As of 09/30/2022, Microfinance Institutions (MFI SA) have 508,587 active customers for a portfolio of approximately 1549.1 million dinars (MD), according to the microfinance barometer published by the Authority of Tunisian Microfinance Control (ACM) for the month of December 2022.
From this same angle, it is indicated that the amount of the average outstanding amount per active customer recorded an increase of 3.11% during the same period, going from 2,954 to 3,046 dinars.
Rates that do not comply with the law
According to the ACM’s 2021 annual report, the weighted average total effective rate (TEG) of microfinance institutions (Société Anonyme – SA and microcredit associations – AMC) IMF SA has experienced an upward trend over the past 4 years in rising to 32.86% at the end of the second half of 2021, thus recording an average annual growth rate of 2.1%. The average TEG of IMF SA reached 31.80% in the first half of 2022.
The consolidated net income of IMF SA reached 57 million TND on 31-12-2021 against 22.9 million TND a year earlier, thus recording an increase of 148.91%, according to the 2021 report of the ACM.
The exceptionally high level of interest rates charged by many MFIs raises several questions, particularly in light of the new provisions of the presidential decree published in the official journal of the Republic of Tunisia on October 21, 2022 imposing fines ranging from 30 to 100 thousand dinars to banks and financial institutions granting credit to their customers at an excessive interest rate.
The decree concerns any financing granted at an overall effective profit rate that exceeds, at the time it is granted, the average effective profit rate practiced during the previous half-year by banks and financial institutions authorized to carry out Islamic banking operations, d a margin which is fixed by decree according to the categories of funding and beneficiaries.
Microcredit widens the poverty gap
According to a note recently published by the Committee for the Abolition of Illegitimate Debt (CADTM) entitled “Illegitimate private debt in the South of the planet: the case of microcredit” which revealed that the “debt system” is hardening all over the world with several changes that have taken place over the past 40 years, mainly since the outbreak of the Third World debt crisis in the early 1980s.
From the 1980s, microcredit initiatives developed and from the start, governments and major international institutions supported the promotion of microcredit, indicates the CADTM and for good reason the stakes are high because the interest rates practiced in the microfinance sector oscillate between 25 and 50%.
According to data from the committee’s note, in 2019, the number of clients of microcredit institutions reached 140 million clients, 80% of them women, and a credit portfolio of 124 billion dollars worldwide. Among them, 65% of borrowers live in rural areas.
It is revealed, in this regard, that many empirical studies devoted to microcredit and many authors show that it does not really allow customers to structurally emerge from poverty because it plunges a large proportion of users into the indebtedness, or even over-indebtedness. It does not allow the development of enterprises in the formal sector.
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