Progress in order - Tunisia

| Friday, June 14, 2013
Progress in orderPhoto Credit:Reuters/Zoubeir Souissi
Ezzeddine Saidane, Founder and GM at Directway Consulting spoke candidly to BME on the growth of sectors and the health of the Tunisian banking systemWhat is the health of the services sector to Tunisia's economy, especially overshadowed by the Arab Spring and government issues?
The service sector represents more than 50 per cent of the Tunisian economy. Like the rest of the economy, the service sector and especially tourism, is suffering from the conditions of the democratic transition environment. Growth, however for the economy as a whole was slightly positive in 2012. It looks like it will remain positive for the current year.
Is there any sign of recovery after the spread of civil resistance that began in December 2010?
Yes there are signs of recovery but they remain shy. Multinational bank staff has not left the country because security has not been a really serious problem, except for a few days after 14 January. What is needed at this stage is a strong message from the political elite that truly decisive progress is being achieved on the path of democratic transition.
Is recovery in the services sector made much harder by the growth of rival hubs?
For Tunisia, the rival hub is Morocco which has largely benefitted from the situation in Tunisia in terms of tourist numbers, exports and foreign 
direct investment.
How much have banking assets fallen since prior to the protests and what can Tunisia do to attract back these assets?
The fall in bank assets was rather limited, below three per cent. Part of those assets has been attracted back by banks already. The real issues of the banking sector are more related to NPLs and liquidity.
How do you see the growth in Islamic banking in Tunisia and the rest of the Maghreb?
It is obvious that there is room for growth of Islamic finance in Tunisia and in the region. This does not mean, however, that Islamic finance will replace conventional finance.
What is the future of Islamic banking in the country and region? What will this do for Islamic bank funding provision for projects?
Islamic banking is just another way of banking and finance. It will develop and enrich the financial sector with more financial products and a larger choice of financial solutions. The Central Bank seems to be moving in the direction of allowing banks to be either fully Islamic or to remain as conventional banks, while opening Islamic finance windows.
What is your view of the Sukuk market growth in Tunisia?
It is non-existent so far. But it is expected to start developing soon.
How have banks performed at end of 2012? What are your views for the future?
Most banks are showing positive growth in their total assets and net profit. That growth is however slightly above inflation, on the average.
What is the current political union with other Maghreb nations? How would a deeper political union affect Tunisia's economy: a bigger addressable market or more competition, less or more geopolitical risk?
The Maghreb Union project is at a standstill position for the time being. Serious studies show that the building of the Maghreb Union would add a minimum of two percentage points of growth every year to each of the member countries.
How have Tunisian asset prices (equities, fixed income, real estate) behaved in the past during periods of high tension?
Prime real estate prices continue to increase. But the stock exchange performance was negative in 2012. It continues to follow a negative trend for the current year. Very good buying opportunities are already visible in the market.
What is the current state of relationships and ties with sub-Saharan Africa, Europe and US?
The main partner for Tunisia remains by far Europe. Eighty per cent of our foreign trade, both ways, is dealt with Europe. That same percentage applies to tourism, FDI and remittances. I don't see a clear African strategy for Tunisia yet. The relationship with the US is very important, but not necessarily in economic terms.
How has the Ennahda Movement changed the outlook of the country? Please discuss the current state of government and public reactions.
Confusion is probably the right word. Doubts about the Tunisian identity and the Tunisian way of life are probably the other main feature. It is a common belief that the transition has been mismanaged so far.
Have you seen an increase in subsidies to households or major infrastructure projects going ahead?
Subsidies to households have increased significantly, but at the expense of the State Budget which shows a much larger deficit than before. The major indicators of the economy have also clearly deteriorated.
What are financial institutions' activities towards finance sector reforms?
Major financial reforms are being announced for the future. As for now, the banking sector is busy managing its NPLs and liquidity problems while trying to cope with rather difficult economic, social and political conditions.
It is obvious that there is room for growth of Islamic finance in Tunisia and in the region
Ezzeddine Saidane was trained as an economist at the University of Tunis, the University of Minnesota, USA and Oregon State University, USA. He started his career in 1974, as an Economist with the Ministry of Agriculture.

He then moved to the banking sector in 1977. He worked for BIAT (Banque Internationale Arabe de Tunisie), the largest private sector bank, from 1977 to 1998 where he filled various positions ranging from credit, marketing, capital markets to international banking. The last position with BIAT was that of Deputy General Manager. In 1998, he joined as CEO of Arab Banking Corporation Tunis, an off-shore banking unit belonging to the ABC group based in Bahrain. In 2000, he obtained a licence from the Tunisian Authorities to found ABC Bank, Tunisia, a local commercial bank of which he was Founder and CEO until October of 2003. Saidane is a banker and a professor who has taught economics and banking courses for 27 years at the IFID (Institut de Financement du Developpement) and at other educational institutions. In 2004, he founded Directway Consulting specialising in financial advisory. His main clients are banks in Tunisia, the Middle East and the Gulf, as well as state-owned and private-sector companies

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