Money transfers from Tunisians living abroad: an untapped goldmine
According to Chedly Ayari, Governor of the Central Bank of Tunisia (BCT), “Migrants are development stakeholders in their own right.” He reiterated this belief time and again at a workshop on migrant money transfers organized by the African Development Bank (AfDB), and held at the Central Bank in Tunis on June 19, 2013.
3.54 billion TND transferred to Tunisia in 2012
The figures speak for themselves. The Tunisian diaspora, which represents around 10% of Tunisia’s population, transferred 3.539 billion Tunisian dinars (TND) – the equivalent of US $2.282 billion – into the country in 2012, accounting for 5% of GDP. Despite the hardship endured by migrants during the economic crisis, this amount is substantially higher than the 2011 figure (2.822 billion TND – US $1.486 billion – or 4.3% of GDP), with incoming money transfers increasing by 25.4%. “This money accounted for 28.7% of all savings in the country’s banks in 2012, up from 25.4% in the previous year,” explained the Central Bank Governor, stressing the important role that these transfers play in reducing the nation’s deficit.
The excessive cost of sending money home
Chedly Ayari is determined to ensure that incoming money transfers from Tunisians Resident Abroad (TRA) have a greater impact on the country’s economy, especially in light of the economic turbulence that post-revolutionary Tunisia has experienced, and the country’s urgent need for cash flow. The Central Bank, supported by the recommendations of the report commissioned by AfDB and French Development Agency (AFD) and produced by the NGO Epargne Sans Frontière (Savings without borders), has therefore set itself two major goals: to drive down the costs associated with money transfers (TRAs pay an average of 13% of the total transfer value in fees), to introduce new financial products and services specifically for migrants, and to ensure that the money sent back by these migrants each year is put to better use.
Tunisia bans use of the exclusivity clause
In January 2013, Tunisia followed the example set by Senegal and Morocco when the Central Bank, at the request of the Secretary of State for Emigration, instructed the country’s banks to remove the exclusivity clause from their money transfer agreements. In other words, all banks operating in Tunisia are now required to offer more than one money transfer option, rather than the services of a single operator. This decision should help to boost competition, break the duopoly held by two of the world’s largest operators in Tunisia and, subsequently, drive down prices. “According to our calculations, a 50% reduction in fees would represent a saving of 2 billion euros,” explained Patrick Giraud, Lead Economist at the AfDB, on publication of the joint AfDB and ADF report.
The banking sector to the rescue
The same report, however, points out that the removal of the exclusivity clause is not sufficient on its own to drive down costs. Ayari wholeheartedly agrees with this observation. Tapping into the goldmine of money transfers from the Tunisian diaspora will require much greater effort. It would appear, however, that Tunisian banks, enticed by this potential goldmine, are finally prepared to step up to the challenge, provided that any regulatory obstacles are removed from their path.
According to Saïd Bourjij, co-author of the report, BIAT is the Tunisian bank that seems most willing to tackle this situation head-on. BIAT is not alone in this respect: several other institutions attended the AfDB workshop at the Central Bank in Tunis on June 19.
Another institution that may become a key player in the money transfer sector is the postal network, which has a significant national network of branches. Linked banking arrangements – whereby individuals can open accounts both in Tunisia and abroad with the same institution, or make bank transfers and transactions between their country of residence and country of origin through agreements between local and foreign banks – also represent an interesting avenue for exploration. According to Bourjij, only one Tunisian bank currently possesses a Schengen passport.
Hela Bousnina is the Head of Electronic Payment and Marketing at the Bank of Tunisia – one of Africa’s oldest banks, founded in 1884. –Bousnina also believes that linked banking can have a positive impact on money transfers. “Such arrangements will build closer relationships between local and foreign banks, which in turn will help to drive down fees,” she explains.
Innovative new banking and market mechanisms in the pipeline
The banking sector and regulatory bodies, such as the Central Bank of Tunisia, have other innovative ideas in the pipeline to help make money transfers easier. As well as linked banking arrangements, there are also plans to introduce “m-payment” and “m-banking” facilities in Tunisia, which would enable customers to access banking services on their mobile phones. “We've been working on these ideas with the banking sector since 2010,” explains Slim Hedi Chekili, Head of Strategy and Development at UBCI Groupe BNP Paribas.
“Almost all of Tunisia’s investment banks are working on these systems,” adds the Bank of Tunisia’s Hela Bousnina,. “Everyone realizes that m-banking is the future.” She also reveals that the Bank of Tunisia will introduce its own mobile money transfer service before the end of 2013.
Tunisia has also undertaken the fifth recommendation of the money transfer report commissioned by AfDB and AFD. At the June 19 workshop, Mohamed Bichiou, Head of the Tunis Stock Exchange, announced a set of new measures to extend the stock exchange promotional campaign launched last year to Tunisians Resident Abroad; create “dedicated funds to finance specific projects, such as infrastructure and development”; conduct so-called “tap” bond issues specifically for Tunisians resident abroad to “help unite [the diaspora] and strengthen their sense of belonging”; encourage Tunisian companies to float on foreign markets; and introduce special pricing mechanisms “similar to the arrangements for UCITSs” (i.e. a 50% reduction in commission on transactions).
The sheer scale of this programme reflects the vast amounts of money transferred by Tunisian migrants to their country of origin.