Tunisia Strengthens Startup Scene through ‘Startup Act’

Tunisia’s parliament has just voted to adopt a groundbreaking piece of legislation that will broaden and strengthen the country’s startup community. Other Arab states should take note.

While Tunisia is best known over recent years for successfully adopting a series of democratic reforms in the wake of the Arab Spring, and despite the political transition and compromises that landed the Tunisian National Dialogue Quartet the Nobel Peace Prize in 2015, the economy has faced significant challenges over the past years. Prime Minister Youssef Chahed, in power since 2016, has forged ahead with significant reforms intended to strengthen the Tunisian economy and secure hundreds of millions of dollars in IMF loans.

As part of these changes, local entrepreneurs had lobbied for changes to laws that had stifled their competitiveness, including currency controls, customs fees, an unclear legal framework, and lack of financial support from governmental institutions. The team also proposed initiatives to promote risk-taking and innovation among young Tunisians.

It took the team of entrepreneurs more than two years to put together the detailed proposed changes after painstakingly reviewing each law that they believed harmed the ability of startups to thrive. This resulted in a 20-point law approved by the government in April. Ultimately, the legal framework created by the Startup Act will support the creation, development, and internationalization of Tunisian startups.

Critical to their success was the support of key ministers. In February 2016, the then-minister of ICT, Noomane Fehri, decided to gather more than a hundred ecosystem players—entrepreneurs, investors, academics, and public servants—to discuss legal change to incentivize growth. At these meetings, participants suggested possible reforms and measures that would transform the ecosystem and remove the majority of the red tape that prohibited further and faster development. Out of the meetings, more than 100 ideas were tabled. A task force, comprised of more than 70 leading actors in the sector, began putting together a feasible plan.

This process was not without its challenges, however. In summer 2016, a government reshuffle impeded the necessary legislative process, pausing advancement of the movement. Bilel Bouraoui, a well-known serial entrepreneur, circulated a petition in order to ensure continuity; the community refused to lose the momentum they had built up through these conversations. Critically, the freshly appointed minister of ICT, Anouar Maarouf, heard the call and the Startup Act task force was back on track with a strong political support.

The ecosystem consistently showed support and pressured as needed all the way through December 2017, when a ministerial council approved the Startup Act and deferred to the assembly for a vote. The rest, as we now know, is history.

This is part of a broader movement across the region as the Fourth Industrial Revolution changes the way we relate to each other, the work we do, the way our economies work, and what it means to be human. In the Arab world, there is increasing urgency towards capitalizing on these changes by embracing the innovation of startups and entrepreneurs.

Last year, the World Economic Forum convened 100 of the Arab world’s top startups that are helping shape the so-called fourth industrial revolution. The WEF has also embarked on a new project called the Digital Arab World, that aims to convene a Digital Innovation Dialogue Series with the goal of ultimately creating a playbook for governments interested in promoting digital innovation through supporting and collaborating with digital entrepreneurs, startups and SMEs, with the input of all relevant stakeholders.

Tunisia’s Startup Act is notable not just for the important steps forward the country is taking to build a thriving entrepreneurship ecosystem, but also because this is the first time in the Arab region that startups have successfully lobbied policymakers to change the laws that affect them. Hopefully we will see similar success in other countries across the region.

About the writers:

Khaled Kteily, Lead, Middle East North Africa, World Economic Forum

Ali Mnif, Startup Act Task Force Member and Country Manager at Silatech