Tunisian Companies Fail to Raise Capital in First Half of 2024
The first six months of 2024 have been marked by a complete absence of capital increases by listed companies on the Tunisian Stock Exchange (BVMT). Not a single capital increase in cash was recorded, raising questions about the strategy of Tunisian companies in terms of accessing the financial market to ensure their development. Only one operation to incorporate reserves took place, that of SFBT, for 20,625 million Tunisian dinars (Mtnd).
The situation is no better for companies that have gone public to raise funds. Only one recapitalization of 6,044 Mtnd took place in six months, that of El Amana Takaful insurance company. The Bank of Financing for Small and Medium-Sized Enterprises (SMEs) resorted to a debt-for-equity swap, reducing its capital by 90 Mtnd and increasing it by 59,060 Mtnd through debt compensation.
In total, no new liquidity has been injected into these companies, which are supposed to be the driving force behind the Tunisian economy. This is intriguing, given that the majority of them are undercapitalized. Except for the regulated financial sector, which is required to respect well-defined prudential norms, the rest of the economic fabric operates with the minimum required equity.
Even in terms of debt issuance, nothing remarkable has been observed. In recent months, microfinance institutions have been taking the lead in a bond market that only accepts double-digit interest rates.
What are the consequences of this situation? Simply, a lack of investment and job creation. For several years, companies have been dipping into their cost structures, seeking to reduce them to a minimum. And as this involves variable expenses, which is a complex issue here, profitability has become a matter of price effect rather than volume. High inflation has become, unconsciously, a condition for supporting revenues. But beware, the tipping point is approaching, and consumption is starting to suffer.
