Jean-Luc Revéreault Presents European Investment Bank's Financing Mechanisms at "Rencontres du Financement" Event

Jean-Luc Revéreault, head of the European Investment Bank's (EIB) representation in Tunisia, presented the bank's financing mechanisms at the first edition of the "Rencontres du Financement" event, organized by the Ccitf and CDC, on May 16, 2024.

EIB's Support to the Private Sector

Revéreault highlighted that, although the EIB is recognized for its financial support to the public sector, it also greatly benefits the private sector. He explained that infrastructure projects, such as road construction and school building, not only improve infrastructure but also stimulate the private sector and local economy by creating jobs. He cited the example of the school renovation program, which generated approximately 40,000 jobs over a 5-year period. This program involved the mobilization of architects, engineering firms, and entrepreneurs, showcasing the indirect but significant impact of public investment on the private sector.

EIB's Financing Mechanisms for Tunisian Enterprises

Revéreault presented two categories of financing mechanisms offered by the EIB to support Tunisian enterprises: intermediated financing and direct financing.

Intermediated Financing

Intermediated financing primarily concerns small-scale projects and involves investments in capital and quasi-capital through investment funds, as well as credits granted by financial institutions such as banks, leasing companies, and microfinance institutions.

Direct Financing

For larger-scale projects, direct financing takes over, enabling the EIB to lend directly to enterprises, often within the framework of public-private partnerships (PPPs) or concessions.

Subcategories of Intermediated Financing

Intermediated financing is subdivided into three categories:

Investments in Funds

These investments aim to strengthen the equity and quasi-equity of enterprises, a necessary condition for accessing bank financing.

Intermediated Loans

The EIB grants credits to Tunisian financial institutions, which, in turn, finance small and medium-sized enterprises (SMEs). In this scheme, the EIB assumes a "risk IF," or a risk on the financial institution rather than on the SMEs themselves.

Guarantees

The EIB offers guarantees to Tunisian banks to share the risk on certain loans to enterprises.

Challenges and Solutions

Revéreault acknowledged that these mechanisms are not without challenges. The issue of sovereign rating and exchange rate risk is a concern, as loans are granted in foreign currencies, while banks lend in Tunisian dinars to SMEs, generating an exchange rate risk that must be mitigated.

To address these challenges, Revéreault proposed a solution: lending to the Tunisian state, which would then re-lend the funds to banks. He announced that credit lines are currently being established, with a €170 million EIB loan intended to be re-lent to several commercial banks. These banks are encouraged to finance class 2 enterprises, recognized for their restart and growth potential.

Finally, a €8 million guarantee line is being prepared to enable two Tunisian banks, currently in the selection phase, to lend to Tunisian enterprises while sharing the risk with the EIB.