When you leave the capital of Tunisia and its brand new cluster of coworking spaces, the rest of the country is like a new field to explore when it comes to feeling the entrepreneurship pulse.
Outside of Tunis, you can meet IT startups as well as social businesses in agriculture, computers, factory equipment, fashion or even virtual reality. They all have a common concern: the disadvantage of not being in Tunis.
Entrepreneurs from cities like Sousse on the coast, or Sfax, the economic hub, have been trying to build an ecosystem on their own, but had to face various difficulties as they are away from the capital.
Others cities, such as Mahdia, a touristic destination, or Kasserine and Sidi Bouzid renowned as agriculture destinations, are also struggling to find a business model that would be adapted to the lack of public facilities or networking spaces.
Wamda met with several entrepreneurs and key players of those regions to better understand how this new ecosystem is trying to grow outside of Tunis and how it is becoming a part of the diverse Tunisian entrepreneurial scene.
According to numbers from the Biat Foundation in Tunis which has been trying to map the startups in Tunisia, Mahdia has six established corporates and one startup, Sfax has 14 corporates and five startups, whereas Sidi Bouzid has nine corporates and one startup. Kasserine has no startup because it is more into the development of small businesses.
Besides underdeveloped infrastructure, remote areas are dealing with relatively high youth unemployment rates. In Mahdia 21 percent of the youth above 15 are unemployed according to the 2014 figures of the National Institute of the Statistics report. In Sfax, it is up to 17 percent and in Kasserine, it reaches 35 percent. However, these rates, remain a little lower than the national unemployment rate, which stands at almost 36 percent according to World Bank figures. The Tunisian government is, however, trying to implement a new culture of entrepreneurship through Innajim, a campaign that aims at simplifying the process of starting up a business for young people in remote areas like Siliana, Gabes, Sidi Bouzid and others.
Sfax, the regional hub that could be more
In Sfax, 270 kilometers away from Tunis, two places welcome entrepreneurs: Intilaq, an incubator that opened in 2014 which also funds startups, and the ‘Technopole’, which are office spaces financially subsidized by the government, that help entrepreneurs rent offices once they kick-off their businesses. More than 83 percent of industrial firms are located on the country’s coast, with nearly 40 percent of these located in either the Tunis governorate or the Sfax governorate, which accentuates Sfax’ attempts to encourage youngsters to create new businesses.
However, “it is difficult to innovate and to create a startup in Sfax because people are very pragmatic here. They would advise you to invest your time and money in less risky businesses that will bring revenues. They don’t see venturing in an IT startup as a business which would generate income,” Mahdi Njim an entrepreneur from Sfax told Wamda. He explained that starting up a business in Sfax is mainstream, as the economy is driven by family businesses, and venturing in a project is a classic channel to earn money, but there is a lack of innovation.
Njim had started several ventures before joining Flexwork, a startup that offers a platform to easy software development. According to him, establishing the business in Sfax, and finding investors there, was troublesome. What makes his new startup, Flexwork, different is the fact that it is “a Turkish and German startup, [which] focuses on international markets to avoid facing these troubles,” he added.
Prior to the kick-off of the activities of the Technopole and Intilaq, two and a half years ago, there was no entrepreneurial ecosystem in Sfax, so all this is quite new for aspiring entrepreneurs.
Some others are more optimistic, driven by the ‘unexplored opportunities’ the city may bring, low competition, in addition to the available low-cost resources and raw material.
Mohamed Kharrat founded Compi Technology in 2015, a company that develops electronic products and IoT. He started his venture in 2013 in Tokyo, Japan, and then moved it to Sfax to debut a business in his home country. “Here, logistics and the cost to run businesses are four times less expensive than in Japan, so it is very good when you are just starting a business,” he said.
Walid Chebbi started his business, TDS (Tunisian Development Systems) in 2006. It was the first startup to settle in the Technopole. His idea was to manufacture in Tunisia mockups that industrial engineering students use instead of importing them. He had no rivals. He started with the money he got from selling his car, 10,000 Tunisian Dinars (US$ 4,000), and progressively built his network of clients with requests from universities and schools. He was an engineer in electronics and had no idea about how to be an entrepreneur. “I wasted a lot of time when I started ten years ago because I did not know anything and I could not ask anyone,” he said.
In 2015, he gained visibility by manufacturing more equipment for the public sector. He is now exporting to Africa and Lebanon and raised $200,000 with Intilaq fund. Despite the economic crisis of the country, he is now profitable, and earned 400,000 dinars ($162,000) of profits in 2016. “The good thing in Sfax is that we have cheap raw material and there already is an industrial ecosystem. Thus, why not building an entrepreneurial one as well. The city has also an airport which could make it more international,” he said.
“But we are still considered as established firms or companies [which do not need any fund or VC assistance], and not as startups. When we want to attend workshops or conferences about startups, we still have to go to Tunis,” Chebbi concluded, referring to the availability of spaces, mentors, and workshops dedicated to companies with a similar status in Tunis.
The last issue is that when you finally kick-off your startup in Sfax, you will also have to face the challenge of brain drain, according to Njim. “I still have a hard time hiring people because the best workers in software engineering already left the country,” Njim said.
Others, had a different point of view regarding that subject. Kharrat for instance believes that there’s a higher employees turnover in Tunis than in Sfax, which brings better hiring opportunities in this city. “Here [in Sfax], you can always find someone who is attached to his roots and won’t go far from his family,” he nuanced.
Mahdia, a hub for social business
Not far from Sfax, the city of Mahdia, which is known for fishing, is also struggling to build an ecosystem of entrepreneurs with what the city can give: people with ideas and a desire to have an impact.
Asma Mansour, the president of the Tunisian Center for Social Entrepreneurship started the initiative of Lingare spaces two years ago, to bring awareness in regions where there was a high unemployment rate but opportunities for social businesses. “We started talking with young people, potential investors, and students. We saw that the first issue they faced was a lack of space to meet and start with an idea,” Mansour told Wamda.
“Our main goal was to ease the process for the youth who wanted to start a business and tap the market. There are no plenty opportunities and they are not very diverse,” added Mohamed Ghachem, the project coordinator. “Mahdia is quite secluded and is not really connected to Tunis either,” he said.
The other objective of the Lingare space was to help aspiring entrepreneurs to build sustainable businesses.
“Sometimes, we have to repair the damage that has been done by the ANETI (National Agency for Employment and Independent Work) and the banks who encouraged entrepreneurs to take loans without a very solid business plan,” said Mansour. Instead of forcing entrepreneurs to borrow money to start their businesses, the Lingare initiative focused on helping them to develop their business through bootstrapping.
Ali Sakka and Hicham Mnassar, members of Pensée Nationale Libre (Free National Thought, an asssociation that promoves citzenship and culture) founded Sociordi with other members of the association and the support of the Lingare spaces program. What was in 2014, an association of engineers willing to repair old computers to offer them to children, gradually became a social business. “With the help of the Tunisian Center for Social Entrepreneurship, we started growing bigger, and tried to contact firms, companies, and even the public sector to collect old computers and repair them,” said Mnassar.
They had to start small because they did not have access to funds or grants. According to Sakka, Mahdia, despite its unemployment rate, is not a priority compared to other regions, which held them back from accessing to finance.
The founders, which now repair around 30 computers per month, are trying to build a sustainable business model by adding children coding classes to their initial services. “The computers we repair are mostly for children because we install easy softwares on the most damaged ones and they could be mostly used by kids,” Mnassar said.
The project also managed to get a 30,000 dinars ($12,000) financial sponsorship from the French Institute in Tunisia for 18 months. “We could base our business model on sponsorships since our goal is mainly to reinvest in what we do, and not profit from it,” Mnassar said.
The Tunisian Center for Social Entrepreneurship (TCSE ) partnered with Mobnet, a mobility project financed by the European Union to encourage Tunisian and Moroccan entrepreneurs to do exchange programs with Italian and French entrepreneurs. This project aims at enabling Tunisian entrepreneurs to benefit from the background of a more experienced entrepreneur and to see how it works in another country.
“The unemployed youth of Mahdia sometimes lack computers to start their project or to send an email. They also cannot access information which is concentrated in Tunis. Thus, they don’t have the tools to become entrepreneurs in the first place,” Ahmani Rahmani in charge of the Mobnet project said.
However, if entrepreneurs in Sfax and Mahdia are already struggling to get more into the light of business angels and investors, these obstacles are doubled in even more remote areas such as Sidi Bouzid and Kasserine where there are even fewer resources, which makes it even harder for an entrepreneur.
“The good thing about Kasserine is that people want to stay here, they don’t always want to leave, because they have their roots in the region so if they manage to create a successful business for the region, it could work,” said Walid Abaidi who is in charge of the Lingare space in Kasserine. He and the TCSE are still struggling to select potential entrepreneurs because of the lack of culture around what is really a startup. “I would say the main challenge is the skills to start a business. Then the lack of trust. People have difficult times to work together and we can observe this in Kasserine more than Mahdia or Sidi Bouzid,” said Mansour.
Though difficulties are not always easy to face, these examples show how Tunisians in remote areas are trying to become entrepreneurs within an early stage ecosystem. Most mentors and projects managers are aware about the need to open up to the regions. Flat6labs, the regional accelerator with its new Tunis-based address, has chosen to be close to the train station to allow startups coming from the regions to be part of the program.
Forty percent of the startups that applied to the acceleration program where from the regions, and only one, from Sousse, was selected to be part of the new batch. Intilaq also dispatched incubation spaces outside of Tunis to target the new concepts that could emerge from the outskirts of the city. The entrepreneurial decentralization process is in action and is progressing in Tunisia.