Focus on NEX-LABS Best Practices in Tunisia: collaboration with all the stakeholders fundamental for the growth of the Water-Energy-Food eco-system

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Image courtesy krakenimages via Unsplash

During the past months, NEX-LABS project partner countries have worked with an incredible commitment to defining a list of their country-specific best practices which are helpful to build a resilient, sustainable, and inclusive Mediterranean ecosystem for water, energy and food security. 

Best practices are a fundamental ingredient to building a catalogue which can be useful for policy building, as well as for improved local entrepreneurship and community resilience. 

The survey conducted in Tunisia, together with research papers, was helpful in defining six features of the country’s sustainable development in the nexus of water, energy and food: 

  1. Role of State
  2. Entrepreneurs and Startups
  3. Human Capital and Knowledge
  4. Infrastructure
  5. Non-governmental Organizations
  6. Legal Environment

 

1. Role of state

The survey demonstrated that more structural reforms for an egalitarian and inclusive society are crucial to support the country transitions towards a more sustainable economy. Critical areas of necessary governmental intervention are needed to improve the quality of education, regulate the market, ensure an adequate tax system able to promote business development, and work towards a decentralized system with important public investments as well as good governance. 

According to the OECD Economic Survey of Tunisia (April 2022) Tunisians are facing the worst crisis in a generation, as COVID-19 hit an economy that was already slowing down. Macroeconomic policy through fiscal stimulus and monetary easing limited the depth and severity of the recession, but the pandemic has exacerbated structural weaknesses, in particular low investment and job creation, high unemployment and informality, mismatch between skills demand and supply, and outward migration of high-skilled professionals. According to the OECD Tunisia Economic Forecast Summary (December 2021) Following a sharp 8.8% decline in 2020, GDP is projected to grow by around 3% a year until 2023.

A third COVID-19 wave and tighter containment measures during the summer penalised labour-intensive services such as tourism and high unemployment is damping private consumption. Investor confidence remains subdued due to political uncertainty, difficulties in financing the large fiscal deficit and little progress on structural reforms. However, the recovery in Tunisia’s main trading partners will boost merchandise exports and tourism will rebound following the containment of the COVID19 health crisis. In an interview the OECD Secretary-General said that “A stable political environment based on democracy and the rule of law is essential for Tunisia’s economic success.” And, that “Fostering political stability, concluding the institutional transition in Tunisia and consolidating the foundations of good governance and the rule of law would strengthen the recovery. The Survey recommends containing the public sector wage bill, reforming state-owned enterprises and the subsidy system, improving integrity and enhancing tax enforcement. Such measures would help to strengthen public finances while freeing up resources for much needed public investment in infrastructure, education and health. Reforms should aim at making better use of Tunisia’s skilled workforce and its proximity to Europe. Lowering barriers to domestic competition and international trade and reducing administrative burdens for firms and the tax burden on labour would foster business dynamism and formal job creation. Better adapting the content of vocational training and education to firms’ needs and strengthening employment services would help to reduce unemployment, which remains particularly high among youths. Tunisia is highly exposed to climate change on its Mediterranean coast and in its Southern desert regions. A sustainable recovery will require adapting its energy mix to fit with the Paris Agreement objectives, by increasing the share of solar power and other renewable. Attracting private investment in green infrastructure and technology will require removing obstacles to competition, including access to the electricity transmission and distribution network, simplifying administrative procedures and cutting import barriers for relevant equipment.”

Several government reforms have been deployed to address the public sector wage bill, the subsidy system:

  • New investment law in Tunisia
  • Public Private Partnership Tunisia 
  • Measures to Tackle the Informal Sector
  • Energy Transition Fund

 2. Innovation Spaces - Entrepreneurs and Startups

Besides the state, also privately owned institutions must support Tunisia’s economic development.  Tunisia so far has managed to create supporting programs for incubators and startups, promoting technological transfer of technologies, and the banking sector is developing a service for the financing of SMEs, start-ups and microfinance institutions. The following banks support SME:

  • BFPME (Banque de Financement des Petites et Moyennes Entreprises)
  • BTS (Banque Tunisienne de Solidarité)
  • Microfinance institutions
  • Venture capital investment companies

As reported on the IST-Africa website in 1999 Tunisia launched a national programme to establish business incubators within Higher Education Institutions supported by Ministry of Higher Education and Ministry of Industry. The first incubator started operations in 2011. There is now a network of 26 incubators across the country located in Higher Institutes of Technological Studies (ISET), engineering schools, research centres and science parks. Innovation Spaces in Tunisia are relatively recent and include WIKI Start Up , Reseau Entreprendre Tunis , Microsoft Innovation Center, Stanford Peace Innovation Lab , Elfabrika , Fablab ENIT , Tunis Fablab , Fablab Solidarity Youth Science Tunisia , IntilaQ , Flat6Labs Tunis, B@Labs , Cogite , Factory 619, COStart, EL Space. In addition to these, there are other initiatives and programs aimed at supporting entrepreneurship and innovation in the country, including accelerators, incubators, and funding schemes. By creating a supportive ecosystem for startups and entrepreneurs, Tunisia is well-positioned to drive innovation and economic growth in the coming years.

Other innovative spaces that are contributing to the start-ups and entrepreneurs support are the technology parks. El-Gazala is the first technology park in Tunisia and North Africa dedicated entirely to ICT and has hosted many high value-added start-ups and companies.

In addition to the El-Gazala technology park, 09 other technology parks are operational in Tunisia and cover several fields:

  • Borj Cédria: Plant biotechnology, renewable energy, environment
  • Sidi Thabet: Engineering applied to health & pharmaceutical industries
  • Sousse: Mechanical and electrical industries and IT
  • Sfax: Information and communication technologies
  • Monastir-El Fejja: Textiles and clothing
  • Bizerte: Food industry
  • Gafsa: Industrial & technological activities, services
  • Gabès: Environmental industry & environmental Technology
  • Manouba: Textiles and clothing
  • Médenine: Exploitation and enhancement of natural resources of the Sahara

In each technology park, five different areas are developed for production, research and development, technology and service transfer, training and shared facilities.

By promoting cross-fertilization between research, universities and industry and the establishment of private high-tech companies, they contribute to the development of new industries in the sectors concerned. The technology parks focus on high value-added, job-creating activities, thus supporting Tunisia's economic growth.

Tunisia has also fifteen cyberparks covering various specialties. The activities of cyberparks focus on the development of software, website maintenance and creation and services related to remote communication technologies (ICT) and call centres. These cyber parks also work as incubators for businesses operating in ICT.

Additional support structures that should be mentioned is the Espace Entreprendre of ANETI and the Centres d’Affaires “Business Centers”. These two-business creation support structures offers personalized counseling and support services to entrepreneurs, as well as training workshops and networking events. The goal is to help entrepreneurs develop solid business plans, find funding, and succeed in their projects. 

In addition to all the above according to GENOME world-leading policy advisory and research organization, with access to Europe, Africa, and the Middle East, as well as trade agreements with the EU and much of Africa and an increasingly educated workforce, Tunisia has much to offer entrepreneurs. The Tunisian government actively supports startups, with the Tunisia Startup Act of 2018 streamlining the process of starting and running a business here and providing a stipend for founders during the first year of activity. The act also established fast-tracking of international patents. Startup investment in Tunisia increased 31% between 2017 to 2021, totalling $38.2 million across 54 deals in the 2020-21 period. Startup Tunisia is a referral initiative that offers DEAL grants of up to TND 200,000 ($67,000) to assist with the launch of new startup support programs. The digital innovation hub The DOT opened in June 2021 with the mission to accelerate the digital transformation of Tunisian society, The DOT is the first hub for digital innovation in Tunisia, opened in January 2021 and the result of public and private partnership. It hosts 26 Partners’ support programs are involved in the Dot : Specialized incubators (health tech, ideation,..) accelerators, association of startups and entrepreneurs, etc. and a community which providing  peer-to-peer learning approach between startups ,corporates, investors, support programs, perks, public services creating this hub of knowledge, support, and connection.

2021 also saw the launch of 40 new startup support programs across the ecosystem, including incubators such as CoStarT, coworking spaces including Coworky and Hive12, and entrepreneurial training programs such as Foundup. Seed and early-stage VC firm Flat6Labs has increased its Tunisia-based Anava Seed Fund (ASF) from $3 million to $10 million. ASF was launched in 2017 in partnership with the Tunisian American Enterprise Fund, BIAT Bank, and Meninx Holding. Tunisia’s Expensya, a maker of expense-management software, raised a $20 million Series B in May 2021. Wattnow, a smart energy management solution, raised a $1.3 million pre-Series A in March 2022.

As mentioned above, significant efforts have been made by Startup Tunisia, they provide several services such as legal framework to startups, to creating funding opportunities through business angel networks, and also opportunities for venture capitalism (the full report is available at this link).

An interesting initiative which helps to close the gap between the educational system and entrepreneurship, or employment is Open Start Up (OST) an American based organisation open startup international is an organization that provides a platform for innovation and capacity building through entrepreneurial education and cross-cultural exchanges between the United States and startup ecosystems in emerging market such as Morocco, Tunisia, Jordan and Senegal. In Tunisa its partner is the DOT. 

The World Bank decided in 2022 to support gender equality opportunities. According to the World Bank blog (click HERE for the full version) dating March 2022 “More women are graduating from higher-level programs than ever before in Tunisia, and an impressive percentage of these women now focus on Information and Communications Technology (ICT) . In our research, we found that 61% of graduates of higher-level tech programs are women and 39% are men. Women in Tunisia also graduate from other STEM programs at remarkably high rates, from engineering and manufacturing to construction. Yet when it comes to employment, we see a different picture entirely- the trend of women’s higher participation dissipates. Overall, 31% of women and 19% of men are what we call NEET, Not in Employment, Education, or Training. In rural areas, 50% of young women and 33% of men live in this limbo, without jobs or training.  Startups can make a difference in Tunisia.  Women in particular face obstacles borrowing money and starting businesses, according to our research.(…) The World Bank is keen to support women and SMEs development. The 66.9 million euro Bank Innovative Startups and SME Project, which came into effect in 2020  and is expected to close in 2026, is supporting the government’s Startup Tunisia program, and targets startups and innovative SMEs with high growth potential while fostering the entrepreneurship ecosystem, such as venture capital funds, incubators, accelerators, and co-working spaces.(….) It aims to enhance the productivity and competitiveness of Tunisian startups and SMEs while supporting the inclusion of unemployed women and youth in lagging regions. (…) Government efforts through the project will focus on mobilizing additional investment through private sector funds that target innovative startups and will co-invest directly in innovative SMEs with private sector partners. To this end, the project recently launched a US$17 million SME funding vehicle to coinvest with private investors.  This Fund, called InnovaTech, focuses on investments in innovation and technology in digital media, renewable energy, agribusiness, ICT, media and e-commerce and in all technologies allowing digital transformation”.

 

3. Human Capital & Knowledge

The survey highlights the importance of skilled and well-trained human resources as well as an improved participation of women in the economic life. Tunisia needs to improve its educational system, as declared by the European Training Foundation, human capital is underutilised, disparities exist between Tunis and rural areas, and one in three are not in training or education.It is important to highlight the importance of the education system in Tunisia; number of students, number of faculties and institutes, research centres, training centres, and a focus on the importance of Tunisian human capital

“The Tunisian labour market is characterised by a low and slightly declining annual rate of the active population – 51.3% in 2019 versus 52.5% in 2015 for those aged 15 to 64 (Eurostat, 2020, p. 38) – but also a growing share of people with higher education degrees in the active population, especially females. Despite females' increasing levels of education, their labour market participation remains one of the lowest in the world. The employment rate for those aged 15+ is low, at 39.7% in 2019 (INS), with females, and especially young females, generally having fewer employment opportunities than males. Some changing trends are, however, evident: young females are more present on the labour market than their older peers. Also, the share of female labour market participants increases with their level of education. Employment rates of females with tertiary education are consistently higher than for those with a low level of education (but similar to those with medium-level qualifications). It is important that such trends are consolidated and that the higher female activity rates translate into more jobs for women and lower levels of female unemployment.”  In the EFT report there are several improvements which can be made to incentive VET (vocational education training) also helpful to ensure that services do not become the main sector for employment. 

As highlighted in Tunisia’s WEF Nexus report the country faces several challenges:

  • The rate of groundwater extraction in many aquifers is unsustainable. This problem is exacerbated by an inconsistent institutional framework to ensure the sustainability of groundwater use and unauthorised drilling for aquifer exploitation. 
  • Although the implementation of solar pumping irrigation systems encourages renewable energy use, there is a risk of increased groundwater overexploitation. 
  • Tunisia has a high energy balance deficit and electricity production is highly dependent on imported natural gas. The country seeks to achieve a renewable energy target of 30% of the electricity generation mix by 2030, with the diversification of the energy mix aiming to improve energy security. 
  • Agricultural production is very vulnerable to drought, especially in the northern regions, where 97% of the cereal crops are rain-fed. 
  • Energy demands are high for irrigation, water transfers, pumping from deep aquifers, desalination processes and wastewater treatment. 
  • Uncontrolled land use practices are contaminating aquifers in the country and inefficient agricultural techniques contribute to the overexploitation of water resources.

To tackle these challenges, the country has created throughout the year’s research centres in various activities such as water, energy, agriculture, horticulture. Some of them maybe found below:

4. Infrastructure

According to the World Bank, Tunisia has made significant investments in infrastructure, which has contributed to economic growth. The investments have enabled reasonably good access to basic infrastructure services. While access rates are high, the relative quality of Tunisia’s infrastructure has deteriorated significantly over the last ten years. State-owned enterprises (SOEs), which dominate the infrastructure sector, receive considerable subsidies and incur notable financial losses. Overall, there is a heavy reliance on external borrowing to fund infrastructure investment, which creates contingent liabilities, and enhances foreign exchange and macro-economic risk. It would be relevant to describe the infrastructure in Tunisia, airports, ports, deep water port project in Enfidha, roads, motorways, industrial zones.

The survey launched for NEX-LABS highlights to support a more sustainable WEF eco system the importance of investing in rural transport infrastructure. Government agencies and administrations need to focus on rural development. Important investments need to be made to support investments, and one aspect is to seize the opportunity of investing in solar energy. 

As concluded in an article by the Oxford Business Group where they outline all of Tunisia’s infrastructure performance “Improving the accessibility, efficiency and quality of transport services is crucial. Doing so will make the country’s broader socioeconomic goals – attracting greater investment, spurring job creation and mitigating deep-seated regional inequalities – more attainable. The sector possesses immense potential in air transport and logistics, given Tunisia’s natural advantage of geographic proximity to and heavy traffic to and from the EU. Policy changes, including reforms to the regulatory structure and increasing the private sector’s role through partnerships, will serve to encourage further investment.”

5. Collaboration with Non-governmental organisations

Tunisia is committed to supporting the UN2030 Agenda for sustainable development. According to the UN High-Level Political Forum on Sustainable Development, Tunisia is listed as a partner or lead entity in the Partnerships for SDGs online platform and is active in collaborating with several NGOS and this is helpful also to address its WEF eco-system challenges. Some examples include:

A profound list of NGOs working in Tunisia for topic specific issues may be found at this link https://arab.org/countries/tunisia/ (1014 Tunisian NGOs listed). Not only NGOs, but we can also find other international cooperation initiatives supported by bilateral affairs, one for example is AICS, an Italian governmental agency for International Cooperation: https://openaid.aics.gov.it/recipient-country/TN. Other programmes like GIZ, USAID also contribute to supporting Tunisia’s development.

6. Legal Environment

In conclusion, as mentioned throughout the article, certainly the legal environment creates the conditions for the country’s economic performance concerning:

  • Startup specific legal frameworks.
  • Developing digital economic regulations.
  • Improving regulatory frameworks for investments and job creation.
  • Dedicated legal framework for private and public partnership.
  • A law for crowdfunding projects.

Download the NEX-LABS Best Practices Booklet here

For further research on Tunisia, please consult:

 

Links for Tunisia reforms:

 

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