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IZI in Tunisia – Evaluation of the VIII Line of Credit for SMEs

The bond that unites Italy to Tunisia has been getting closer and closer in recent times and intertwines major topical issues such as migratory flows and energy supply, but it is certainly not new. Italian cooperation has been involved for decades in initiatives for the socio-economic development of the African country and, particularly, in modernizing and improving the production system of small and medium-sized enterprises.

Since 1988, Tunis has benefited from seven Credit Lines from the Italian government which have contributed to the mise à niveau of the national production system and to the purchase of equipment and tools in favor of Tunisian SMEs, particularly in innovative sectors and in those with better prospects of relapse into qualified employment.

With this evaluation, IZI is pleased to present the results of the implementation of the VIII Line of Credit in favor of Tunisian small and medium-sized enterprises, carried out between 2013 and 2022. The general objective is “contributing to the pursuit of development objectives of the country”, through the “promotion of private investment and the safeguarding of the existing production apparatus”.

This meant making 73 million euros available in the form of medium and long-term credit to 144 beneficiaries, for a total of 162 financial transactions, broken down as follows:

  • creation of new SMEs;
  • financial stabilization of SMEs already present in the area;
  • technical modernization (mainly with equipment of Italian origin) of SMEs.

How did we carry out our evaluation? The evaluation activity directly concerned the beneficiaries of the Credit Line through interviews, focus groups, and questionnaires, but also the analysis of secondary sources and the involvement of privileged players, which made it possible to have a higher understanding of the context in which Tunisian SMEs develop and work.

The program results are positive: the funds disbursed were spent entirely and contributed positively to the economic growth of most of the project participants. In a country where 60% of the sample of Tunisian SMEs interviewed stated that they were suffering economically – both due to the difficulty in finding funds and the general trend of the economic situation – it is surely a success that over 75% of beneficiaries of the Line has found a substantial improvement in their socio-economic conditions and that 19% testify they have benefited from it partially.

In particular, 9 out of 10 companies declared that they had increased their turnover, and 3 out of 4 improved their competitiveness by launching innovative products on the market. The positive effects also concerned employment: almost 94% of SMEs hired new employees and among them 1 out of 4 introduced more than ten units into their workforce.

Not only that: although there were no specifics that gave priority to companies engaged in social and environmental promotion, the SMEs benefiting from the credits nonetheless demonstrated an ability to intercept these issues: 75% of the companies interviewed confirmed to have put into practice, thanks to the credit line, environmental improvement actions in the production processes; 70% of those interviewed favorably welcome the inclusion of people with disabilities in the company; finally, 42% of the beneficiaries were able to compensate for the negative consequences caused by the pandemic.

As regards the purchase of new equipment, the beneficiary companies described themselves as very satisfied with the new material of Italian origin – which they have acquired thanks to the loans – with a high approval rate found in more than 80% of the interviewees. The knowledge of Italian technologies and products is widespread among local entrepreneurs, who prefer to invest in Italian materials, even though they face higher costs than other international suppliers. During the meetings we noticed how the tunisian enterpreneurs were already aware of Italian equipment and how this interest led them to identify the most suitable financial aid instrument for them, almost always independently. The sectors that invested the most in equipment produced in Italy were the agri-food sector, followed by the chemical and construction sectors.

The evaluation also found some critical issues: a point on which there is certainly to invest for the maximum performance of the program is the communicative and informative side. Most entrepreneurs who have not benefited from the Credit Line declared that they never knew about it. However, among the companies that benefited from it, 18% learned about it through research conducted on their own, while 44% said the bank gave them the information.

The reason for this lack of widespread information about potentially interested subjects is attributable to the fact that the Italian Cooperation, after the first years of communication on the territory, has delegated this task to local operators (Central Bank, intermediate banks) and to support structures ( Italian-Tunisian Chamber of Commerce, business associations), which carried out direct but geographically unequal communication, so that companies in some more disadvantaged inland regions were unable to receive the necessary information.

Given the foreseen future renewals of this tool in the context of the activities of the Italian Cooperation in Tunisia, the evaluation conducted by the IZI staff produced a series of conclusions and recommendations, in order to strengthen the effectiveness and impact of the intervention, pointing out some aspects for improvement that reflect the considerations developed during the evaluation and that better meet the needs indicated by the beneficiaries.

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