Tunisia was never known as a digital hub – till recently. A development that did not mushroom by chance. The country introduced new incentives to kickstart the innovative industry as an area that can contribute to economic empowerment and job creation.
Origins of the ‘Startup Act’
For a significant part of the past decade, Tunisia has been mired with civil unrest instigated by socio-political and economic factors. On the back on slow economic growth, the rate of unemployed is also discouraging. Many young Tunisians are creating tech and non-tech solutions to earn a living while improving their way of life. The growth of regional accelerator schemes is fostering the culture of SMEs and entrepreneurship.
The Startup Act
The official website defines it as a legal framework dedicated to startups and supported by the Tunisian government. The initiative was supported by the Ministry of ICT alongside other stakeholders in the
Tunisia was the first African country to pass a Start-up Act which was passed by parliament in April 2018. A pioneering move that has set the stage for other regional countries such as Senegal to emulate. The new measure is inspiring entrepreneurial ingenuity in sectors such as software development, agricultural biotechnology, among others. The act clearly defines what constitutes a ‘startup’ By applying for a startup label
As of December 2019, here are the stats:
Over 279 businesses applied for the Start-up Act, out of these 169 had the start-up label granted. Of the applicants: 21.9% were female founders, 14.2% already had pre-funding before applying for the startup label, and $18.5 million worth in funding has thus far been raised.
The eligibility criteria
- The company should not have been in existence for over 8 years
- Have a turnover of less than 15 million dinars
- Maximum headcount of 100 employees
- 2/3 of the company capital be held by individuals or investment organizations
- Innovative business model
- Scalable idea
Once the business gets the startup label, they can enjoy the full benefits associated with the StartupAct universe. Their latest online application window opened on April 1, 2020.
Benefits of the ‘Startup Label’
A Tunisian government employee can take a year off of work and pursue entrepreneurship. In the event that the startup venture fails to succeed, they can still get back to their job. This is one of the merits behind the new startup legislation. The creative legislation behind it aims to incentivize the country to pursue digital innovation and entrepreneurship.
The perks also include a state-funded salary for a maximum of 3 founders during their first year of operations. This also includes tax breaks and a one year period of leave for private and public sector employees with a guaranteed return slot.
Gains thus far
Tunisia has witnessed an uptick in founders across the countrywide. Different representatives drawn from both the private and public sectors are engaged in actualizing the new act. Data from the enterpreneurs of Tunisia show a rise in co-working spaces from 38 in 2018 to 62.
Startups registered in the Tunisian market vary from marketplace-eCommerce, blockchain-fintech-insuretech, software, biotech-health, agri-tech, transport-logistics, robotics, AI, gaming, media, among others. In addition to young founders are senior Tunisians in the diaspora also coming back to launch their startups.
On the whole, the tax incentives from the startup Law have been significant. For one, they give the smaller startups a tax leeway in a country where the regular tax regime is brutal for small businesses.