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Why you should invest in Tunisia’s tech start-ups ecosystem  

Tunisian tech ecosystem for technology based start-ups are attracting the attention of global players in the entrepreneurship scene in recent years. Young Tunisians are taking matters into their own hands.

A sign in French and Arabic refers to the “Street of Entrepreneur.” Image credit: David Weekly via Flickr.

Talented, young university graduates are launching myriad startup companies, creating an impressive wave of civic entrepreneurship throughout the tiny country. Although there are no official figures available on the number of Tunisian startups, estimates suggest thousands of new companies have been formed over the last five years.

Science and technology are at the heart of this transformational economic change, and startups are its engine. Giving young, educated Tunisians access to a creative ecosystem, where their ideas could flourish, would create a paradigm shift in the Tunisian economy.

In the midst of this lengthy process, you get the feeling that you are going around in circles. Creating a startup isn’t cheap either as, between accounting and registration fees, the cost can reach 10,000 Tunisian dinars (about $4,300).

ENTREPRENEURSHIP AS SOLUTION?

The economic landscape in Kasserine raises pointed questions about the limits and promises of entrepreneurship training as a tool for economic growth in Tunisia and beyond. At the same time, failure to take account of Tunisia’s history and context can encourage orientalist tropes of the region as stubbornly undeveloped, unstable or needing x or y development strategy. That’s why it’s critical to delve into the particularities at play.

First, unemployment’s suffocating effect on the young is not unique to Kasserine, or to Tunisia. It is a challenge shared by countries throughout the Middle East and North Africa (MENA), whose youth bulge is well-documented.

Second, entrepreneurship has been heralded as a solution to this population shift. Just a week before the Kasserine article, a Devex article asserted that entrepreneurship could help drive Middle East revitalization. And a new report from the Atlantic Council argues that creating entrepreneurial culture is the only viable economic strategy for the MENA region. Entrepreneurial development training is seen as offering an opportunity to harness the region’s human resources and diversify its oil-dependent economies.

Third, however, Tunisia has received government-funded entrepreneurship training. To further complicate the picture, the Times article notes that many of those unemployed already hold advanced degrees. From abroad, USAID has launched a variety of measures to support SME growth. Yet in spite of efforts to create jobs through training, there remain obstacles to growth that training alone has not removed.

ENVIRONMENTAL FACTORS

The issue, some experts suggest, lies neither with entrepreneurship per se, nor efforts to instill it through training, but rather the environment in which it is practiced. Ask anyone who tries to grow their own food: climate and soil quality matter. It’s not enough to laud the idea of entrepreneurship if there’s a failure to nurture an entrepreneurship-friendly ecosystem.

The Atlantic Council asserts that for entrepreneurship to succeed in the MENA region, the youth segment must be integrated into new, tech-enabled industries. The Arab Spring and today’s protests signal that we’ve entered what its authors call the

“Participation Revolution,” a rising generation’s demand for roles and use of tools to build their own futures. This cohort, come of age in an economic pressure-cooker, is ready for innovation and hungry for opportunity  ideal candidates to launch a start-up-friendly culture. (Or, as we’ve seen, to protest unmet needs.)

Youth participation makes sense, but why the focus on technology? The argument is that tech midwifes entrepreneurship, even in industries not directly tech-related; and entrepreneurship midwifes growth. Enabling entrepreneurs technologically, therefore, will result in much more than tech start-ups, for entrepreneurs drive economic regeneration and create employment.

“What is good for start-ups,” the report concludes, “is good for the economy as a whole.”

Not all will accept technology-based, private-sector solutions uncritically. For one, the exhortation to embrace technology, when coming from a U.S.-based advisory group, may sound like a call to “develop” according to a Western paradigm. Anticipating this rebuttal, the report notes that the Internet is, statistically speaking, already in the hands of the people; its utility was proven in the Arab Spring. The Participation Revolution is here; now it is simply a matter of how proactively actors private and public harness its potential for economy-building activities. In this view, a move toward tech-based private enterprise is irreversible. But how efficiently various players adopt it in the face of the enormous economic challenges besetting a generation, is an open question with profound costs.

The more significant challenges to private-sector growth are political. The Times’ article highlights the ineffectiveness of training programs to promote private-sector growth apart from larger public interventions. Even government backing for training programs can come up short when government rules, banking practices and legal culture do not encourage initiative and risk-taking. Lacking longevity and public trust, the temporary government of the past three years has offered only short-term solutions. With a more stable government, some believe that today there is enough pressure on policy-makers to make reforms such as simplifying regulations, building sound competition policy and incentivizing innovation.

A MULTIFACETED APPROACH

Human capital development is clearly important. Mowgli Mentoring, an organization that works with SME owners across the MENA region, hails mentoring as a driver of economic growth; it reports an astounding 890 percent return on investment both through safeguarding existing jobs and creating new ones. But the example of Tunisia suggests the workforce of tomorrow, even if expertly trained, won’t be successful apart from a functioning ecosystem.

Secure Drive Company, for example, was founded in 2015, and offers automatic reporting and assistance for car accidents that happen in remote areas. Response time by authorities for accidents in rural areas is often long, but with Secure Drive’s app, users can signal for help more easily.

The startup E-Taxi also has gained significant popularity over the last year. The app works similarly to Uber, where users can look for and call cabs to pick them up at any given location.

Flat6Labs, for example, which has hubs from Tunis to Beirut and Bahrain, provides technology companies with seed capital and mentorship.

Through their coaching programme, the accelerator recently offered 8 places to some of the 400 tech start-up hopefuls that pitched ideas to them.

Young Tunisians are increasingly interested in entrepreneurship

Yehia Noury, managing director of the Flat6Labs, believes the start-up environment in Tunisia has expanded significantly over the past two years.

“There are a lot of innovations, smart young people who are working towards building creative, innovative solutions to everyday problems,” she told Euronews. “We were at around 50 start-ups when we first started, we’re now at 600 to 700.”

Bechir Afifi, who took part in the accelerator’s competition, is the co-founder of Fabskill, a tech-smart recruitment company.

Since launching eight months ago, Afifi’s software has been used to recruit candidates for five international firms.

Believing that Tunisia’s future lies in the digital and the IT sector, Afifi argues that highly educated people should be encouraged to develop their ideas in their homeland, rather than search for opportunities abroad.

“If we can give them the right ecosystem here, if they can work on cutting edge tech – and more challenging things – they can create something awesome,” he told Euronews.

ARTIFICIAL INTELLIGENCE GAINS MOMENTUM

 

AI is a field that many entrepreneurs are investing in

Thus, it’s perhaps no surprise that Tunisian Afifi is not the only entrepreneur to jump on the AI bandwagon.

Zohar Slim, the co-founder of one of Tunisia’s leading AI companies, was fixing computers in a call center before pursuing her tech start-up.

Founded in 2014, InstaDeep creates Artificial Intelligence systems that optimise decision-making processes in real-life industrial environments.With 60 staff members across its European and African offices, InstaDeep delivers its products digitally.

Digital delivery of software is a preference of many tech companies

“Technology is the sweet spot, because we have issues in Africa and the Middle East with importing and exporting goods,” she explains. “It’s always a hassle, you have to wait.”

Slim adds that with software, trade is a lot faster than with other products:

“You just send it, there’s no limits. In Tunisia, we don’t have the big oil reserves, [but] we have our brains.”

BUREAUCRACY STUNTING INNOVATION

Walid Sultan Midani launched Digital Mania, an independent gaming company, eight years ago. The firm, which is expanding into creating games for Virtual Reality, has 128 games produced so far.

Virtual Reality is a top trend in the tech industry When asked

When asked what is stifling start-up growth in Tunisia, Midani says that too much bureaucracy is to blame.

He adds that although people are pushed to launch start-ups in the country, they are not equipped with the same resources or tools as elsewhere in the world.

Last year, the Tunisian government launched The Start-Up Act, a series of policies and reforms to develop the country’s entrepreneurial and tech ecosystem.

Despite these efforts, businesses like InstaDeep and Digital Mania have had to move their headquarters to Europe in order to expand and bypass red tape.

“There is much talent here, but the barriers are just frustrating,” says Midani. “Just open the door and let the flow go, and you will see in two years something magnificent will happen here.”

Proliferation of startup incubators

Startup incubators have greatly contributed to the success of young companies in Tunisia by helping early seed companies gain the capital and training they need to push their companies into the market. Startup incubators like the Founder Institute and Boost offer funding, professional training sessions and mentorship programs for young, small companies looking to expand their ideas and improve efficiency.

Educational programs on business and investment strategy have proved immensely useful for young entrepreneurs, as well. One example includes the Regional Development General Commission’s Integrated Development Program, which aims to collect feedback from local actors and beneficiaries on priority projects, target locations and best options moving forward.

 

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