Tunisian banks need to become more commercial, according to EBRD President

In a very short time, the European Bank for Reconstruction and Development was able to achieve rapid progress in the establishment of a cooperation with Tunisia, allowing its quick setting up within our walls. Sir Suma Chakrabarti, President of the European Bank for Reconstruction and Development speaks with much more detail on the plans of the investment bank in Tunisia as well as projects it intends to achieve.


This is not your first visit to Tunisia, but in this tour, many goals are achieved?

Our goal is first to confirm the strength of signals sent to Tunisia from the EBRD. Indeed, the EBRD is now implanted here in Tunisia and intends to remain in the long term. This is just the beginning, the beginning of a strong relationship between Tunisia and our bank.

We have drawn up a list of projects which we will implement. These projects were approved by our Board of Directors in September. We also have many other projects in the making for future periods. The most important part of all this work and what will enable us to move forward, is the opening of our office in Tunis. Experience in Eastern European countries has shown that it is always better to rely on local expertise and their knowledge of the environment. With the signing of this agreement, Tunisia is the first country in North Africa to have an office of the EBRD, and it will be officially from next February.

I am very pleased with this progress. All this will help us act more easily because it will allow the bank’s mechanisms and staff to work as quickly and effectively in Tunisia, which is of great importance to us. Tunisians have this aspiration to change. They have had huge expectations since the revolution. We, for our part, have acted very quickly. Indeed, Tunisia was not even a member of the EBRD last year. It is currently a member, the first credit for Tunisia has won approval of the board, and our office will be opened in Tunis in next February. All this was done very quickly. Add to that our funding line is very strong. In order to allow these projects to be realized quickly, I call for further clarifying Tunisian policies, because investors need vision so they feel confident to come and invest. The policy should make the country more attractive for both foreign and local investors.

What are, according to you, the emergency measures to be taken to improve the attractiveness of Tunisia?

What is crucial for us is the Investment Code. This is a very important element for attracting investors. The other is the “social pact” which the trade union (UGTT) and the employers’ organization (UTICA) are working to adopt. This is very important because it will appease the spirits, including protests against unemployment and job insecurity. An agreement between the two major organizations must be reached. A sort of “pact” will be announced in the month of January. There are two points that we consider essential, along with other decisions that will affect the different sectors. Everything must go through the state because as you know the Tunisian economy, as were their counterparts in Eastern Europe, is managed by the State.

Could you quantify the EBRD commitments in Tunisia?

We do not have a budget framework, unlike the World Bank or other institutions that work mainly with the public sector, because we work primarily with the private sector. We have, rather, a regional budget, for example, for MENA, to which Tunisia belongs. If all goes well in the four countries of the region, Tunisia, Morocco, Jordan and Egypt, by 2015, our total investment will reach 2.5 billion Euros. Tunisia has its share in this amount, how much exactly? I cannot predict, because it depends on the number of projects that the private sector will submit to us. We expect the private sector in Tunisia to bring new ideas and projects to access our credit. The Tunisian economy is not very large compared to the Egyptian economy, for example, but Tunisia will do well. I give you the example of our experience with a large economy, that of Turkey, where we continue to implement reforms.

Budget requests which came to the EBRD from the Turkish private sector rose from 0 to 1 billion in three years, i.e. 1 billion per year, and this thanks to all the reforms undertaken by the Turkish authorities to attract investors. Even if we admit that it is a fairly large economy.

Requests arriving from Tunisia may not reach this level, but if reforms are made, they will be significant and so will be our commitment. Another thing to mention is that if Tunisia demonstrates effective performance similar to the one observed in countries of Eastern Europe, every Euro invested here will bring 2.6 Euros more. Other investors will come with the EBRD in each project that we undertake here in Tunisia. This is very important, we come here and we will attract other investors with us.

How do you see the relationship between the EBRD and Tunisian SMEs? What are the conditions for access to your credit?

We have different and multiple approaches. With our accumulated experiences in different countries, we have developed lines of credit available to all types of SMEs. Sometimes we spend credit lines for SMEs in a well determined sector. In Turkey, for example, we have created a line of credit dedicated to the encouragement and empowerment of SMEs created by women. We have a variety of products, among which we can choose an instrument that goes with the requirements in a given country. Countries have different needs. It will be easier for us to transfer the credit agreement service, because we end up, in this case, with much less of managerial tasks. Sometimes we give loans directly, but it happens in very specific cases. Generally, we use local banks to perform this service. In Tunisia, it is Tuninvest which will credit agreements. In addition, through our consulting services, we assist SMEs in preparing project studies to become eligible.

Your meeting with the Governor of the Central Bank of Tunisia is one of the highlights of your visit. What are the topics you had discussed and what information have you learned?

It was a great discussion. Absolutely, we mainly focused on two issues that we consider essential: the banking sector in Tunisia, and all the reforms and consolidations it needs. How to make this sector has a mindset to become oriented to a more commercial aspect? These are issues that are addressed by BCT and services of the Ministry of Finance, and we hope to make a contribution in terms of references at the level of studies developed, and that the latter go in the right direction. BCT would like us to ensure the monitoring of these studies.

We will try to bring the fruit of our experiences in Eastern European countries in restructuring the banking sector and orient it more to the commercial aspect. We are certain that the BCT will need our help, especially in the banking sector.

What are, according to you, the main problems of the banking sector in Tunisia? What are the possible solutions?

We should recognize that there are a large number of banks, first of all. And many banks have undue loans. The rate of non-performing loans is quite high, especially in the tourism sector.

We should now know how to fix this and help banks become more commercial. We can help at this level. The second thing that we had discussed with the Governor of the Central Bank, which is of crucial importance for the future of Tunisia, is SMEs (Small and Medium Enterprise). These SMEs should be assisted to innovate, succeed and create new jobs. To make this possible and enable these SMEs to benefit from EBRD financing, they need the local currency, because it is not practical to grant them loans in foreign currencies, since they do not export and work mainly for the local market. Until then, we could grant such loans only in local currency due to a regulation that prohibits it. On the other hand, it is not logical to give them these loans through offshore banks, as it will be very expensive. We had some interesting discussions about this with the Governor of the Central Bank and the Minister of Finance, and they have expressed their willingness to help us overcome this problem.

This is one of the most important objectives of this visit, and we think we have succeeded, since in a few months, we will be able to find a solution within the framework of an agreement between the EBRD and Tunisia. This is a policy change which the EBRD, the BCT and the Tunisian government know the importance. This will allow our strong funding line to be put to work not only for the benefit of the banking sector, but also for SMEs in all other sectors.

How do you plan to implement your bank experience in Tunisia? What are the business sectors you would target the most?

In fact, many areas are in our sight. There are companies in the oil and gas sector, in the field of food processing and tourism. As we know, the policy of previous governments in the tourism sector has not experienced great success.

The government would like to review this policy. We want to implement our expertise in the agricultural sector. We have a rich knowledge of the value chain in this sector. Our experiences in countries of Eastern Europe and Turkey can serve here in Tunisia. I must also say that I am impressed by the speed and availability of all those with whom we have worked with the Tunisian government to get where we are today. It is not easy to coordinate the work of various departments with which the EBRD works. We encountered many difficulties in Egypt, where, for months, we did not find any contacts. This was different in Tunisia, which is why it is in your country that we can say that we are making the most progress.


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