Tunisia joins hands with the ICD to launch second Islamic VC fund

Tunisia’s Deposits and Consignments Fund is structuring a second Islamic venture capital (VC) fund in partnership with the Islamic Corporation for the Development of the Private Sector (ICD) in a drive to reduce unemployment by supporting export-driven SMEs. MARC ROUSSOT reports.

Protesting against growing inequality and unemployment, hundreds of Tunisians took to the streets in December last year in the governorate of Kasserine, one of the country’s poorest. The demonstrations ended with the death of a journalist who set himself on fire, almost eight years after a similar act of desperation triggered what would become the Jasmine Revolution.

To break the spiral and answer the people’s demand, the government introduced a number of measures in January and announced the future launch of a second Islamic VC fund called Theemar 2. The vehicle will finance the development of SMEs and foster the creation of new jobs, especially in the interior regions of the country like Tataouine, Kebili, Tozeur, Gafsa and Kasserine, where 21.1% to 32.4% of the population are unemployed.

Theemar 2 will be funded by the Deposits and Consignments Fund, the ICD and domestic financial institutions, with assets under management (AuM) expected to be to the tune of TND30–50 million (US$9.82-16.36 million).

The VC fund will be focusing on export-driven SMEs working in sectors like agriculture, manufacturing and health for instance, with a debt ratio below 33%. Three committees will meet regularly to discuss the fund’s overall strategy, investment opportunities and SMEs’ Shariah compliance eligibility.

The future launch of Theemar 2 follows the inception of a similar vehicle back in 2012 with almost identical objectives: investing in about 30 companies with promising growth and return prospects, and located in the interior regions of the country.

With TND50 million of AuM, Theemar — which means fruit in Arabic — has helped create 382 jobs in total and held a stake in nine SMEs as of December 2018, with investments amounting to TND21 million (US$6.87 million).

“Theemar 2 is the continuation of our first experience which revealed its effectiveness in funding SMEs, particularly those established in the interior regions, and fostering job creation while also promoting and popularizing Islamic finance. It has also diversified the industry’s offerings, which were limited to banking products,” shares Dr Boutheina Ben Yaghlane Ben Slimane, the managing director of the Deposits and Consignments Fund.

With the launch of Theemar 2, Tunisia’s government is showing its commitment to the development of Islamic finance and acknowledges its capacity to help achieve the herculean task of reducing the country’s 15.5% unemployment rate and bridge Tunisia’s SME financing gap of US$4.9 billion.

This article first appeared in IFN Volume 16 Issue 11 on the 20th of March 2019

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