A big focus of the second half of the trip has been on alternative financing of businesses. From the American Chamber of Commerce meeting, we were told that a lot of goals had been set in order to make Tunisia more attractive as a destination for foreign investments. The government institutions and entrepreneurs did not agree on much at the meeting, but they did reach consensus on a lack of capital.
We had meetings with a number of organizations outside of traditional banking that finance local businesses. The African Development Bank focuses on investing in projects in businesses that are intended to further development in Tunisia. Its financing is backed by its member countries and development finance institutions (DFIs). The Abraaj group, a private equity firm with $9B AUM, was the most traditional financial institution we met. Its LPs are focused on a single bottom line. The firm made its first wholly owned investment- a private hospital- in Tunisia in 2014. We had the opportunity to visit the clinic, and it was clear that along with changing management, they were drastically modernizing their labs and rooms. AfricInvest is one of the most experienced private equity firms, but nearly 85% of its funding comes from DFIs. The International Finance Corporation has a triple bottom line with only 0.3% of its total portfolio in Tunisia. IFC’s role in Tunisia is to source and aid investment to make it easier for investments to happen. The organization has connections through all industries and knows the major players. It also funds enda-inter-arabe, the largest microfinance institution in Tunisia. It provides financing to 270,000 businesses. When the local business owners were asked why they preferred enda-inter-arabe for funding as opposed to a traditional bank, their response was that enda provided a lot of advice in starting their businesses as well as emotional support.
The government does not have the capacity to stimulate all economic growth, and has relied on the help of these financial institutions to support entrepreneurs.