Global Effective Rate for Microloans Reaches 25.7%
The global effective rate for microloans has been revealed over the weekend, standing at 25.7%. This figure was published a few weeks ago, and a review of the document released by the Microfinance Regulatory Authority (ACM) shows that it has provided all the necessary arguments to justify this level.
It is worth noting that the 25.7% rate for the second half of 2024 is a positive development compared to the 36.0% recorded at the end of the same semester in 2023. Moreover, unlike the banking TEG, this rate is equivalent to the period rate and takes into account the insurance premium linked to microloans paid by beneficiaries and received by the Microfinance Institution as an insurance intermediary.
The significant decrease compared to 2023 is due to the decision made by the ACM, in close consultation with all IMF SA, to set the nominal interest rate applicable to microloans allocated to improving living conditions at a maximum of 24%. The study commission was abolished for all types of microloans falling under this category. A study conducted by the ACM from January 2018 to February 2024 demonstrated, among other things, that this category of microloans is significantly less risky than those allocated to income-generating activities.
The level of the TEG for microloans could have been set even lower if institutions had access to refinancing resources at an advantageous cost. In fact, not being authorized by regulations to collect micro-savings and being limited to marketing a single product, IMF SA struggle to bear a high refinancing cost. This is therefore a call to the authorities to review these restrictive conditions. Accessible rates will help boost consumption and facilitate access to financing for a larger number of Tunisians.
