Considered one of the most promising new emerging markets of Africa, the Tunisian government has aligned its economic development strategy to include Islamic finance as it seeks to diversify its funding sources to rebuild its economy which was deeply injured during the long years of the old corrupted regime and shaken by the Arab Spring of 2011.
The change of the political landscape in Tunisia after the revolution has been a good restart for the development of a steady Islamic finance system in the country. The years 2013 and 2014 have definitely been the years of many important developments for the Islamic banking and finance industry, driven by structural changes within the Islamic finance sector.
Review of 2015
Undoubtedly, the year of 2015 was also marked by some important events in the Islamic finance sector. During the year, the draft law of banks and financial institutions has been issued. While the draft law specifies that both Islamic and conventional banks are subject to the same regulation, within this law, the first contracts with operations of Islamic finance have been defined. Moreover, banks’ constitutions, operations, identification of a guarantee mechanism and depositor assets have also been discussed.
In November 2015, Amen Bank, the country’s second-largest conventional private sector bank, asked for approval from the Central Bank of Tunisia to create an Islamic bank as a subsidiary or, where appropriate, an Islamic window. This will depend on the promulgation of the new banking law. Amen Bank also launched two Islamic mutual funds in December 2014 that were to be managed by Tunisia-based United Gulf Financial Services-North Africa.
Moreover, after more than two years from the date the Sukuk law was approved by the National Constituent Assembly, Tunisia is looking to issue a US$500 million Sukuk by the beginning of 2016. The aim of the Tunisian sovereign Sukuk is to attract a new class of investors due to the political instability in Tunisia and beyond. The issuance of the first Tunisian sovereign Sukuk was rescheduled first to 2014, then to 2015 and now to the beginning of 2016.
Preview of 2016
It seems that with the beginning of important changes last year, we will witness in 2016 the rise of Tunisia as the intellectual capital of the Islamic financial world, supported by new Shariah compliant banks and new companies in the sub-financial sectors like Takaful, asset management and Islamic funds. On the heels of the successful steps toward the development of an effective and steady Islamic finance system during the past three years, we look forward to some important milestones in the Islamic finance industry in Tunisia in 2016.
Indeed, after the revolution, the Tunisian government has shown strong support toward the development of Islamic finance by making several initial steps to facilitate many Shariah compliant transactions like Sukuk, Shariah compliant funds and some Shariah compliant products.
However, it is still not enough. To promote the development of an effective Islamic financial market in Tunisia, the government needs to mobilize professionals and provide stronger political support.
A better regulatory framework for Islamic finance must also be developed by the regulatory and concerned authorities to cater to the demand for these alternative financial products. The government must also develop and promote new products to meet the needs of Tunisian customers and help to promote the economic development of the country.
The outlook for Islamic finance in Tunisia remains positive. The country has the opportunity to utilize Islamic finance for the good of its own economy and also to act as an Islamic hub for the French-speaking portion of Africa.