Tunisia: Fintechs Cry Out for Regulatory Overhaul Amid “Discouraging” Framework

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Tunisian financial technology startups are struggling to navigate the country’s regulatory landscape, with a staggering 53% deeming it “discouraging”, according to the latest Tunisian fintech barometer.

Major Obstacles

The study, conducted by TunisianStartups in partnership with Matine Consulting and the German Agency for International Cooperation (GIZ), reveals that two regulations stand out as major obstacles: the foreign exchange code and the law on payment institutions.

Lack of Regulatory Sandbox Environment

Depriving Startups of a Regulated Environment

The absence of a sandbox environment for fintechs to test their innovative solutions has widened the gap between regulators and startups, depriving them of a regulated environment to simplify authorisation and compliance procedures. The Central Bank of Tunisia (BCT) describes the sandbox as a “test environment for monitoring the experimentation of innovative solutions proposed by fintechs on a small scale and with willing customers”.

Accessing Finance and Market

Fintechs are also struggling to access finance, with investment funds and business angels being more receptive to their risk profiles. However, the internal rates of return required by funds are too high for startups.

Market Trends

Improving End-Consumer Appeal

Startups reported an improving end-consumer appeal for their solutions (74%) and increased cooperation from financial institutions (42%).

Human Capital Challenges

Startups also expressed disappointment with the effectiveness of incubators and accelerators in meeting their specific needs. When it comes to human capital, 63% of startups said they can attract the talent they need, but 37% lamented a lack of available talent in Tunisia, particularly in areas like cyber security, artificial intelligence, and Big Data.

Call for Regulatory Overhaul

To develop the sector, fintechs called for an overhaul of the regulatory framework, which would encourage collaboration between startups, financial institutions, and regulators. They also stressed the importance of setting up standardised and secure interoperability and Open Banking standards (APIs). “The development of this regulatory framework could make a major contribution to facilitating these collaborations and fostering a more dynamic and inclusive financial ecosystem,” they said.

Simplified Procedures and Innovative Public Procurement

Overcoming Difficulties in Accessing Public Contracts

Fintechs emphasized the need for simplified procedures and innovative public procurement mechanisms to overcome difficulties in accessing public contracts.