Tunisia's government works to develop the start-up ecosystem using new policies and incentives

The rise of Tunisia’s ICT sector forms part of the government’s drive to make science and technology the focus of its economic transformation, diversifying from traditional sectors such as tourism, manufacturing and agriculture. While government policies are organised under the sector’s national plan, Digital Tunisia 2020, the private sector is working to develop its ICT capabilities through the growing start-up scene, with new companies entering consumer banking, health, retail and business-to-business services.

Tunisia’s connections with Europe and its young and skilled workforce present opportunities to form a start-up ecosystem, particularly as the country is well positioned to use its low-cost base to become a major player in MENA. Sector players have already identified its regional advantage. “Compared to its neighbours, Tunisia has a good standard of education, ICT competency and physical infrastructure,” Selim Ferchiou, general manager of local mobile phone distribution company One Tech Mobile, told OBG. Therefore, effectively integrating entrepreneurs with well-defined public strategies and regulation could transform Tunisia into a leading digital economy within the MENA region.

Smart Tunisia

A key pillar of the Digital Tunisia 2020 plan, the Smart Tunisia national funding programme and initiative was launched in 2015, aiming to create 80,000 jobs by 2020 through a combination of offshoring, nearshoring and co-location public-private partnerships. The government allocated a total budget of around €500m to support the programme through incentives, and funding for local and international companies.

In addition, the government is collaborating with a larger pan-African project, the Smart Africa start-up investment fund, which was launched in February 2019. The fund is set to be supported by the country, allowing Tunisia to aid in the early stages of development of the continent’s technology business environment. The fund has an initial budget of €100m and is forecast to incubate both Tunisian and sub-Saharan start-ups.

Start-up Act

In 2018 the government also ratified a 20-point framework granting legal and financial incentives for designated early-stage ventures, known as the Start-up Act. The benefits introduced by the act include funding support, corporate tax exemption, government-sanctioned salaries for company founders and support in obtaining international patents. In addition, the act is the first legislation in the world to sanction a paid year-long leave period for aspiring entrepreneurs. The law also allows designated start-ups to set up foreign currency accounts, enabling new companies to operate both at home and abroad, which is becoming increasingly popular for digital service providers.

Companies eligible for these incentives are selected based on criteria such as age, size, turnover and capital ownership. As of June 2019 around 60 start-ups had benefitted from the legislation, including Medilsys, an IT systems provider for health care facilities; Enova Robotics, the first smart robot manufacturer in Africa; and Next Gen, a digital solutions provider for education and health. In June 2019 the World Bank agreed to lend $75m for the ongoing funding under the scheme.

Looking Ahead

Following the success of existing programmes and legislation, the development of infrastructure for tech start-ups appears set to continue over the medium term. Following a visit to France’s STATION F – the largest start-up campus in the world – Youssef Chahed, the prime minister, announced in February 2019 that the government hoped to replicate this by establishing a “STATION T” in Tunisia.

Furthermore, the Ministry of Communication Technologies and Digital Economy held the sixth meeting of the Strategic Council for Digital Economy in April 2019, chaired by Prime Minister Chahed. The council announced the launch of a roadmap for the rollout of cloud computing, along with a draft national plan to improve human resources in the digital sector. Additionally, the council praised the progress made so far by existing policies such as the Smart Tunisia project.