Reinforcing Med Microfinance Network System for Start-ups

ReSt@rts Project Supports Young Entrepreneurs amidst the Constraints in the Banking and Finance System in Tunisia

According to the Tunisian national register of enterprises, 86% of the private sector is made up of one-person enterprises, 12% of micro-enterprises (2 to 10 employees), 1.6% of small enterprises (11 to 100 employees) and 0.4% of large companies (more than 100 employees)
74% of new jobs come from self-employment “one-person businesses”. This means that even if micro-enterprises allow entrepreneurs to create their own jobs, this is still insufficient to contribute to improving unemployment. Mainly because the scarcity of medium and large enterprises is a key factor behind the low rates of job creation.

The low rate of new jobs created can also be explained by the fact that most existing companies are not growing steadily enough. In general, the Tunisian private sector is paralyzed: the majority of companies do not develop, but they do not disappear either, they simply stagnate.
The banking and financial system is the main source of constraints to the development of entrepreneurship. Today, entrepreneurs find themselves limited in their ability to provide capital to meet their own needs as well as the needs of their new businesses.

In most cases, the primary source of initial funding comes from the entrepreneurs’ personal savings. Conventional loans are inaccessible, especially for young people and agricultural entrepreneurs.

Indeed, banks and financial institutions in Tunisia are above all extremely risk-averse, particularly with regard to micro-enterprises, it is considered even riskier in the case of projects led by young people or agricultural entrepreneurs. In reality, the newly created companies do not reassure the banker because of the absence of guarantees. A loan given to a new entrepreneur is considered by the banker a very risky loan with a high cost.
For entrepreneurs, it is hard to attain a loan because they are often requested to provide a guarantee with high credit, this is often considered a constraint for entrepreneurs, who already have very difficult access to credit.

For this purpose, financing is a big obstacle in the face of entrepreneurs, which hinders the process of creation and development in the SME sector. 
In addition to constraints in the banking and financial system, it is important to mention the limitations imposed by the legal and administrative environment namely; the complexity of administrative procedures, as well as constraints linked to the social and cultural environment, which often specifically women entrepreneurs struggle with. 

In order to mitigate these constraints, ReSt@rts project, funded by the European Union under the ENI CBD MED Programme, facilitates access to finance for non-bankable youth in the Mediterranean countries to help them pursue their entrepreneurial visions.

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