19 July 2013 12:42 pm | | 6


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Headquarters of the National Agricultural Bank, one of the three state-owned Tunisian banks. Image courtesy Wikimedia Commons

Headquarters of the National Agricultural Bank, one of the three state-owned Tunisian banks. Image courtesy Wikimedia Commons

A lengthy process of evaluating Tunisia’s three state-owned banks has been announced by the government, but numerous problems remain and a strategy for reform is not yet in place.

The Tunisian economy has suffered from poor access to credit, with Tunisian businesses having to offer large guarantees to receive loans necessary to expand. The three banks up for evaluation cover a third of the country’s banking sector.

Tunisia’s economy has fared poorly since the revolution, and recent evaluations by major credit rating agencies have been pessimistic. On June 28, for example, a Standard and Poor’s report described Tunisia’s banking sector as “fragile and not supportive of investment.” It predicted that the government would need to devote considerable funds to recapitalizing Tunisian banks, which currently are not able to meet demands for credit.

The gap between the demand for credit and the funds available in Tunisian banks is large, estimated to be between 17 and 20 billion dinars (10 to 12 billion dollars), according to Laurent Gonnet, a financial sector specialist at the World Bank who spoke with Tunisian media on Tuesday.

Banks are also saddled with bad debts that will likely never be repaid, decreasing their ability to make new loans. 

The three major state-owned banks – the National Agricultural Bank (BNA), the Housing Bank (BH), and the Tunisian Banking Company (STB) – are widely regarded as in need of reform. They represent 36 percent of the country’s banking sector, but their oversight has been lax, with no full on-site inspections held since 2006.

The government has announced that it will undertake an eight-month audit process to diagnose failures in these banks and identify a reform strategy. According to the Ministry of Finance’s website, the international auditors selected for the evalution are Group PWC/ MTBF for STB and Roland Berger Strategy Consultant/FICO and ORGA Audit Group for BH and three of the bank’s subsidiairies. The final bank to be audited, BNA, is still collecting bids from international contractors, due to low payment offerings. The process is behind schedule and was supposed to start on July 15 according to Gonnet.

Gonnet believes this audit will prepare the country to undertake needed reforms.

“When looking to evaluate the banking sector, we need to look at two key indicators: the credit penetration rate and debt quality, meaning the amount of bad debts,” according to Gonnet.  

The credit penetration rate measures the amount of credit issued by banks as a percentage of a country’s gross national product, with a higher percentage meaning there is more access to loans and other forms of credit in an economy. This means higher access to credit for businesses looking to expand, facilitating growth.

“Ten or 15 years ago, the Tunisian and Moroccan banking sectors were similar, but now Morocco is taking a step forward with a credit penetration rate of 90 percent. Tunisia is lagging behind with a rate of 72 percent,” Gonnet said. He believes that reforms can bring Tunisia on par with Morocco.

Tunisia’s reform strategy, however, is yet to be determined.

Gonnet reported the key problems facing the Tunisian banking sector as mismanagement, lack of innovation, and a lack of an effective approach to bad debts.

The value of collateral that must be put up to guarantee a loan in Tunisia is the highest in the region, averaging 167 percent of the loan amount, according to Gonnet. This limits the flow of credit in the economy, as potential borrowers may not be able to provide such a guarantee.

He listed a number of reforms which the government could adopt, including transforming the three public banks into development banks, liquidating them, installing teams of private experts in management roles, and finally, to giving shares of these banks to strategic shareholders.

“The financial sector’s full potential hasn’t been reached yet in Tunisia. The banking sector’s intervention is not efficient and not supportive of economic growth,” he said.

Under the regime of former president Zine el-Abidine Ben Ali, the International Monetary Fund (IMF) called on the government to undertaken financial reforms, but the suggestions were not implemented.

The IMF issued an analysis of Tunisia’s financial system stability last August as part of its Financial Sector Assessment Program (FSAP). It noted that the reforms called on in its previous assessment issued in 2006 had been ignored.

“The core recommendations of the 2006 FSAP were not implemented. These recommendations centered on the proposed comprehensive reform of the state-owned banks to improve their risk management; addressing the overhang of nonperforming loans; and the rationalization of staffing and duties,” stated the report.

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Comments (6)

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  1. You realize that the major problem of Tunisian banks is the amount of non-performing bad loans provided to the cronies of the defunct BenAli regime, who invested them in empty touristic hotels. Foreclose on these bad loans, take the loss, and voila, you will solve the banking problem in Tunisia. But of course, the question then is who will take the loss: we are talking billions of Dinars here…

  2. elmouldi ben ibrahim. maaroufi says:

    It is a hard task but it is feasable when all the facts are put together and siphoned then adjusted properly you will find that these bank are very wealthy. Slowly slowly catchy monkey.

  3. Adnane says:

    Customer service needs to looked at, I bank in the UK and Tunisia, in the UK I can pay bills online in a lot of cases instantly, in Tunisia I have to fill in forms and it takes 4 to 7 days to process., so when we have transaction into and out of Tunisia it can take 2 or 3 weeks which has a massive negative effect to business. As far as I know this is because all transaction s go through the central bank who delay the transaction so they can skim off some interest So with or without credit facilities the banking system still reflects an element of pre revolution central control. This certainly limits the ability for Tunisian business to compete in the world markets, all a bit frustrating and short sited when the country is trying to rebuild

  4. WTF says:

    the sector is in dire need of reform. lets hope the reform come fast and be implemented immedialtely not shelved.

    • Big al says:

      We need young people on fire for jesus in tunis, once the youth get on fire for the real truth, Tunisia will be changed,

      it’s not about information, it’s about revelation,

      Mohammed came 500 years after jesus, and now God didn’t know what he was doing from the beginning so he sent Mohammed, well what did Mohammed accomplish, because marry an 11 year old girl, marry women he could screw then tell everyone to kill christians and jews and when they die they get to screw 72 more virgins, what mess, and that’s how tunisia became muslim

      Jesus came and heal the sick raise the dead fed the poor, and over death, and you can to by putting your trust in jesus and asking him to forgive you, mohammed can’t save you he is dead, Jesus is not he is alive and here and ready to help you no matter what the situation is, Jesus said if you can believe everything is possible, are sick, broke problems with kids , business family relationship jesus can help just pray and ask Jesus to come into your life or call me at 702-477-2000

  5. Me says:

    About time

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