Tunisia Live - Mischa Benoit-Lavelle - Consumer culture grew rapidly during Ben Ali's reign -
Marriage can be an expensive affair in Tunisia. For Ahmed, a 40-something secretary who works in Tunis, the cost was too much for his salary to cover, and he was forced to resort to a 12,000 Tunisian dinar loan. Add to that 4,000 dinars of interest, and you arrive at a 16,000 dinar burden, which Ahmed now carries – the equivalent of two years pay at average wage for Tunisians.
That’s right: interest comprises a quarter of Ahmed’s loan.
Ahmed is far from alone. Over the last twenty years, more and more Tunisians have taken out loans for consumer purchases at rates of interest typically much higher than those available to consumers in the West. Additionally, nearly anything can be purchased through stores on credit: weddings, weekend family excursions, even the sheep to be sacrificed on the Muslim holiday of Eid al-Athaa. As prices continue to rise while salaries stagnate, personal debt becomes something of an inevitability.
“There are people who don’t receive any of their salary at the end of the month,” said Rebli Fedhila, director of technical assistance for consumer organizations at the National Institute of Consumer Affairs.
Officially there are only 668,000 individuals in debt in Tunisia, a country of over 10,000,000. However, ask any middle class Tunisian and they will probably know someone with debt problems. For them, as well as for experts in the field, the numbers provided by the government are almost certainly illusory.
“The [real] statistics weren’t accepted,” said Fadhila, who was a director at the Minister of Commerce and a member of the Administrative Council of the National Institute of Statistics before taking her current post. According to Fadhila, studies were indeed conducted on the issue of excess debt, but officials did not want to face the truth. “There was no political will to say, ‘we need to analyze [this problem].’ The officials, the ministers, said there isn’t any excessive debt.”
Qualifying Tunisians can buy almost any type of product on credit
For a nation eager to paint a picture of itself as an ‘economic miracle,’ and as a middle-class country in a region of poverty, revealing the level of consumption that was enabled through unsustainable debt would hardly be desirable. If the World Bank knew exactly how Tunisians were able to achieve the 80% home ownership and 20% car ownership statistics that Tunisian officials liked to brag about, they may have been less willing to supply billions of dollars in loans.
While waiting for reliable figures, the loans continue to flow.
“It’s a very profitable business,” stated Mohamed Zarouk, responsible for banking services and insurance at the Organization for the Defense of the Consumer, a Tunisian non-profit. Zarouk calls the prices at which banks are able to lend to consumers in Tunisia “exorbitant” and decried the lack of protection for debtors.
“It’s a question of relation of forces. Here, that relation is largely to the benefit of the banks,” said Zarouk. “Never will you find a customer negotiating with the bank. They just sign [the contract].”
The consumer debt revolution in Tunisia can trace its origins back, in part, to a store with close ties to the Ben Ali-Trabelsi clan. In 1998, the Tunisian superstore Batam, which specializes in the sale of household appliances, began allowing customers to make purchases of goods on credit, a practice that was at the time not regulated by any law. According to French-Tunisian news magazine Jeune Afrique, the easy money allowed for an explosive expansion of the store.
It also led to its bankruptcy in 2002. After the company was unable to pay a series of its own sizable debts, the government ordered a restructuring and placed the company under the management of a caretaker.
However, Batam soon re-opened its doors. In fact, there was probably never a real threat of permanent closure for a company that was acquired through political pressure in 1999 by Belhassen Trabelsi, the extravagantly rich brother of former first lady Leila Trabelsi. In any case, Batam’s business is alive again, and selling on credit is now practiced by nearly all large retailers in Tunisia.
The Tunisian appliance store Batam was the first to start offering sales on credit
Legally, consumer lending in Tunisia is no longer a free-for-all: laws passed around the turn of the millennium set out clear conditions for individuals to qualify for both consumer loans from the bank and purchases on credit at stores. Most importantly, the employer of the debtor must act as a guarantor for any loans.
However, thanks to the powerful collection techniques at their disposal, banks do not need to put as much faith in the solvency of their debtors as they do in Western nations. For bank loans, debt repayment takes place automatically, with the bank simply debiting the monthly amount owed from their customer’s account. Banks are thus guaranteed that as long as their customer has a dinar in his account, their loan will be repaid. For sales on credit, consumers often agree to give the creditor a check for the total amount of the purchase. If they are late on a payment, the company can cash the check. If the check bounces, the consumer may face criminal prosecution.
Nevertheless, employer requirements limit the portion of the population able to get loans for purchases. However, those unable to get credit legally do not simply go without. Instead they have recourse to what has become a booming extralegal industry in Tunisia: private loan sharks. According to Zarouk, the practice is widespread, particularly along Tunisia’s Sahel coast, and lenders are not necessarily career criminals but often legitimate businessmen looking for extra profits on the side.
“It’s people with a good deal of money who are looking to make their money grow,” said Zarouk.
Such loans are attached with astronomical interest rates, and, in cases of non-payment, obscure and non-legally-defined modes of collection.
Rebli Fedhila and the National Institute of Consumption are currently undertaking a study, the first reliable one of its kind, to determine the true extent of consumer debt problems in Tunisia. Fedhila hopes that with proper data, the government will feel the need to institute the proper legislation. Zarouk also feels the need for new legislation.
“To fight this problem, we need a whole battery of regulation,” said Zarouk. In addition to pushing for reform, he says the Organization for the Defense of the Consumer will lead educational campaigns for consumers looking to take out loans.
Ahmed, for his part, has taken on part-time work on nights and weekends to cover the cost of his loans, working a 7-day week to provide for his wife and three children. Even with the extra work, there have been moments when he was afraid he wouldn’t be able to provide for the needs of his family. In spite of everything, Ahmed remains stoic and does not regret having taken a loan.
“It’s an obligation. If I hadn’t done it, I wouldn’t have been able to get married; I wouldn’t have been able to build my own house. I just hope my situation gets better,” said Ahmed.