Further development for the Arab Spring
Press Release from 2018-07-11 / Group, KfW Development Bank
KfW supports strengthening of banking and financial sector in Tunisia with up to EUR 460 million
- Launches with EUR 100 million for the Compact with Africa reform partnership, aiming for reforms at macroeconomic level in banking and finance
On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW has today signed a promotional loan for EUR 100 million. As the first of three possible tranches, it comes as part of the wide-ranging reform package which the Federal Government has negotiated with Tunisia (Germany’s contribution to the G20 Compact with Africa initiative). This aims to transform the Tunisian financial sector, involving structural reforms in small and medium-sized enterprise financing, as well as improvements in general conditions, public finances and capital market development.
Along with the reform package, Tunisia is also due to receive a reduced-interest loan for up to EUR 140 million once it has completed the initial reforming steps. This sum is to be extended to Tunisian commercial banks and leasing companies, which will then issue loans to micro, small and medium-sized enterprises (MSMEs) under attractive conditions. There is a pressing need for action, as 49% of businesses lack adequate financing.
Through KfW, the BMZ is providing another EUR 10 million on a grant basis to finance investment advisory services for the planned processes of transformation in the Tunisian financial sector, including the potential formation of a consolidated Tunisian promotional bank. EUR 10 million for a guarantee facility to support start-up financing caps off the comprehensive reform partnership.
“Seven years on from the revolution – the Arab Spring – Tunisia still finds itself in a period of economic and political upheaval. Reform in the financial sector, including banking, is urgently required to facilitate Tunisian businesses’ performance capacity and growth, to curb high youth unemployment and to guarantee access to loans – especially for those 98% of the country’s enterprises that are micro and small-sized,” says Dr Joachim Nagel, Member of the Executive Board of KfW Group.
To date, Tunisia has been one of three countries (alongside the Ivory Coast and Ghana) that Germany has supported with a comprehensive, reform-minded approach as part of the Compact with Africa initiative.