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Tunisian Banking System: Looking forward to bold reforms

Mar 24, 2011
Dhafer Saidane , PhD in Economics, Professor SKEMA Business School
I – The impasse: A banking system beset by bad practices

After twenty years of impasse, the Tunisian banking system should emerge from the doldrums


Today, considering the country’s size, it is not unfair to say that the Tunisian banking system is made up of a constellation of small banks. At the regional and international levels, they count for very little. With some US$ 30 billion in total assets, Tunisia’s major banks are far behind their African counterparts - South Africa: US$ 570 billion, Egypt: US$137 billion, Morocco: US$102 billion, and Nigeria: US$87 billion.

For over twenty years, no major reforms have helped stimulate the banking environment, especially with regard to restructuring. The banks are observing each other, and due to constraining private practices and the high stakes, they are unable to attain their real potential to finance the economy. Trapped by their capital structures and conflicts of interest, they have opted to live discretely off their investments. Cradled by the market, a degree of sluggishness has set in. What has therefore become of their mission of contributing to development efforts?

A demanding anti-economic environment and missed opportunities

During these times of financial and political crises, it is fair to denounce and condemn banks. No! Tunisian banks are not responsible for the issues facing the Tunisian society. They have respected the logic of the markets that was imposed and administered upon them. They have mobilized skills and capitalized on expertise. Unfortunately, their efforts were thwarted by an anti-economic environment characterized by « business » and private interests that were unfavorable to entrepreneurial initiative and creativity. The banker was incapable of playing their
role because they hadn’t the means or rather, the power to do so. As for the entrepreneurs, they could not express their talent because they neither had visibility nor hope. The lack of convergence between the Tunisian banker and the entrepreneur represents serious “economic failure”. We are unfortunately paying a huge price for this in terms of job creation.

II – Hope: Mobilizing resources through meaningful measures

Consolidating and reforming the banking system to enable it play its role as an engine of growth


Bold reforms are expected. Regardless of the situation, bank regroupings are essential. It is an opportunity to restructure and consolidate the capital of both public and private banks. Mergers are vital and even urgent. It’s the opportunity to introduce good practices. It’s also time to send a strong message to the international community, the rating agencies that are watching us, our historical partners, and investors. It’s time to finally rebound and restore the confidence that we henceforth deserve and which will mark our accession to a mature financial system.

Prudent financial liberalization which avoids excesses and unnecessary mimicry

We should not throw out the baby with the bath water. No! Ignoring the past and resetting the financial and banking sectors would be a serious mistake. Similarly, adopting a status quo would be the best way to discredit our economic and human potential in the eyes of the international community. Financial liberalization can be a source of efficiency if it is well managed. Opening up the economy, including the dinar’s convertibility, should be done without excesses and zeal. We are still a fragile economy. Seeking to please others amounts to putting in place conditions for chaos.


Dhafer Saidane is a professor at the Université de Lille III and the Skema Business School. He also acts as an expert for the United Nations Economic Commission for Africa (UNECA) and the United Nations Conference on Trade and Development (UNCTAD), and is an advisor to the Club of Banking and Financial Institution CEOs in Africa for the Maghreb region. He is the author of numerous works on the topic of finance, including such prominent publications as “La Finance Islamique à l’Heure de la Mondialisation” and “Les Banques, Acteurs de la Globalisation Financière”.

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