The Tunisian Solidarity Bank: Making Dreams Come True

By Delinda C. Hanley

In a move designed to widen the network of mutual help within society and promote the entrepreneurial spirit of the country’s younger generations, President Zine El Abidine Ben Ali launched slightly more than a year ago a novel financial institution which is already attracting a lot of attention.

Created on Dec. 22, 1997, the Tunisian Solidarity Bank (BTS) aims to help all segments of society to seize the opportunities created by the country’s economic and social development effort. The bank finances micro-projects for those people who would not normally qualify for a loan from commercial banks because of their lack of assets or collateral. Men and women in both urban and rural areas are eligible to apply for a loan with a maximum annual interest rate of 5 percent, and a flexible grace period of 3 to 12 months before repayment begins. Reimbursement of the loan can be over a period of 18 months to 7 years.

Of the bank’s 30 million dinars capital (one Tunisian dinar is the equivalent of one U.S. dollar), 62 percent is held by 225,000 individual shareholders with an investment of 18.5 million dinars. The BTS therefore had to hold its shareholders’ meeting in a convention center. About 38 percent of the bank’s capital is held by the state and state-owned enterprises with an investment of 11.5 million dinars.

The bank is well on its way to achieving its goal of providing loans for 10,000 projects per year. In 1998 7,300 projects (with a $30 million value) were financed. The largest number of projects receiving loan approval, 13.9 percent, are in the textiles and clothing sector, followed by 11.2 percent from the agricultural sector. Last year women submitted 21 percent of the loan applications and they were awarded 26 percent of the loans.

BTS chairman Abdellatif Saddem says that his bank’s loans have more than just monetary value because they epitomize the creative and entrepreneurial spirit of Tunisia’s industrious younger generation. “BTS loans are creating a boom in handicrafts and service activities,” he says.

Financing such projects helps people including those in needy areas become part of the country’s business fabric. “This is not the Bank of the Poor,” he says. “This is the Bank of Hope.”

Three conditions are required by the BTS from loan applicants:

1) That they be devoid of means and collateral and thereby not able to access a commercial bank; 2) have training in the field in which they wish to launch their projects; and 3) have a sound project idea, with a local demand for the product, so that the borrower eventually will earn enough money to pay back the loan and support his family.

One of the obvious benefits of the BTS projects is that they provide job opportunities to young graduates. Such opportunities will also plant the seeds of expanded business ventures and additional jobs based on individual initiative. Projects financed in 1998 are expected to create 11,000 jobs, of which 11 percent are for recent university graduates.

The maximum amount for a BTS loan is around $10,000. The BTS has made an exception, however, at President Ben Ali’s request, for recent university graduates. The loan ceiling for them has been raised to $20,000 since their projects, such as accounting and auditing firms, or paramedical services, kindergartens or Internet clubs may be more costly than the project of a small farmer who needs $2,500 to purchase a pregnant Holstein cow.

The bank relies on streamlined and quite efficient procedures to process applications. It employs high-quality staff and in-house-designed computer software to follow projects and set up contracts. However, with thousands of applications, and only 80 bank employees, 25 of them in the capital city of Tunis, BTS relies on outside resources to help complete simplified formalities.

Credit applications are examined with the help of representatives of government departments, or some non-governmental organizations. Bank officers visit the applicant at work, see where he or she wants to work, and meet his family. They follow the main principals for international micro-management, including technical and financial feasibility studies.

“Each case is unique, so we avoid standardization of criteria and get local help fitting to the type of project,” says a BTS official. “The local representation of the Ministry of Agriculture can examine agricultural projects like cattle breeding, animal husbandry, greenhouses, and irrigation plans. People who live near the applicant can quickly discover what ideas can probably work.” The bank would finance such business projects as buying a carpet weaving loom for a woman artisan. It would also finance projects for the blind and the handicapped.

The Tunisian Solidarity Bank is still in its early stages. But young people with a dream do now have a reliable place to go. Their toil and sweat can make such dreams come true. Successful projects can help them reimburse the bank, which in turn will finance the creative ideas of their fellow citizens. “We are confident of our success,” said Mr Saddem, “because of the noble mission of the bank and the values it espouses.”