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Poor governance in the Tunisian banking sector

Staff Writer |
The poor performance of the Tunisian financial sector, which is fragmented and dominated by the state is a major challenge for the Tunisian economy.

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This is according to the report published by the African Development Bank (AfDB) "Addressing Together the Bank’s High 5 for Transforming North Africa."

As of March 2015, the capital asset ratio for the banking system was 9.5 percent, less than the statutory requirement of 10 percent, due to the 3.5 percent ratio for state-owned banks, the report reads.

The document notes that "Poor governance in the Tunisian banking sector has led to inadequate risk monitoring, a poor diversification of credit portfolios and an unusually high rate of bad debts (16% of loans in 2015, down from 24.2% in 2011 but high compared to the ratios recorded in other regional countries).

The report recalls Tunisia's ranking 131st overall out of a total of 188 countries studied by the Heritage Foundation and the relegation of the Tunisian banking sector by Standard & Poor’s to group "9" on a rating scale that goes from 1, the lowest risk, to 10, the highest risk.

In Tunisia, The nonbanking sector in Tunisia remains underdeveloped. Capital and fixed-income securities markets are still relatively modest, and market capitalization is about 24 percent of GDP, compared to 76 percent in Morocco, according to the report.

The report draws up the economic situation in the region according to 5 priorities set by AfDB, namely, industrialisation, energy, regional integration in terms of infrastructure, agriculture and the improvement of living conditions in Algeria, Egypt, Libya, Morocco, Mauritania and Tunisia.