To expand to foreign countries as a startup in Tunisia, you have to pass through the eye of a needle. Don’t be confused, the country’s Startup Act is a deal-breaker; it offers a range of uncommon incentives to startups: a monetary grant, which could allow startup founders and all those who are shareholders in a labelled startup to cover their living expenses for one year; an incentive on the cost of patent registration whether in Tunisia or in other offshore countries; a good fail strategy which entitles startups to pull funds from the Tunisian Startups Guarantee Fund if they experience financial turbulence, among others.
But the Startup Act does not give one thing, at least in practice. In Tunisia, transactions in currencies other than the country’s dinar are generally disallowed by the country’s central bank (BCT). In fact, credit and debit cards cannot be used for purchases on foreign commercial internet sites and most Tunisian banks only allow account holders to use bank-affiliated credit and debit cards to make domestic online purchases denominated in dinars.
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Now, although the Startup Act, by its terms, currently allows startups to open a special foreign currency account which they can freely fund with contributions of capital, turnover and dividends in foreign currency, it is easier for a camel to pass through the eye of a needle than for a startup to be approved to have access to a foreign currency account.
“Going international for a Tunisian [startup] is almost impossible,” says Yahya Bouhlel, GoMyCode’s co-founder. “To settle elsewhere, you need currencies. The startup label gives us the right to a foreign currency account, but to have them, you have to go through the BCT and wait for months.”
How Did GoMyCode Circumvent This?
To beat this system, the Tunisian edtech startup that teaches coding skills to learners and which is now present in Nigeria, Algeria, Morocco, Egypt, Senegal, Bahrain and Cote d’ivoire had to do one thing: first headquarter abroad, and not in Tunisia.
It therefore, strategically chose to set up its headquarters in The Netherlands where everything is digitized and investors are not afraid to finance startups.
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However, the choice of The Netherlands was particularly informed by the fact that the country is welcoming to international business owners and does not discriminate against businesses with a foreign headquarters. Consequently, foreign companies are allowed to own 100% of the stock of (most) Dutch companies. This fact is important because sometimes, it is impossible to own shares (by law) in companies based internationally if you are not resident in any of the countries of choice.
But perhaps, the single most significant point here, that still enabled GoMyCode to retain its Tunisian nationality (or pride itself as a Tunisian startup), is that the Tunisian Companies Law allows entrepreneurs to set up branches of their foreign companies in Tunisia, provided that the branch must appoint at least one director of any nationality during the registration process with the Tunisia Trade Registry in order to conduct any commercial activity in the North African country.
Having done that, GoMyCode proceeded to raise funds abroad, from Dubai, United Kingdom and France, where investors could invest in euros, and not just dinar.
“The business model of the startup requires strong responsiveness from the administration and speed in everything related to paperwork and authorizations. To our great misfortune, this is not the case. We suddenly realize that our officials are not imbued with the startup philosophy. For a Tunisian company to set up in Egypt, Morocco or Nigeria, you have to go through 4 ministries and a multitude of administrations, and the same in the host countries,” Bouhlel says.
If GoMyCode had not pushed beyond its limits despite the tough regulatory turf, it would have been worse off for it.
Today, the startup’s first $850k fundraiser has enabled it to acquire a space in Tunis, Tunisia’s Capital, and to open branches in Algiers (Algeria), Casablanca (Morocco), Lagos (Nigeria), Dakar (Senegal), Abidjan (Cote d’ivoire), Cairo (Egypt) and Manama (Bahrain). It also currently employs 85 full-time people and 150 part-time trainers. Its growth rate is 4 to 5 times higher from one year to the next, and Yahya Bouhlel aims to open 100 spaces to train 50,000 students per year in 15 countries. (It is looking to raise another funding round for interested investors.)
Read also: What Difference Have Startup Acts Made In African Countries Where They Exist?
GoMyCode Is Not Alone; There Are Other Tunisian Startups
Joining GoMyCode in lamenting about the difficulties in internationalization as a Tunisian startup is a fellow country firm Next Gen, which got funded barely two months ago by MAXULA Gestion, manager of the startup fund STARTUP MAXULA SEED FUND.
“The startup label does not allow us to convert our national currency; we had to generate money in foreign currency. So we managed to find a currency fund and we found it in the Sultanate of Oman,” said Moez Lachneb, CEO of NextGen.
But it looked like a miracle for NextGen. It got a US$100,000 grant from the Oman Technology Fund (OTF), an investment fund specializing in supporting innovative national and international startups. Using the grant, the startup opened a foreign currency account, and then from there launched into the neighboring Morocco. It is also planning to open its second branch in Muscat in the Sultanate of Oman soon.
foreign startup expand Tunisia foreign startup expand Tunisia
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer