In a bid to revitalize its entrepreneurial landscape and accelerate its transition to an information economy, Tunisia has embarked on a significant endeavor — the launch of the Startup Act 2.0. Building upon the successes and lessons from the original Startup Act, which was passed in 2018, the Tunisian government, led by Prime Minister Najla Bouden, recently held a crucial ministerial working session at the Government Palace in La Kasbah. During this meeting, senior government officials unanimously emphasized the pivotal importance of finalizing the definitive version of the new bill. Their goal is to align it with ongoing legislative initiatives and to provide a robust legal framework to bolster the country’s burgeoning startup ecosystem.

A Collaborative Approach to Legislative Renewal:

The meeting underscored the government’s strong commitment to the new Startup Act, recognizing its vital role in fostering the development of the entrepreneurial sector and driving innovation within the country. Aware of the urgency to empower startups with a solid legal foundation, the participants agreed to expedite the legislative process, signaling the government’s determination to enact the new Act efficiently.

The Startup Act 2.0 has been subject to thorough consultations with various stakeholders, including representatives from the Ministry of Communication Technologies, the Ministry of Economy, the Ministry of Vocational Training and Employment, the Ministry of Education and Scientific Research, startups themselves, and civil society components. This collaborative approach aims to incorporate diverse perspectives and ensure that the Act addresses the unique needs and challenges faced by the startup community.

read also Nigerian Fintech Traction Receives $6M Funding Boost to Expand Merchant Solutions

Learning from Past Experiences:

The original Startup Act, enacted in 2018, laid the foundation for Tunisia’s innovation ecosystem, contributing to the establishment of a stable platform for startups and aiding their market penetration. However, over the years, the Act exposed certain inefficiencies and challenges, some of which the proposed law intends to correct. They are summarized below: 

1. Addressing Financing Challenges: One of the most pressing issues faced by Tunisian start-ups is the lack of adequate financing options. Despite the success of the first Startup Act in fostering a stable ecosystem and market penetration, the funding gaps have become evident barriers to the growth and sustainability of many promising start-ups. The government aims to accelerate funding opportunities for these start-ups, making it a top priority for the new legislation.
   
2. Fostering Collaboration Between Start-ups and the State: While the initial Startup Act facilitated collaboration between the public and private sectors, there still exists untapped potential for closer cooperation between start-ups and the government. By encouraging start-ups to work more closely with the state, there is an opportunity to leverage their innovative solutions to improve public services and address societal challenges. The new Startup Act seeks to incentivize such partnerships.
   
3. Retaining Start-ups Locally: A significant concern for the Tunisian government is the trend of successful start-ups leaving the country in search of better funding opportunities and more supportive ecosystems. This “brain drain” not only affects the local entrepreneurial landscape but also hampers the country’s economic development. The new legislation aims to create an environment that encourages start-ups to remain in Tunisia by offering attractive incentives and support.
   
4. Adapting to a Changing Economic Landscape: The world is rapidly evolving, and the economic landscape is transforming due to technological advancements. To remain competitive and seize the opportunities presented by the digital era, Tunisia recognizes the importance of revising its Startup Act. The new version, Start-up Act 2.0, aims to be more adaptive and forward-looking, aligning itself with the country’s vision for 2035 and the transition to the information economy.
   
5. Overcoming Regulatory Challenges: The successful implementation of any legislation requires an efficient regulatory framework that allows for flexibility and agility in responding to evolving market dynamics. The Tunisian government acknowledges the need to improve the regulatory framework to facilitate innovation, remove bureaucratic hurdles, and create an environment conducive to start-up growth.
   
6. Building on Past Experiences: The initial Startup Act revealed valuable insights into the strengths and weaknesses of Tunisia’s innovation ecosystem. Learning from past experiences, the new legislation, Start-up Act 2.0, aims to build upon the collaborative spirit of its predecessor while addressing the identified shortcomings to create a more comprehensive and effective legal framework.

So far, the success of Tunisia’s initial Startup Act can be attributed to the collaboration between the public and private sectors. The involvement of Smart Capital, a privately managed company with public shareholding, in administering the Startup Act has proven beneficial in avoiding bureaucracy and inefficiencies that often plague government agencies in Africa. Smart Capital has been actively promoting Tunisian start-ups and planning various fund launches to support their growth.

Tunisia startup Act Tunisia startup Act

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

If the Tunisia Startup Act enabled the establishment of a stable ecosystem and market penetration, the second version of the Startup Act will seek to address the inadequacies that have been created as barriers to the growth of startups.

“In my opinion, the fact that the state helps start-ups by buying their products is more important than funding,” said Zouber Turki, president of the Collège des start-ups, during a webinar hosted by IACE on Wednesday, November 16, on the topic “What is the contribution of the start-up Act 2.0 law to entrepreneurship in Tunisia.” 

Three years after the Start-up Act went into effect, the speakers compiled an inventory of Tunisia’s start-up ecosystem during the online debate.

Read also Adamaius Capital Invests in Tunisia’s Power Brands to Create North-Africa’s FMCG Platform

They also returned to the difficulties that entrepreneurs encounter.

Turki, while praising the work of the College members, stated that financing is a major issue that Tunisian start-ups face. However, he believes that the latter may advertise their technology solutions and get money elsewhere. The formation of start-ups beyond the university gates should not be a source of anxiety for the university professor, especially when Tunisia continues to gain from their technical solutions and services.

Returning to the process that resulted in the adoption of the first version of the Startup Act, Wissem El Mekki, director of the digital economy at the Ministry of Communication Technologies, stated that the new regulatory framework was driven by young people who aspired to revolutionise traditional investment and pushed for the adoption of agile regulation for innovation. He also stated that three years is insufficient time to conduct a review of the Startup Act.

Read also Kenyan Agritech Firm Twiga Foods Turns To Agency Model, Fires 211 Staff

However, “the second version of the law will allow the administration to clarify its vision regarding the policies adopted in terms of innovation,” he believes. “It will also allow the administration to straighten the course, make corrections, and improve the regulatory framework capable of contributing to the development of the ecosystem and overcoming the shortcomings that stand in the way of the growth of start-ups.”

Accelerate Funding

According to Mohamed Salah Frad, president of the Tunisian Association of Capital Investors (Atic), the start-up Act law has enabled the establishment of a strong ecosystem and the penetration of the market, as seen by the large number of labelled start-ups (more than 700 start-ups). However, some flaws have revealed. These are primarily issues of financing and the implementation of the notion of the state start-up.

Frad urged for the acceleration of financing for the 700 branded start-ups in this regard, predicting that the finance needs would be roughly 70 million dinars. Concerning the State start-up, Atic’s president emphasised that the public buyer must be convinced of its position as a growth engine for these young startups looking for markets. Using the start-ups Ahmini and BeSoftware as examples, Frad stated that the state has been unable to capitalise on these innovative solutions to improve its services, emphasising that in the United States, it is the state that has provided impetus to the growth of technology.

Read also Cellulant Partners Solv Kenya on Digital Payment Services.

According to Oussama Messaoud, secretary general of the Tunisian start-ups association, the start-up Act has facilitated a paradigm change by fostering a dynamic and an environment of innovation and encouraging investors to take risks.

In light of the difficulties encountered by the administration and the banking system in applying the law (particularly for the special account in foreign currencies), Messaoud has called for the creation of new innovative financial products and mechanisms to attract investors interested in the Tunisian ecosystem. He also brought up the issue of start-ups that, once they reach a certain degree of development, are obliged to leave the nation in order to obtain funding and flourish.

Tunisia Startup Act Tunisia Startup Act

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh