Financial Crime World

Tunisia’s Banking Sector: Challenges and Opportunities

Current State of the Banking Sector

The Tunisian banking sector is facing several challenges due to weaknesses in the broader economy. The sector has a large number of players, including 23 commercial banks, which creates competition and negatively impacts the overall impact of banking activities on the economy.

Consolidation Efforts

Consolidation efforts are being pursued by the Bank of Tunisia (BCT) and the International Monetary Fund (IMF), but they face difficulties due to the country’s economic structure. Despite these challenges, the sector remains a key driver of economic growth in Tunisia.

Emerging Opportunities

Microfinance

The microfinance segment has seen rapid development since the enactment of the Microfinance Law in 2011. As of April 2019, the total loan portfolio of the microfinance segment exceeded TD1bn ($347.3m), with some 600,000 customers.

Islamic Finance

Islamic finance is gaining momentum in Tunisia, with three sharia-compliant banks operating in the market. The segment is expected to account for around 15% of the total by 2022.

Fintech and Non-Bank Payment Branches

Fintech operations and non-bank payment branches are being deployed in areas where traditional banks have not run profitably in the past.

Leasing Segment

The leasing segment has undergone consecutive years of development, with a growth rate of 4.8% in 2018 to TD4.5bn ($1.6bn). However, the country’s current economic difficulties may impact leasing companies in the coming months and years.

Key Points

  • Tunisia’s banking sector has a large number of players (23 commercial banks), which creates competition and negatively impacts overall economic impact.
  • Consolidation efforts are being pursued by BCT and IMF, but face difficulties due to country’s economic structure.
  • Microfinance segment has grown rapidly since 2011, with TD1bn ($347.3m) loan portfolio and 600,000 customers as of April 2019.
  • Islamic finance is growing in Tunisia, with three sharia-compliant banks operating in the market.
  • Fintech operations and non-bank payment branches are being deployed in areas where traditional banks have not run profitably.
  • Leasing segment has grown 4.8% in 2018 to TD4.5bn ($1.6bn), but may be impacted by country’s economic difficulties.

Conclusion

While the banking sector will continue to face challenges in the coming years, there are opportunities emerging in segments such as Islamic finance, microcredit, fintech operations, and non-bank payment branches. The sector’s largest players will likely allocate resources to adapting to new prudential rules and aligning with Basel III requirements.