It’s time for the rise of Private Equity industry in Tunisia


By Michael Blummer

Distortions, defaulting on loans, deflating dinar and lack of liquidities are characterizing the economy during the transition period in Tunisia. This makes the access to finance, through the traditional banking sector which still widely dominant, extremely challenging for the SMEs who have the possibility of expanding their businesses. So what can SMEs do to get finance their investment needs? That was the topic of the Tunisian American Young Professionals – Tunisian chapter’s latest Couscous Discussion: How Private Equity is Impacting the Investment Flows in Tunisia.

Digging in quickly, not only into the delicious couscous, but also into the meat of the discussion, the keynote speaker, Mr. Moez Dalloua, Regional Director of Financial Services Volunteer Corps, led in pointing out the local scenario in comparison with how other countries operate in this field, listing some of the top current problems, and discussing solutions to the resistance that exist to reform.

TAYP’s Tunisian chapter’s president, Mr. Mondher Khanfir, moderated along with key players in the field of private equity, venture capital, finance, business strategy, law, investment initiatives, and economics including the Economic Advisor and Attaché from the US Embassy, Tunis, Mr. Nick Manske.

Interestingly enough, one of the peculiarities that of the current local trend from the private equity companies is that more are choosing companies to invest in that can fit within a tax exemption/reduction benefit even over those companies who show a better ROI despite having normal tax rates to pay. Unfortunately, this solidifies the outside research that indicates local investors are trained in to be risk-averse and led by the State investment policy, perhaps more by culture rather than from institutions as one stated that Tunisian society has a general fear of change. Ironically as well, most of the local private equity companies do not assess their own risk – they rely on outside sources.

Speaking of risk, another issue is that of the exit market – how one pays off the loan/investment made by PE? Getting a loan from the bank is really not a solution, especially since on average, one needs 167% of collateral (mainly in real-estate). Buy-outs aren’t currently working in Tunisia. Stock market is over-regulated and protects the investor at an unequal importance to the entrepreneur.

So, what is working? You can take great relief to know that there are local investors within venture capital, seed funding, private equity, micro-financing institutes, and banks who are literally investing millions of dinars. Specifically, two success stories were shared where investment and construction have been made in creating the first hotel in Sidi Bouzid and a private/public hospital in Kasserine. An initiative funder is focusing on underwriting and guaranteeing certain solid business bank loans if the bank is leery of committing as well as focusing on training Tunisians how to assess franchises.

Another experience to assert is CapitalEase Seed Fund, a private equity fund subscribed by Angel Investors in Tunisia ( and exclusively dedicated to innovative Start Ups at the early stage of their creation process. This first PE initiative is expanding and emulating now in Tunisia.

So where is the room for improvement, specifically? Don’t rely too heavily on the government, who has yet to show capability in the economic field which was realized by the population as most said during the latest elections that they see little connection between politics and economics. Currently, there are still too many regulations that prohibit a free and competitive market. “We even have many paradoxes in our Governance, as we are one of the rare countries where private funds are managed by public sector” said Mondher Khanfir. The Tunisian economy in general needs more Public Private Partnership to break with the distrust between the two sectors. Learn from other countries on capitalizing on the investment that is made by foreign investments. Research shows that a thriving economy has a large proportion of personnel as accountants, engineers/scientists, and financial experts. Lastly, be willing – local investors need to lead the way – how can we expect foreign investors to invest if domestic investors are not? 

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