Tunisia - Societe Nationale d'Investissement Project

RESTRICTED Report No. P-480 FILE 'irPY This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION REPORT AND RECOMMENDATIONS OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS OF THE BANK AND THE BOARD OF THE IFC ON A PROPOSED LOAN TO AND AN INVESTMENT BY THE IFC IN THE SOCIETE NATIONALE D'INVESTISSEMENT IN TUNISIA April 22, 1966  REPORT AND PRECOIT1ENDATIONS OF THE PRESIDENT TO THE ZaECUTIVE DIRECTORS OF THE BANK AND THE BOARD OF DIRECTORS OF THE IFC ON A FROFOSED LOAN BY THE BAINK TO AIM INVESTIENT BY THE IFC IN THE SCCIETE NATIONALE D'INVESTISSEMENT IN TUNISIA 1. I submit the following report and recommendations on a proposed Bank loan, in an amount in various currencies equivalent to US$5 million, to and a proposed IFC investment of D 300,000 (about US$570,000) in shares of the Societe Nationale d'Investissement (SNI) in Tunisia. PART I - HISTORICAL 2. In late 1963, at the reauest of the Tunisian Government, IFC undertook to examine the prospective demand for long-term finance in the private sector of the Tunisian economy, the organization and oper- ations of institutions engaged in medium- and long-tern financing, and institutional changes desirable to meet more effectively the demand for such finance. A mission visited Tunisia in January/February 1964 and its report was submitted to the Government in the middle of the year. Central to its recommendations for improving the supply of long-term loan and equity capital for private industrial and other enterprises in Tunisia was the need to introduce more efficient institutional arranoements and, in particular, to replace or reorganize the Govern- ment-controlled Societe Nationale d'Investissement. After receiving these recommendations the Government embarked upon a reorganization of SNI into a privately-controlled development finance company, and in January 1965 requested IFC to assist in the reorganization and to participate in SNI's capital. After a further review in Tunisia, agreement was reached with the Government on a plan of reorganization which, if successfully completed, would make it possible to recommend an IFC investment in SNI's share capital and a Bank loan to SNI, and to seek other foreign institutional shareholders for SNI. 3. This reorganization was carried forward during 1965 and is now