Tunisia: The importance of improving the start-up environment is clear.

With job creation a priority, Tunisia is rolling out new advisory and financing mechanisms to increase support for entrepreneurs, inclunding entrepreneurship credit programmes and business incubators.
Donor support

Financial support for entrepreneurs in Tunisia is being made available through several channels. For example, the $1.2bn in loans announced by the World Bank in February 2014 to support economic and political reform in Tunisia included $100m earmarked for lending to small and medium-sized companies (SMEs).

The Overseas Private Investment Corporation of the US, meanwhile, has launched a $37.5m lending facility for Tunisian SMEs in partnership with several local banks, with a focus on the franchising sector. In a separate development, a local financial group, Microcred Tunisie, has pledged loans for entrepreneurs aged 18 to 35.

As Tunisia’s SME segment continues to develop, business confidence is as well rising. Walid Sultan Midani, founder and chief executive of gaming company Digitalmania, told media in February that today’s local entrepreneurship ecosystem is unrecognisable compared to five years ago. “Had you told me again that there would be incubators, accelerators and investors... I would have said ‘no way’.”

Incubate & accelerate

Several private incubators and accelerators have sprung up since 2010, with a mix of international backing.

France’s Réseau Entreprendre, an international network of entrepreneurs that support start-ups by providing mentoring and financing, founded its Tunisian branch in 2010.

Meanwhile, Lab’ESS, a self-style laboratory of social economy and solidarity, was created with the support of France’s Comptoir de L’Innovation and Groupe SOS, with funding from the French Development Agency. Lab’ESS currently oversees two programmes – the Bureau Association Conseil, founded in 2011 to provide professional mentoring and advisory services, and the incubator IMPACT, launched in 2013 and specialising in social entrepreneurship.

Tunisian entrepreneurs as well have access to world accelerator programmes like Yunus Social Business (YSB). Headquartered in Germany, YSB began operating in Tunisia in 2013 in partnership with the African Development Bank and currently offers a two-month accelerator programme to eligible start-ups.

Public initiatives, such as the National Business Incubator Network (Réseau National des Pépinières d’Entreprises, RNPE), are as well active in in Tunisia’s entrepreneurial scene. Founded in 2005 under the auspices of the Ministry of Industry, Energy and Mining, the RNPE offers coaching, consulting and financing, with 30 locations around the country.

Other supporting infrastructure, such as networking and co-working spaces, are by presently operating in Tunis, according to Houssem Aoudi, founder of TEDxCarthage and the co-working space Cogite.

Founded in 2013, Cogite was the initial co-working space in Tunisia, and has since expanded to two new sites. Jasmine Hall, an extra co-working space, opened in Tunis before this year.

Additional to do

However, as is the case in a lot of North African markets, much remains to be done in terms of offering start-ups the support they need, with a lack of available funding from local banks cited by a lot of as the majority pressing challenge.

Speaking to local media last year, Laurent Gonnet, the World Bank’s financial sector specialist in Tunisia, characterised the country’s commercial banks as “extremely cautious and risk averse”, particularly with respect to technology companies.

Their caution reflects regional trends. According to estimates from the International Finance Corporation, while SMEs make up the majority of businesses in the MENA region, they receive just 8% of total bank lending.

Entrepreneurs have as well highlighted the need for a additional conducive regulatory environment for start-ups. While Tunisia ranked 75th out of 189 nations in the World Bank’s new “Relieve of Doing Business” statement, it ranked 103rd in terms of the relieve of setting up a new business.

Last year’s decision to increase the cost of registering a business was seen as a step backwards by some. Ramzi el Fekih, a veteran of California’s Silicon Valley, who returned to Tunisia to set up Viamobile, a mobile banking and payments app, said it took him two years to obtain the green light for his company from the Central Bank of Tunisia.

Speaking at the Investment and Entrepreneurship Conference in Tunis, Penny Pritzker, US secretary of commerce said, “Streamlining, simplifying and clarifying the investment code will incentivise business formation, facilitate additional private sector increase and competition, and send a signal to local and world investors that Tunisia is open for business.”

Job creation

The importance of improving the start-up environment is clear. A difficult year marked by slower increase ­– following renewed security concerns and weaker tourist inflows – is taking its toll on Tunisia’s job market, with the country’s younger generation hit particularly hard.

Tunisia’s in general rate of unemployment presently stands at 15.2%, though joblessness amongst younger Tunisians has climbed to 40%. A recent study by the Ministry of Higher Education found that only 30,000 of the 70,000 students graduating from Tunisian universities each year are finding work.

Tunisia’s large diaspora could prove effective in helping bridge some of these gaps. While 1.1m Tunisians are thought to be working and living abroad – equivalent to around 10% of the country’s people ­– some are returning home to set up businesses, bringing with them their contacts and access to capital. Those that remain abroad send substantial remittances each time– around $2.3bn in 2012, according to the African Development Bank.