Supporting Small and Medium Enterprises' Access to Finance in Tunisia

The micro, small and medium-scale enterprise finance sector in Tunisia has changed substantially— beginning with the introduction of a new microfinance law in 2011, which opened up the market to new entrants— and the Tunisian government has continued to build on this progress through the newly-passed Start-Up Act in 2018. Tunisia has a number of policies, mechanisms and institutions to support enterprise creation and growth, and a more developed policy framework for small, and medium-sized enterprises (SMEs) than that of other North African and Levant economies, according to a recent SME policy assessment. Private equity and venture capital markets are underdeveloped. The Tunisian lending market accounts for less than ten percent of the financial sector, but is increasingly important for external financing of fixed asset investments of small- and medium- enterprises (SMEs). According to 2015 European Investment Bank report, banks limit SME business to only a subset of well-established SMEs which are able to bring in substantial collateral. Other SMEs, which have limited equity and funds, are mostly excluded. The banks' current liquidity situation encourages lending only to those clients perceived as less risky and which offer real assets as securities. Access to finance is one of the main impediments to the business environment in Tunisia, and this is particularly true for SMEs.