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Tunisia looks to become Islamic finance centre

By Mohamed El Hedef for Magharebia in Tunis – 26/07/11

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With a newly liberated political atmosphere and a developing free market, Tunisia is looking to become a centre of Islamic finance in the Maghreb.

Islamic banking was the focus of a recent forum in Gammarth where experts, bankers and political leaders discussed ways Tunisia could lead the region in expanding economic opportunities. The July 15th-16th conference, organised by the General Council for Islamic Banks and Financial Institutions (CIBAFI), also tackled issues of innovation and training in the emerging field.

Tunisian Finance Minister Jelloul Ayed told attendees that currently 96% of financial resources from Islamic banking are invested outside Muslim states, something he considered a lost opportunity.

He also explained that Tunisia could turn to Islamic finance as a source of funds for its immediate needs, estimated at 30 to 40 billion dollars over the next five years. Tunisia's current loans from the Islamic Development Bank total about 500 million dinars across several sectors, Ayed said.

In this regard, the minister announced that Tunisian authorities were looking to develop a legal framework to regulate the sector. He also highlighted plans to create a sovereign wealth fund called "The Future Generations Fund".

On the Maghreb level, Ayed underscored that efforts by Maghreb countries toward integration must continue and be intensified, ultimately encompassing all financial and economic fields. He added that the integration to which peoples of the Maghreb aspire provided greater opportunities for growth for the Maghreb region, which has about 85 million inhabitants and a GDP approaching $400 billion. Some studies have estimated that the lack of integration costs the Maghreb 2% of annual GDP growth.

"If we know that one point in growth, for example, in Tunisia can provide 20,000 citizens with jobs on average in the year, this country has lost about 400,00 jobs over the last ten years," the minister said. Islamic finance represents an important opportunity to contribute to the financing needs of the Maghreb and assist it in establishing joint projects, according to Hussein Mohamed Al Meeza, Vice Chairman of Al Salam Bank in Algeria. He also pointed to the strength of Islamic banks during economic shocks and financial crises.

But the reality of Islamic banking does not seem to match this rosy image, as it faces serious challenges, according to CIBAFI Secretary-General Dr Ezzedine Khoja. He said Islamic finance must deal with the different schools of Islamic law, as well as the lack of international standards for Islamic financial institutions, such as the "Basel" standard, despite the existence of an accounting and auditing body at these institutions.

Most Islamic banks focus on finance rather than direct investment, with 75% of Islamic commercial bank assets invested in short-term products, and the proportion of long-term direct investment not exceeding 2%, according to Khoja.

Globalisation also poses a challenge with increasingly intense competition, as traditional Arab and foreign banks enter the Islamic investment market, in addition to the challenges in terms of keeping pace with changing technology.

The weak capacity of some Islamic banks to innovate, coupled with the lack of trained human resources, results in inability to manage liquidity with the required efficacy on the one hand and to reassure and attract customers on the other, explained Mohamed Habib Kchaou, Director-General of the Centre for Investment and Training in Islamic Finance (CAFI) in Tunisia. He added that CAFI plans to offer an Islamic banking degree next September.

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  1. Anonymous thumb

    chahed alimi 2013-4-17

    Is it possible to get a loan from Islamic banks in order to work abroad? Thank you very much! If possible, please give me necessary information.


  2. Anonymous thumb

    سندة 2011-11-28

    Is the executive office of Nour Islamic bank closed? Are there really Islamic banks in Tunisia? If they are, can you help me? I have been looking for some time for an Islamic bank. The only one I knew was Azaytouna bank but it was found out later that it was fake and that it was just a façade to hide the dirty acts of the in-laws of the ousted.


  3. Anonymous thumb

    Yidir 2011-7-30

    U know what's so funny?.....Decades ago we had lots of people talking about how socialist Islam is!....now its how capitalist Islam is!....Islam seems to fit in any mould.


  4. Anonymous thumb

    محمد خليف 2011-7-28

    We ask you to support these Islamic banks in all parts of the republic, explain their services to citizens and their interest rates in order to attract more people so that we will stay away from usury banks.


  5. Anonymous thumb

    Anonymous 2011-7-26

    The photo accompanying the article is quite convincing and proves that the Tunisian authorities are very serious with regards to their desire to make Tunisia an Islamic financial centre. It is not important that the state coffers are empty or that the provisional government has not managed to recover the money that Ben Ali and his family stole. As for the young people, who rightly despair, they do not know what to do but flee their country, which has not managed to offer them work. They prefer to risk their life at sea rather than wait for financing – whatever its origin – to come. They do not give care about the eggheads who tell them that Tunisian, a bankrupt country – is going to transform into an Islamic financial centre. This is because these eggheads are keeping quiet with regards to the attitude of the rich Saudi Arabia, which has kicked Tunisia right in the nose by protecting Ben Ali, who didn't have to show up there with his bags empty. Qatar is sheltering Nesrine, Ben Ali’s daughter, and her husband Sakher Materi, the champion of thieves. The Emirates are also sheltering the stolen Tunisian fortunes. But these are just unimportant details for our Minister of Finance. He gives us reassurance with a photo of two bearded men wearing turbans among others. They are not the same age. One symbolises a glorious past and the other a promising future. This is beautiful and it gives me confidence. We cannot find more convincing proof than that the heavens have chosen Tunisia to become the financial centre of the Muslim world. Once the situation stabilises and the country finds a new dictator to perpetuate the tradition of tyrannical government, Tunisia will see the womanisers and drunkards from the Gulf countries hurry to come here. We will laugh well.


  6. Anonymous thumb

    yidir 2011-7-26

    Islamic banking is maybe to biggest scam that there is. Money costs always money and banks are not going to work harder or became more correct if they can make easy money.And what is islamic banking anyway??!! lending without interest?!! is like selling without profit.That is no commerce.A bank is a commercial interprise that is always looking for a chance to take your money not a charity that loves u.This is just marketing for dummies....me i learned to distrust everything islamic or finacial...dirty tricks on dirty tricks.