Can Tunisia become a hub for entrepreneurs?

Tunisia has struggled to meet popular demand for economic freedom since its protest movement ousted former President Zine El Abidine Ben Ali at the beginning of 2011, during the Arab Spring. Economic reform have been slow in coming, as has foreign investment, with unemployment stubbornly remaining at 15%, or twice that among the country’s youth.

“The scary number of unemployed ‘highly-educated’ youth is an illustration of the mismatch between reality and expectations,” argued clean-tech entrepreneur Hassine Labaied. “It is also proof of the inability or unwillingness of the newly graduated to start a business on their own.”

According to a 2014 World Bank report, the Tunisian economic environment still lacks what is needed to attract more investment. Extensive barriers deter start-ups from launching, while according to the report, market restrictions, outdated business regulations, and a poorly functioning financial system pose significant  all obstacles. In short, protectionism and monopolies continues to hamper productivity and innovation.

Yet, despite the hurdles there has been progress, argued Labaied. “The business environment has improved since the revolution,” he said. “The de-facto monopoly of the Ben Ali clan over the economic arena has been alleviated. It is now easier to start your business.”

In 2014, during a US trip, the then interim Tunisian Prime Minister Mehdi Jomaa described Tunisia as a “hub for investment”. But can Tunisia really become an investment hub?

According to Labaied, yes. “Tunisia has most of the ingredients,” he said, adding, “we are shaping a new business framework and re-thinking our development model.” He estimates it will take 3–5 years, “but we will make it happen.”

Houssem Aoudi, founder of TEDxCarthage and co-founder of the Tunisian social business co-working space, Cogite, agrees. “Tunisia has everything to succeed,” he told me when we met at one of the co-working spaces in Lac, a suburb of Tunis overlooking the waters of the Mediterranean. He said the entrepreneurship community is growing quickly—one of the reasons behind the success of Cogite. “We wanted to create an oasis to host this community.” Networking is key, he argues, the pillar behind the concept of Cogite (“you don’t just pay for the desk and the facilities,”) but also gain access to a large network of people from diverse backgrounds—everyone from young students to experienced entrepreneurs.

One of Cogite’s entrepreneurs is 29-year old Yosr Tammar, co-funder of NorAppWeb, a one-year-old tech company that is making apps. What’s the biggest obstacle facing Tunisian entrepreneurs today, I asked her. “The bureaucracy,” she said, “and financing.” Friends and family have supported her but at first, her mother was hesitant. “That’s a hobby,” she told her, “get a real job.” But after a couple of months she was persuaded, even proud.

Yosr’s co-founder is Norwegian and many of their clients are based in Norway, which is a huge advantage, Yosr argues. “It is not easy if you are limited to the Tunisian market.”

With ten years of entrepreneurship experience, Karim Jouini, CEO of tech start-up, PepinoTech, agrees. “You can’t grow in Tunisia,” he said, and highlighted how complicated it is accessing foreign currency, which locks you into the Tunisian market. In addition, it is hard to get access to venture capital. “It is hard to raise money,” Karim explained, and pointed to the complexity of getting your company assessed and valued, “It is close to impossible in the tech sector.”  He also highlighted the difficulty in finding skilled, motivated people because of the country’s high emigration rate.

Partnerships between local entrepreneurs and international funders are one solution, argues Labaied. This is what he did when he co-founded the clean-tech company, Saphon Energy. A platform matching local entrepreneurs with foreign investors is what was needed: “It is essential and feasible.” The platform should begin at a micro level and diffuse at a larger scale. “I saw it happen elsewhere; the Israeli, Taiwanese and Indian experiences are good case studies.”

Labaied believes that many Tunisians abroad would love to set up businesses in their home country and, at the same time, “many ‘local’ clever ideas are in gestational stage and lack the initial boost and the first couple of thousand dollars to start materializing.”

Solutions should come from outside the government and there shouldn’t be too much focus on government limitations, according to the owner of Tunisia’s first video game developer company. “I don’t believe that the solution is coming from the government,” said Walid Sultan Midani, founder and chief executive of Digitalmania. “The solution needs to come from the private sector.” Then the government will follow.

​According to Midani, there just isn’t time to wait for the government; things need to move fast if Tunisia is to be able to measure itself against other entrepreneurial hubs around the world. But the 31-year-old IT-entrepreneur is optimistic. “If you compare the ecosystem now with just five years ago, it is just unbelievable,” he said.

“Had you told me then that there would be incubators, accelerators and investors that really are in the entrepreneurship sector I would have said, ‘No, no way’.” Yet, encouragement and information are vital in order to get more Tunisians to dare starting their own business. The mentality is beginning to change, he said. “And it is moving fast.”

This post first appeared on The World Bank Voices and Views Blog. Publication does not imply endorsement of views by the World Economic Forum. 

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Author: Christine Petré is a partner and editor at the hugely popular young news site Your Middle East.

Image: The obelisk clock tower at the end of Tunis’ Bourguiba Avenue strikes noon. REUTERS/Zoubeir Souissi