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Tunisia’s ‘Start-up Act’ provides incentives for entrepreneurs

While experts agreed the law was a step in the right direction, they warned it should not be considered Tunisia’s sole economic lifeline.

A new “Start-up Act” approved by Tunisia’s parliament is being hailed as a “sign of hope” for entrepreneurs.

The legislation will provide grants, tax exemptions and government incentives to businesses that qualify as start-ups. The aim is to encourage young people to pursue innovative business ventures and drive growth in the science and technology sectors.

“This is a huge opportunity to modernise our economic laws and promote Tunisia as a start-up hub to the continent and the region,” said Zied Ouled Ali, vice-president of the NGO TunisianStartups, which helped draft the law. “It’s an important step towards dealing with new technologies and supporting youth and it’s the culmination of a lot of hard work.”

Spearheaded in goverment by former Minister of Communication Technologies and Digital Economy (ICT) Noomane Fehri, the process began in 2015 with the formation of a start-up task force with representatives from civil society, business and government.

The final product includes a series of support initiatives for qualifying entrepreneurs, including significant corporate tax exemptions, capital gains tax exemptions for investors, special customs procedures and salary compensation for start-up founders.

ICT Minister Anouar Maarouf praised the act as “a response to a call made by young people that will help… overcome the obstacles that hinder the implementation of their projects:”

“This law is likely to create an economic dynamic by attracting Tunisian investors and entrepreneurs resident abroad,” he added.

Tunisian Prime Minister Youssef Chahed said the law would “anchor [Tunisia’s] economy in the digital age.”

While experts agreed the law was a step in the right direction, they warned it should not be considered Tunisia’s sole economic lifeline.

“Start-up ventures are not the best way of solving unemployment in the short term,” said Ouled Ali, who founded and manages the cloud-hosting company SAFOZI. “Start-ups must be very cost-efficient and do not operate like normal businesses… Start-up founders must be willing to work for 1 or 2 years or more without making much money at first.”

Unemployment has been a stubborn challenge for Tunisia’s government and a chief driver of social unrest. During the last quarter of 2017, the country’s unemployment rate climbed to 15.5% and was more than 30% for young people, data indicate.

This lack of job prospects, combined with a floundering currency and creeping inflation, has led many young Tunisians to set their sights overseas. A 2017 poll by the Tunisian Forum for Economic and Social Rights (FTDES), said more than 40% of Tunisian respondents stated a willingness to leave the country, even if they had to do so illegally.

Setting foot overseas is not just the preferred solution of Tunisia’s poor and marginalised but of some educated elites as well. For years, doctors, engineers and other highly skilled professionals have moved to Europe, Canada or the United States in search of more stable and higher-paying jobs.

“The sense of despair, which is exasperated by the absence of a real change and a lack of a perceived improvement, is a push factor,” said FTDES President Messaoud Romdhani. “Some of these young people were not able to find a job or to achieve any sort of stability at home.”

Ouled Ali said he hopes Tunisia’s growing “start-up ecosystem” can push back against this phenomenon.

“Beyond its immediate impact on the economy, it (the Start-up Act) is also very inspiring,” Ouled Ali said. “What we need today more than ever is to show youth that succeeding in Tunisia — not only overseas — is possible… This is a sign of hope.”

TunisianMonitorOnline (The Arab Weekly -Written ByStephen Quillen)

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