Where Credit is Due: Microfinance Regulatory Reform, Tunisia, 2011-2014

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Translation: French 

In the wake of the 2011 civil uprising that toppled a longtime dictator, Tunisia’s transitional government struggled to meet citizens’ demands for economic opportunity. Interim Finance Minister Jaloul Ayed saw limited access to financial services as a barrier to building the private sector and creating jobs, but the microfinance industry was overregulated and dominated by a majority-state-owned bank that loaned government funds to nonprofit associations, which in turn loaned to clients at unsustainably low rates. Ayed and his deputy, Emna Kallel, crafted a strategy to expand small businesses’ and entrepreneurs’ access to loans by revising requirements and opening the door to private-sector lenders under the watch of a new supervisory authority. The law upended the existing microfinance industry, creating new opportunities but also disrupting the government-funded associations. Four years later, uncertainties remained, but Tunisia’s microfinance sector had begun to move toward a market-based system under a new regulatory environment that allowed for the industry’s future expansion.  

Robert Joyce, ISS Research Specialist, and Natalie Wenkers of Science Po's Paris School of International Affairs, drafted this case study based on interviews conducted in Tunis, Tunisia, during September and October 2015. This case study was funded by the French Development Agency. Case published in February 2016.

financial services
financial inclusion
interest rate
Focus Area(s): 
Civil Service
Making Markets Work
Critical Tasks: 
Action plans
Credit Reporting
Donor coordination
Independent agencies
Market performance & market distortions
Preparation of policy papers and choices
Strategic planning
Core Challenge: 
Capacity (capability traps)
Contracting out (creating semi-autonomous agencies)
Reducing capture
Country of Reform: 
Case Studies
Robert Joyce