Tech Khaled Ben Jilani « The innovative ecosystem provides solutions, not all of them but a breath of fresh air to young people »
It is an optimistic Khaled Ben Jilani, partner at AfricInvest, who looks back in this interview on the 10 years of the Tunisian revolution, without overshadowing the flaws in individual freedoms or looking ahead to the future of his country. Nevertheless, he pleads for profound changes, in the credit sectors where alternatives, such as neobank or wallet must be boosted, for more innovations, greater freedom of mobility for people and in particular for foreigners than useful. Startup Act has not considered, but also financing structures, via incubators, investment funds, etc. risk funders, or even another training with small universities with very short training, e-learning, by exercising a profession in side.
What is the view of the Tunisian, that you are, on the last years and the projects undertaken by this post-revolution Tunisia?
It’s not an easy question…. A lot has been done in terms of progress on certain elements, in terms of individual freedoms in particular, even if a lot remains to be done, it is far from certain. When I put myself in the shoes of young people today, on sexual freedom, the consumption of alcohol or soft drugs, for example, there is nothing. Which is also important for having a fulfilling youth. This is the main point.
Freedom of expression, meanwhile, political dynamics, remains the weak point, because there is no strong leadership. It is not a question of the person, but of the project, of courageous decisions to be made. This is what we need. I don’t want to talk only about reforms because they involve painful decisions. There are other avenues to consider even if the reforms are necessary for a healthier and more sustainable development. It won’t come with the wave of a magic wand. Especially since there are too many tensions currently, between the State, the private sector, civil society, even within the fractions …
Is there not something else that we can add to the current environment, in the economic life space that allows for new developments? The innovative ecosystem is one of them. It provides some solutions, not all the solutions, but a breath of fresh air has young people, at least some young people, for whom the Tunisian economy does not offer solutions for the future.
The economy, more than gloomy, should experience a real recovery in 2021 if we are to believe the World Bank, which ranks Tunisia among the champions of growth this year with + 5%. We are indeed seeing sectors confirming themselves. Among which, digital. An ecosystem that has developed and structured considerably in recent years, notably with the adoption, in 2018, of the Startup Act. You worked there. What is the particularity of this decision and its impact on this Tunisian technological ecosystem?
What must be said, and this is important to stress, most of what is happening in the digital world today, the current players, were there, long before the Startup Act. With champions, particularly in software, such as Vermeg, which have an interesting size, even if they are not yet numerous. Today we have a positioning in a number of sectors where we have competitiveness on a global scale, in software in particular.
Over the last ten years, we have had a lot of new verticals where we have a lot of potential but we have done too little, or not enough. When you look at Africa, most of the funding goes to FinTech. An extraordinary opportunity because it is found everywhere, in traditional and new sectors. A revolution in payments therefore technological evolution and revolutions with new decentralized approaches with blockchain and others. We are moving from payments, essentially based on an interaction with a physical element, cash, check or transfer order, towards something more automated. But that requires technology and regulation. There, we missed the boat. Even though a few weeks ago the central bank adopted a regulatory sandbox, a kind of regulatory device for a limited period of time, to try, under the supervision of the central bank, a number of solutions. A very good orientation even if it is still too shy, in my opinion. Four licenses have been granted, if I’m not mistaken. This is not enough…
In Tunisia, we have what is called an exportable resource, with companies that can be African leaders. Payments, globally, is one of the top areas in terms of fundraising. This is the first level.
Then, access to credit, one of the big opportunities. In the policies of several countries, in Europe or in Africa, we talk about financial inclusion. Today, we see more and more digital models, digital, increasing the ability to reach increasingly large populations without correlation. Technology allows it, but it requires innovative models. The problem, credit is completely regulated in Tunisia, it is solely the responsibility of banking players. A big opportunity today which must be declined in various forms. Microfinance makes it possible. But we need a minimum capital. For a startup, this is not possible.
Last element in the fintech, the neobank or wallet, which makes it possible to give alternatives to consumers outside the traditional bank. There are still very few innovations at this level. And innovation comes from startups. You have to understand that. Because startups are more agile, less tied to risk policies. South Korea, for example, understands this and is working with Startups. In Tunisia this dynamic does not exist. We also do not have this ability to create small champions who can grow and become engines of the economy.
There are other sectors, with great potential, notably education and health, where we are extremely well positioned at the regional, African and not only level. We can imagine other models on this. Fortunately, there weren’t any big creative barriers in these areas. But it would be necessary to evolve so that the regulations allow these fields to develop more quickly. We can take the example of Go my code which becomes a regional champion. Dynamics that must be supported and simplified.
The Startup Act, why it was important in this sense: It has simplified, not all, but several bottlenecks in the life cycle of a business. It started with the will of a community that mobilized to build a better environment and have more innovative solutions.
What is important, this dynamic created by the Startup Act, the idea today is to apply it to the sectors I have just mentioned. Once again, if we want to make it a strategic direction, observe the blockages that exist in medicine, pharmaceuticals, education, it is at this level that we will have to reflect with authorities who often spend their time to solve problems relating to traditional sectors. We must have this same dynamic where the proposals come from the base. The base, they say, has needs. Here are possibilities, and the minister responsible for them answers them.
This is what positively surprised me in the dynamics of the Startup Act: when we went to see officials in the various ministries, because we saw about ten of them, the officials told us: « we are with you » . You just need to have a slightly different gait in the way the Advocacy has done so far. A more « democratic » approach Startups offer more than the big names in the sector, who may have solutions that will become very big, if they are well thought out and will have more impact, in terms of vision. Innovation provides solutions on a number of verticals that are developed through the emergence of champions and the development of real skills on a global scale. We still need the support of the authorities in terms of regulation …
An element in which the Startup Act did not provide solutions: greater freedom of mobility for people, especially foreigners. Today, being an expatriate in Tunisia, not in terms of a multinational, but as an employee, is hell! We do not understand that creating regional or global leaders requires having part of its staff, from the regions in which we want to shine. If I have one regret, this is it, we haven’t worked hard enough on it …
In the meantime, this Startup Act, these regional champions that you mention, and these developing sectors, AI, robotics, Gaming, puts Tunisia as a tech hub … How to confirm this positioning today?
Gaming, in fact, there are a lot of assets in these sectors, in terms of competitiveness. On the other hand, we are not able to do everything, it is important to understand that we need skills … But we have potential.
Even if something else is missing to develop these sectors. Beyond the law and regulations, we must make investments. Today, we lack funds dedicated to Tech.
This is being done thanks to various donors including the Tunisian Deposit and Consignment Fund, the World Bank, among others, others will follow. This is essential because to develop an ecosystem, we must create the instruments that will finance it, which is not the role of banks. And development banks have created a lot of sectors in Tunisia. We must now imagine that we must need financing structures in this sector. Incubators, investment funds, which will finance the risk. By adapting to the differentiated needs of startups.
Another essential thing, it must be done with the clear vision that these boxes must not remain exclusively Tunisian. In innovation, if you want to become a growing box, you have to leave the country, while employing in the country. We must change all the laws and policies that will prevent this. In this case the free movement of capital, of people, and this exchange rate regulation which must be reviewed. There, more and more capital, intelligent… will come.
Now, how to ensure that the sector fits more into the real economy, that it has more impact in the economy, in terms of added value and in particular job creation ? Unemployment of young graduates remains one of the main challenges of post-revolutionary Tunisia, as the protests of recent days have reminded us …
Innovative sectors will not be able to provide answers on their own to the question of youth employment. In particular, we need to work in education, we need to have new models. In tech and innovation, things change very quickly, new skills are required every five years, we must find faster and more agile models and the State must understand that we must be able to train in a differentiated way, as required. This does not mean that we no longer need large universities, but that we must also consider small universities with training cycles in four months, at a distance, by exercising a profession on the side … do this with innovative startups that are doing extraordinary work and growing in the region. This is to resolve this mismatch between the needs of businesses and the basic training provided by the public education system which has not been able to adapt at the same pace.
Second, we must succeed in offering these young people more rewarding jobs than what we could have in the policies of the past. Historically we needed jobs in factories, call centers and others, today the young Tunisian, rightly, will have the ambition to have a job in a company that thrives. It’s not going to come all of a sudden. We are going to witness a series of generations that will be formed and innovate over time. But it is possible. In terms of contributing to a different development model, I think innovation can bring several bricks to this model.
To conclude, how do you see Tunisia in ten years?
I would like to imagine that we create innovative Tunisian champions on a global scale. Human above all. We have a real dynamic of people who think differently, and innovate. Today, we have this ability to think without limits, thanks to the new values introduced. I dare to imagine that some entrepreneurs will bring a new model of leadership in the private sector but also social entrepreneurship to bring models that will chart new paths. Both structures which will have a lasting impact on the structure of the Tunisian economy, and also women and men who will impact their environment, through skills in politics, civil society … I see some today ‘hui which allow us to glimpse a real light at the end of the tunnel …
Box: Ten-points Startup Act
1.Tunisia, in 2018, launched the first legislative framework specially dedicated to startups.
2.The Startup Act is a legal framework dedicated to Startups in Tunisia. This framework is designed to facilitate the launch and development of Startups from Tunisia.
3.This legal framework incorporates 20 measures structured around a Label of Merit and Benefits to Entrepreneurs, Investors and Startups.
4.It is mainly materialized by: (i) Law No. 2018-20 of April 17, 2018 relating to Startups; (ii) Decree No. 2018-840 of 11 October 2018 establishing the conditions, procedures and deadlines for granting and withdrawing the startup label and benefiting from the incentives and advantages for Startups and the organization , the prerogatives and operating procedures of the labeling committee; and (iii) Circulars of the Central Bank of Tunisia N ° 2019-01 and 2019-02.
5.The Startup Act contributes to making Tunisia a favorable country for Startups at the crossroads of the Mediterranean, the MENA region and Africa.
6.Smart Capital is in charge of the implementation of the Startup Act and more broadly of the Startup Tunisia initiative, under an agreement with the Ministry of Communication Technologies and the Digital Economy.
7.From its creation to September 2020, 338 startups have been labeled under the Startup Tunisia program.
8.Tunisia is ranked via its Startup Act, 23rd out of thirty countries at the forefront of digital technology and 1st in the Africa and Middle East region, according to the “Startups Without Borders” which has just published its Attractiveness Index, the “Startup Visa Programs Attractiveness index”.
9.And the Tunisian success, in particular, makes people envious. After Mali and Senegal, Algeria is working on the creation of a specific legal framework for startups and funding of 10 million euros for « Algerian champions capable of conquering other markets in Africa and elsewhere ». Similarly, the Rwandan government appealed to the i4Policy foundation to draft a legislative framework favorable to entrepreneurship.
- The Tunisian tech ecosystem continues to develop around the Startup-Act: a law on crowdfunding, known by its acronym « Crowdfunding », was recently unanimously adopted by the Assembly of People’s Representatives ( ARP).
This law is a complementary framework to the Startup Act, insofar as it sets up more flexible funding mechanisms. From now on, platforms will be created playing the role of intermediaries between companies seeking financing and individuals who undertake to support these projects by injecting money into them.
To find out more: https://www.startupact.tn
