Bank of Regions will be based on new economic scheme in corporate finance (BFPME CEO)
06/12/2018 21:36, TUNIS/Tunisia
(TAP) -  The Bank of Regions to be created in early 2019 will be based on a new economic scheme in corporate financing, said CEO of the Small and Medium-sized Financing Bank (BFPME) Labid Zaâfrane.

In an interview with TAP, the CEO added that the new bank will provide more guidance to promoters and a more in-depth review of applications before they are adopted, with a view to minimizing risks.

The Bank of Regions, provided for in the 2019 Finance Bill, will provide lines of financing to commercial banks, which will act as intermediaries in terms of granting loans to people who want to create projects and who have obtained the agreement of the Bank of Regions.

These people must also meet all the conditions relating to the studies of the real cost of the projects, as well as to the guarantees presented, he added.

He said that the Bank of Regions that will replace the BFPME created in 2005 will play a leading role in boosting growth and avoiding failures of the BFPME, whose bad debts reached 150 million dinars (MD).

For the manager, these debts are the result of a policy based on the financing of high risk projects and without a real evaluation of the studies presented by entrepreneurs.

Q: How do you explain the failure of several projects funded by the BFPME?

A: Almost 40% of the projects we have funded from the creation of the BFPME in 2005 until October 2018 have failed. Several factors explain this failure. Essentially, it is the lack of training for entrepreneurs who are quick to get credit without paying much attention to the development of market research.

In addition, young developers struggle to determine the true cost of their projects and do not opt ​​for partnerships that would share the costs, in addition to their low equity participation in the project and the lack of liquidity available to them.

After the creation of their projects, several young promoters are forced to go into debt more and in the end they put the keys under the door.

Before the Revolution (December 17, 2010-January 14, 2011), we were able to reject several high-risk projects that did not offer real guarantees for the bank, but the political pressure exerted by the old regime for reasons of propaganda related to the 2009 presidential elections had a negative impact on the bank's financial balance.

Q: How can the Bank of Regions benefit from the BFPME experience?

The creation next year of the Bank of Regions is a good idea, because it will be the engine of the development process and the creation of projects needed to revive our economy which will have to be based mainly on SMEs, most of which suffer from low funding.

The objective is to preserve the sustainability of these companies, strengthen their competitiveness and allow them to expand their activities.

As you know, once created, the Bank of Regions will absorb the BFPME and the Tunisian Guarantee Company (SOTUGAR) and we are ready to make our experience available to commercial banks that will cooperate with this new credit institution.

As a reminder, our bank currently employs 132 officials, 70% of whom are managers. Our qualified staff, mainly in SME financing, will play a leading role at the level of technical supervision, support for entrepreneurs and the implementation of projects.

It should be recalled in this context that commercial banks, unlike the BFPME specialising in the financing of development projects, do not have sufficient experience in the financing of development projects, considered very risky.

This explains the nature of their activities based on granting of medium and long-term loans and financing less risky projects to guarantee profits and avoid losses.

Q: Will commercial banks agree to finance high-risk development projects in the regions?

A: They will have no choice but to join the development process and boost investment in the country, hence the role of the Bank of Regions which will ensure the sufficient financial resources to play their full role in project financing.

In my view, commercial banks will not be extremely cautious in granting loans to young entrepreneurs, especially as their applications will be well studied by the Bank of Regions (guarantees, own resources, actual cost of the project ...) .

Q: The capital of the bank of regions is 400 MD, what are the sources of financing?

Part of the capital of the Bank of Regions will be funded by the State; the rest of the capital will be provided by the German Development Bank (KFW), the European Investment Bank, as well as other partners.

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