North Africa, West Asia

Tunisia's entrepreneurial spirit

Tunisia's startups are not the cure-all to the country's profound economic problems, but they're a step in the right direction.

Will Worley
31 May 2015

Tunisia entrepreneurship fair 2015. Adel Hedhili/Demotix. All rights reserved.

"Today we are building a new country, based on the youth and on startups and things like that. We need change, but when this change happens, we need investment. We need money, and we need time before money.”

Walid Sultan Midani is optimistic about Tunisia’s future. He proudly runs Digital Mania Studios, the first videogame developers in Tunisia. They create games and apps, including one commemorating the overthrow of former dictator Zine El Abidine Ben Ali.

Tunisia is well known as the cradle of the Arab Spring, but has gone mostly unnoticed to the rest of the world since the fall of Ben Ali in 2011.

The revolution was a call for civil rights and liberty, but it was strongly fuelled by resentment over corruption and the economy. Inequality, rising prices, and unemployment—many smart graduates struggled to find work—were strong factors driving the revolution.

The driving factors of the revolution are still significant issues today. Partly as a consequence, Tunisia is also home to a small but strong startup scene. Startups are small, often youthful entrepreneurial ventures, commonly (but not exclusively) associated with the tech sector.

Walid recalls recently discussing the subject with colleagues: “Five years ago when all of us tried to launch something, comparing it to the mapping of the [business] ecosystem today, it’s really awesome. Back then, if you needed to raise funds you had to talk with the state.”

Now, he says, there are all sorts of options, from venture capitalists to incubators. There is mutual support, workshops and regular gatherings of entrepreneurs, fostering a community.

Often, whenever attention is paid to Tunisia, its problems are described mainly in terms of Islamic fundamentalism. Clearly, this is not without reason. The Bardo Museum attacks in March were a bloody reminder of this threat.

It is also thought that over 3000 Tunisians have left the country to fight in Syria and Iraq, many for ISIS. It is a stark reminder of the possible dangers posed by the disillusionment of unemployment.

However, four years on from the 'Jasmine Revolution', some things have improved. Elections have taken place, and watchdog group Freedom House recently classified Tunisia as ‘free’.

“It’s been remarkable to watch people change, mentalities and approaches change” says Alia Mahmoud, who runs the Microsoft Innovation Centre (MIC) in Tunis. The MIC supports promising startups to gain a footing in Tunisia’s complex ecosystem.

Alia continues: “It’s been really interesting to witness the explosion in entrepreneurial initiatives since the Arab Spring, especially coming from civil society as it has become stronger.”

Despite this, corruption remains commonplace, with many believing that it has become worse since the revolution. Tunisia also has one of the most educated populations in the Maghreb, but many entrepreneurs believe that the universities are not teaching skills needed by the market.

As a result, many graduates remain unemployed. Many travel abroad to find work, reducing the country’s intellectual capital. Some of those who stay try to create a future for themselves by exploring entrepreneurialism.

In response to the needs of this developing democracy the Overseas Private Investment Corporation (OPIC), the US development finance institution, guaranteed $50 million in lending to fund Small and Medium Enterprises (SMEs) in Tunisia.

OPIC is lending through the economic development organisation Tunisian Credit Guarantee Facility, which in turn is working with Tunisian banks.

In March the US Secretary of Commerce, Penny Pritzker, led a delegation of diplomats at the Investment and Entrepreneurship Conference in Tunis. They met with high-powered Tunisian politicians and businesspeople. President Obama also addressed the meeting by video link.

Artisanal entrepreneur Leila Ben Gacem was invited to a conference workshop the day before the main event:

“I think they really wanted to understand what are our market penetration issues, our business growth issues, and I think they wanted to understand what hinders business from growth or sustainability, so that they understand where they should most sustainably invest the money they’re giving.”

While general awareness of the summit and its outcome was fairly low, Tunisian entrepreneurs are cautiously optimistic. Leila commented: “It’s great news. We are in need of such support…It depends how money will be given and managed but as an initial stage, I think it’s a step in the right direction.”

Leila does see potential benefits for the artisan industry that might emerge from the fund. The Tunisian Dinar has lost 50 percent of its value in the last few years, making it harder for craftspeople to buy good quality materials needed for their crafts. A rising black market has also flooded the market with cheap Chinese imports.

Leila believes the fund would help fight off this squeeze, and allow entrepreneurs to “structure themselves, improve their product, market themselves better, go to international markets, and position themselves above what is coming from China.”

Similarly, Soufiene Fantar, who runs artisanal startup Atelier Fantar, believes that while the money is fine for those who need it, he would rather see it being used to promote Tunisian products to the world. Despite running a young business, his most pressing need is for extra market visibility, in order to make further connections and clients.

Alia agrees that visibility is important. However, she also believes the agreement should be used as an opportunity to “more forcefully encourage banks to reform.”

She believes the banks in Tunisia remain overly conservative and disconnected from the modern economy, and have little regard for entrepreneurship. “What kills companies more than anything is time. The banks have no concept of ‘time is money.”

The deal came at a time when many Tunisians were hopeful about post revolution opportunities. “Tunisia today is a startup!” claims Walid. This is a sentiment not just echoed by those in business.

Ghaith Madsia, an activist with electoral observers iWatch, also thought that the future of Tunisia may lie with non-traditional solutions: “The youth could organise to create their own thing, not wait for the government to give them a job.”

This is particularly the case as citizens remain wary of the government despite the changes. Indeed, many current politicians are former stooges of the old regime. Startups are often promoted as a solution to the country’s economic woes, especially unemployment.

Despite being so involved in the scene, Leila puts it bluntly: “entrepreneurship is overrated as a solution for unemployment.” It’s good PR, and by placing the weight of responsibility on the private sector the government’s role in resolving the crisis is reduced. “It calms things down,” says Leila, “but I honestly don’t think it's sustainable.”

She points out that it is far cheaper for the government to provide funding for a startup in the short term, than to pay a career’s worth of wages for a public sector job. However, this is no guarantee of success. As with everywhere else, many startups fail and close within a few years.

The OPIC deal may inject vitality into Tunisia's economy, as it finds its feet and makes its way. But the underlying problems posing a threat to this new democracy are deeply rooted, and must be addressed with a proper strategy, and not used as a political football.

Yet in Tunisia, a country with freedoms that have been denied to many others of the Arab Spring, there is self-confidence and optimism. However, home grown entrepreneurship is not a magic bullet, it still faces numerous obstacles. But it exists, and its devotees use the language of hope for their work and for their country.

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