Chapter 13. Tunisia
The foundations of SME policy: definitions, statistics and institutions
Important progress and reforms have been achieved over the past few years in terms of the overall economic agenda. However, in terms of SME and entrepreneurship policy Tunisia is still putting in place the initial building blocks. First, since 2016 there is a new SME definition in the context of the new Investment Law; however, this definition is mainly based on financial criteria (an SME has to have total assets of less than TND 15 million, or roughly EUR 5 million), with no distinction made between micro, small and medium-sized firms (see Table 13.1). Furthermore, although the definition is used by the Agency for the Promotion of Industry and Innovation (APII – one of the institutions in charge of enterprise policy) to delimit its field of action, there are other definitions used by several other actors, such as the SME bank (BFPME) and the statistics office (INS).
The National Statistics Institute publishes an annual report on SME statistics from the National Enterprise Repertory using a definition based on the number of employees.1 The repertory is one of the most complete sources of information in the region with structural, demographic and business dynamics (firm entry and exit) indicators. According to the consultations, the Ministry of Industry is working to establish an SME Observatory in order to produce official statistics on SMEs.
The wider economic policy framework in Tunisia is given by the National Development Plan 2016-2020,2 which targets a growth rate of 4% per year, a reduction in the poverty rate to 2% of the total population, the creation of 400 000 jobs, a reduction in informality to 20% of the economy, and reduction in unemployment to 12%. The plan expects to meet these objectives through the development of human capital and the improvement of infrastructure that better connects the inner regions. As noted before, the government also adopted a new Investment Law in 2016 that is designed to attract investment by increasing both freedom to invest and protection of investors.3
In terms of the institutional SME policy framework, as in 2014, co-ordination and implementation of SME support continue to be fragmented. The Ministry of Industry is the main authority responsible for SME and entrepreneurship promotion, notably through the General Directorate for SMEs (DGPME) and the Agency for the Promotion of Industry and Innovation (APII). As noted before, a new Investment Law was approved in September 2016 and includes some provisions affecting SMEs. Despite the fact that the Investment Law has created a specific governance structure for the investment regime, it is not a specific instrument or strategy for SME development. From the information gathered in Tunisia, there is an unresolved issue with SME co-ordination. Each Ministry or institution has some mandate to work with SMEs, typically by sector. For example, the Ministry of Agriculture supports SMEs in the agribusiness sector, the APII focuses on the industrial sector, etc. Nonetheless, there is no strong co-ordination mechanism.
In terms of mechanisms to monitor and evaluate SME policies, the APII has launched a first version of a “barometer” to measure the impact of public policies and reforms according to the perception of SMEs. This work was conducted with SMEs in the industrial and industry-related sectors.
Public-private dialogue (PPD), on the other hand, has continued to be strong. This has built on the complex process of political and economic transition and dialogue among numerous actors over the past few years. This has also been reflected in important economic reforms such as the adoption of the new Investment Law. Concerning the specific case of enterprise development policy, in 2014 the National Business Agenda (NBA) was established in order to create a public-private dialogue platform to advance reforms that improve the business climate. The NBA includes the government, the Tunisian Union of Industry, Commerce and Crafts (UTICA), the Tunisian Union of Agriculture and Fisheries (UTAP) and the Arab Institute of Business Leaders (IACE). Additionally, the Regional Business Agenda was developed as a second phase to the NBA to assess challenges and obstacles at the regional level. This represents an important progress in the implementation of the reforms identified by the SME Policy Index in 2014.
For further action: As recommended by the SME Policy Index 2014, Tunisia could start putting into place a more coherent SME and entrepreneurship policy by developing and implementing a multi-annual SME strategy. Such a strategy could define the specific mechanism of co-ordination among the many actors involved in SME support. The strategy could also help to better target the different types and needs of SMEs (subsistence, low productivity or opportunity, high potential driven; micro, small or medium; in the services, manufacturing or agriculture sector, etc.). The SME strategy should also consider and be an integral part towards the achievements of the goals of the wider policy framework. The strategy could also build on the NBA and could serve to frame a formal SME public-private dialogue platform. Tunisia could also set up an effective SME agency which could be in charge of policy co-ordination and of monitoring and evaluating the impact of policies on the health of enterprises and to adapt policies to the needs of SMEs. The establishment of an SME strategy would also provide an important basis for a comprehensive monitoring and evaluation system of SME support.
Improving business environments for SMEs and entrepreneurs
The improvement of the regulatory framework and administrative simplification for businesses is under the responsibility of the General Directorate for Reform and Administrative Outlook (DGRA), within the Office of the Head of Government. A decree to implement regulatory impact analysis (RIA) through a regulatory guillotine exists since 2014 and the DGRA was then working on a pilot project for a strategy on regulatory reform. The DGRA had done an inventory of more than 1 000 business laws and regulations to establish afterwards the regulatory guillotine.
Since then, Tunisia has registered much progress in this area. According to DGRA the strategy was developed through a consultative process between the government (seven ministries), professional organisations and business and regional organisations. As a result, seven procedures were supressed, 147 simplified and 86 kept. The exercise was then extended to five other ministries (decree of September 2014). Furthermore, the Regulatory Guillotine project was accompanied by capacity building activities including trainings and awareness campaigns both at the national and local level. Several workshops were organised for government officials and regulators at the beginning of the project, as well as at the end to disseminate the results. Workshops were organised in three different regions (Tunis, Sousse, and Sfax) in order to raise awareness among regional government officials about the importance of the project and the simplification process.
One of the initiatives that have seen the light thanks to the NBA is a new hotline called “SOS Ijraat”, created in 2016 to provide information on administrative procedures to companies which are encountering administrative obstacles. Through this hotline, businesses should be able to flag problems to the administration, and a mechanism to address it should be activated.
In terms of the operational environment for enterprise creation, the SME Policy Index 2014 noted that company registration was one of the most efficient in the region. The country had a single identification number for three administrations related to the Ministry of Finance; there were no minimum capital requirements for start-ups; it had a network of one-stop shops in 19 regions; and an online registration system but it only covered Tunis and was specific to declaration of investment projects.
More recently, a draft Start-up Act has been introduced (2018), focusing mostly on innovative start-ups (part of the wider strategy Digital Tunisia 2020). The Start-Up Act aims to simplify administrative procedures, but also to facilitate access to finance and international businesses. 4 The Act envisages the creation of a single point of contact for entrepreneurs to obtain information and conduct the required formalities for registration and operation.
In terms of bankruptcy procedures, a Collective Insolvency Proceedings Act (loi 2016-36 du 29 avril 2016 relative aux procédures collectives) was enacted in April 2016. The views on the effects of the Act, according to the consultations for this interim assessment, are contrasting. For example, some see it as more concerned with the liquidation of companies than their restructuring for an eventual redressing. Others pointed to its positive aspects such as alert systems for auditors of enterprises that could be in difficulty; or new rules of conduct to be observed by the courts and judicial experts, and the various partners of the company during the phase of amicable settlement, judicial settlement and eventually, bankruptcy.
For further action: The RIA mechanism could be strengthened to integrate not only a regulatory guillotine (inventory of existing regulations) but also a forward-looking system to assess the merit and effectiveness of new business regulations vis-à-vis other forms of intervention. An SME test could be implemented to look particularly at regulations and administrative requirements that can disproportionately impact SMEs. The National Business Agenda could become a powerful platform to drive the reform agenda in this field.
Fostering access to finance
Tunisia has registered progress in terms of the legal and regulatory environment for access to finance. Credit information mechanisms have improved in recent years and a number of legal reforms are ongoing. First, the credit registry improved its services making historical information available for individuals, while before it was limited to enterprises. The credit registry now covers almost 27% of adult population, which is higher than the OECD average of 18%.
Furthermore, a credit registry for microfinance (CRM) was also created in 2016 to facilitate credit assessments. Through this mechanism, microfinance institutions are expected to extend their credit operations, reduce losses and reinforce their institutional stability. There are no figures on the impact that this has had on the microfinance sector, although the number of users had increased from 280 in March 2016 to 478 by the end of that year.
Second, a new law on (private) credit bureaus has been developed by the government and presented to the National Assembly.5 The law seeks to establish a legal framework to, among other things, authorise the sharing of negative and positive information on credit; establish the rights and obligations of all parties involved (credit bureau, users, consumers, etc.); and protect the right of users and enterprises to confidentiality in their information. It is expected that the approval of the law will pave the way for the establishment of the first (private) credit bureau in Tunisia: Mitigan Credit & Insurance Bureau (Mitigan CIB).
Additionally, a reform on the registry of moveable assets is ongoing in order to extend the array of assets that can be pledged as collateral, to allow the non-possessory security over moveable assets and rights, and to establish a general registry of moveable assets. The aim is to inform creditors of any pledges for a given asset, and to determine the beneficiaries of a right over a given asset. No information has been provided in terms of the expected results of the reform and when it would enter into force. There is no information on the improvement of registries of immovable assets (cadastres).
An administrative instruction has also been published by the Central Bank establishing the rules for the development of a credit rating scheme by financial institutions.6
In order to facilitate access to capital markets for SMEs, the Tunisian authorities launched a project in 2016 to overhaul regulations on private equity activities and approve a single code, the Collective Investment Code. The draft code is under review at the National Assembly. Other initiatives have been launched between 2016 and 2017 to facilitate access to finance for SMEs. The APII has launched an initiative to introduce crowdfunding by engaging public and private actors involved in SME financing. A bill on crowdfunding in Tunisia was finalised in February 2018 and is awaiting approval.7 On the other hand, the Start-Up Act (new Law n ° 2018-20 of 17/04/2018) aims to create a Guarantee Fund for Start-ups and other funding sources were launched between 2016 and 2017 to facilitate access to finance for SMEs.
Finally, a draft code for collective investment bodies has been developed to improve the regulatory framework for venture capital and promote these sources of funding (this draft code is currently being examined by the parliament.
Concerning the availability of sources of finance, the SME Policy Index 2014 noted that the main actors in this area were public agencies such as the SME Bank (BFPME) for credit, the Guarantee Company (SOTUGAR) for credit guarantees, and the Solidarity Bank (BTS) for microcredit. Other public funds are still dedicated to strengthening the financial base of SMEs, such as the Industrial Promotion and Decentralisation Fund (FOPRODI), which is managed by APII. Under the new Investment Law, this Fund will be incorporated into a single fund called the Tunisian Investment Fund (FTI).
For this interim assessment there is no evidence of an increased role of the private sector in the provision of finance. What is more, the BFMPE has created new funds in co-operation with different international programmes and other ministries.8 Nonetheless, the full implementation of the laws, reforms and administrative instructions mentioned above should provide a better environment for a greater participation of private actors in the provision of access to finance.
Tunisian authorities are developing a new programme, Investir PME, that aims to facilitate the introduction of SMEs to alternative markets through the stock market. As the cost of entering this market is normally high for SMEs, the new programme will focus on reducing entry barriers and helping SMEs diversify their sources of financing.
Finally, several websites have been created to provide information on financial support programmes for SMEs.9 Nevertheless, they are limited to listing the different institutions that provide financing, so the information could be better organised to guide SMEs towards the adequate instruments for their needs.
For further action: Tunisia is undertaking a large number of initiatives to strengthen access to finance for SMEs, but most of the legal reforms are still pending final approval. Hence, a first priority would be for the government to pass and implement these reforms. The SME Policy Index 2014 also noted the need to create incentives for the expansion of the provision of finance by private sector actors. Many of the pending reforms and laws also point in that direction; nonetheless, to date there is not much evidence of an increased role of private sector providers over the past few years.
Nurturing entrepreneurship and SME growth
The provision of business development services (BDS) seems to continue increasing. The network of business centres and incubators in Tunisia has been expanding over the past few years.10 The APII manages the Business Incubators Network, providing services in the 24 governorates. The Ministry of Industry manages the Business Centres regional network which is developing non-financial services in collaboration with financial institutions. The bank BIAT launched an incubator, B@labs, offering 4 to 16 months services for innovative start-ups.11 International accelerators like Founder Institute,12 Flat6Labs13 and Boost have also opened offices in Tunisia, offering training and mentoring services.
Several websites provide information regarding existing entrepreneurship support and BDS facilities. For example, the platform Wajjahni was created to provide information to entrepreneurs while the Foundation BIAT has developed an interactive map to locate support services across the country.14 Furthermore, each institution involved in SME support has its website with relevant information, but there is no single platform.
Several initiatives have been implemented in the last few years to encourage women’s entrepreneurship. A National Plan for Women Entrepreneurship, called RAÏDA, was adopted in 2017 by the Ministry of Women of the Family and Children. The company HP, in partnership with the United Nations Industrial Development Organisation (UNIDO) and with the APII set up an Entrepreneurship Training and Support programme called "HP-LIFE" to support students, aspiring and established entrepreneurs to acquire ICT skills.15 The Ligue des Femmes d’Entreprises was created to guide women entrepreneurs developing small projects, including in rural areas.
The regulations on public procurement provide for the obligation to set aside a percentage for small businesses16 of up to 20% of the estimated amount of works, goods and services contracts and studies.17 If it is impossible to reserve these contracts within the limit of the aforementioned percentage, the public purchaser must indicate the reasons in a report which is transmitted to the relevant Contracts Control Commission (in accordance with Article 169 of Decree 1039-2014) and which expresses its opinion on the reasons mentioned.
Information concerning annual purchase forecasts, texts governing public procurement, tender notices and results of calls for tenders are centralised and accessible to registered public purchasers and potential bidders. TUNEPS and the National Observatory of Public Procurement are two commissions that are part of the higher commission of control and audit of public contracts, which was created in the framework of establishing a system of good governance of public procurement.
Tunisia is one of the few economies in the region where procuring agencies have to pay interest in overdue payments to the contract holder in the event of delays on down payments or the payment of a balance. Bidders are not required to register on a government registry of suppliers and there is a legal period of minimum 30 days for bids submission from the date on which the contract notice was published. However, some cost-related aspects can be a barrier for SMEs facing resource constraints. For example, tender documents are not always accessible for free, and the cost is subject to the discretion of the procuring entity. Also, bidders are required to pay a provisional guarantee,18 for which the public purchaser fixes the amount by applying a percentage between 0.5 % and 1.5 % of the estimated amount of orders by the contract. This sum is returned to the participants in the market whose offers are eliminated after publication of the results. The sum is replaced by a performance bond paid only by the contract holder after notification and signature of the contract (which will be returned after execution of the contract).
Decree 1039-2014 also includes specific provisions for e-procurement through TUNEPS, a platform that manages the online public purchasing system (in the context of markets or for off-market acquisitions). There are also training sessions for SMEs to use the platform and there is a practical guide for SME participation in procurement. UTICA, TUNEPS and public institutions provide training courses to familiarise SMEs on public procurement procedures to SMEs to facilitate their access to public procurement contracts. A decree of 2018 provides for the obligation to issue the public order only via TUNEPS as of 1 September 2018.19
Concerning the internationalisation of SMEs, in order to support SMEs linkages with foreign firms participating in global supply chains, the government and the European Bank for Reconstruction and Development (EBRD) signed a loan agreement for USD 50 million to increase and diversify SME exports. Several funds have been created, including the fund “Primo-Export” which has accompanied 30 newly created SMEs over the last two years to export their products and activities. The World Bank launched a series of projects to support global value chains.
Several reforms and initiatives have been undertaken to expand export services. In 2016, the APII launched a project in collaboration with five other institutions, including business associations to facilitate the internationalisation of enterprises in the technology sector through better access to market data. The APII has participated in several international conferences and events in order to connect Tunisian enterprises to international markets. Tunisia joined the Enterprise Europe Network (EEN) in 2016 through the creation of a Consortium "EEN Tunisia" formed of five national organisations: the APII as co-ordinator of the consortium, the Centre for the Promotion of Exports (CEPEX), the Chamber of Commerce and Industry of Tunis (CCI of Tunis), Technopark Elgazala and the Confederation of Tunisian Citizen Enterprises (CONECT).
The APII, through the services and activities of the EEN network, offers services to companies such as the identification of business partners, participation in business-to-business meetings, and dissemination of information on European legislation.
For further action: Tunisia has a very well-developed market of BDS from private and public actors. The establishment of a comprehensive information system to disseminate information among targeted enterprises could increase the coherence of all these efforts. This could take the form of a wider initiative such as the establishment of an SME Observatory (a useful tool for the dissemination of statistics, studies and SME information) along the lines of those being developed in many other economies. The information could also include the many initiatives being undertaken to promote SME internationalisation and participation in global value chains.
Investing in entrepreneurial human capital
Tunisia already had in the previous assessment a clear policy framework to promote entrepreneurial learning in upper secondary education, as reflected in Law 10/2008 on Vocational Training. Since then, the government has produced a new Charter to promote an entrepreneurial spirit, and a National Strategy on Entrepreneurship. In 2016, the Ministry of Vocational Training and Employment appointed a State Secretary for Entrepreneurship, reflecting the political commitment to this topic.
Several initiatives have recently been developed in co-operation between training centres and companies. Most of them rely on external support, such as the European Training Foundation (ETF, promotion of entrepreneurship as a key competence) and INJAZ20 (simulation of the creation of companies “CP Company Program” and “EMC Entrepreneurship Master Class”). The new "soft skills" project (adaptability, sense of efficiency, creativity, collective work, initiative) with the Ministry of Vocational Training is an innovative approach and should be consolidated.
Tunisia has actively supported women’s entrepreneurship in the past few years through the 2016-2020 National Programme for Women’s Entrepreneurship (RAÏDA), which has provided many support initiatives focusing on start-ups and diversified geographically. These activities have taken place in the context of a dynamic social dialogue involving civil society, international donors and the government.
There is a rich offer of training programmes supporting women, which is well-tailored to their needs. Some examples are the training programmes delivered through the network “Entrepreneuriat Pluri’elles”, as well as the initiatives undertaken by Women’s Enterprise for Sustainability (WES) and the Tunisian Association for Management and Social Stability (TAMMS). The Center of Arab Women for Training and Research (CAWTAR) is also particularly active.
In the context of the 2016-2020 Programme to Develop Exports (PDE-3), the Skills Plan 2017-2020 recognises the importance of training to support SME internationalisation. Different institutions provide this type of training, such as the APII, which works with the EU EEN-Tunisie network, as well as the Center for Export Promotion (CEPEX), chambers of commerce, and other actors including UTICA. An Export Academy is planned to be created. On the other hand, there is little co-ordination between the different actors active in this field.
Tunisia has also adopted a sectorial approach, developing tailored training programmes through different channels. The project “Skills for trade and economic diversification” (STED) is an interesting example in this regard. Other sectors that are particularly active are the textile industry, including lingerie and denim clothes, and ICT.
For future action: It is recommended that the government develops action plans for the implementation of the policy framework, which should include monitoring and evaluation mechanisms and adequate funding. These plans could be developed together with national institutions such as the “Observatoire national de l’emploi et des qualifications” (ONEQ). Also, it should be ensured that the training mechanism for teachers and trainers concerning the entrepreneurship as a key competence is well-structured, for which the European framework EntreComp could be a useful tool.
The government and local actors should develop better data and establish mechanisms to monitor and evaluate the implementation of initiatives that support women’s entrepreneurship as well as SMEs’ internationalization. Data collection initiatives could be developed together with relevant stakeholders from the private sector, such as UTICA, Co-ordination between different institutions providing training courses for SMEs to export could be improved. Also, the use of online trainings could be used to increase the offer and reach of training programmes.
The way forward
The assessment for the SME Policy Index 2014 was undertaken in a context in which Tunisia was undergoing an intense important political transition and was preparing the ground for economic changes. These changes are still ongoing and have focused on broad economic policy areas such as regaining macroeconomic stability, strengthening security and re-activating investment and economic activity. To maintain this progress, Tunisia could increase its efforts towards developing a better business environment and a more strategic SME policy. Key actions that could be taken are as follows:
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Developing and implementing a multi-annual SME strategy with institutional co-ordination and dialogue mechanisms and targeted to the different profiles and needs of SMEs and entrepreneurs.
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Adopting a full-fledged RIA mechanism and introducing the SME test.
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Encouraging and facilitating the creation of new firms through technical mechanisms (e.g. online procedures, one-stop shops, etc.) and well-designed incentives.
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Implementing reforms and initiatives for access to finance that are pending approval and assessing whether the existing financing sources are satisfying the needs of different firms and entrepreneurs.
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Better disseminating information about the myriad of BDS and the possibilities of access to public procurement opportunities for SMEs.
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Develop action plans for the implementation of the strategic policy framework to promote entrepreneurial learning, which should include monitoring and evaluation mechanisms and adequate funding.
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Develop better data and establish mechanisms to monitor and evaluate the implementation of initiatives that support women’s entrepreneurship as well as SMEs’ internationalisation. The private sector could lead these efforts through representative bodies such as UTICA.
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Co-ordination between different institutions providing training courses for SMEs to export could be improved.
Notes
← 1. Statistiques Tunisie, www.ins.tn/en/themes/entreprises#sub-318.
← 2. “Plan stratégique de développement économique 2016 -2020”.
← 3. Law n°71-2016 dated 30 September 2016, which entered into force on 1 January 2017.
← 4. http://www.huffpostmaghreb.com/2017/04/13/startup-act-tunisie_n_15986206.html Consulted 24 Oct 2017. Also see Bouguerra, B. (25 April 2017), “Tunisia’s #Startup Act catching the wave of Innovation”, Voices and Views: Middle East and North Africa Blog, The World Bank, http://blogs.worldbank.org/arabvoices/tunisia-startup-wave-innovation.
← 5. Loi sur le crédit bureau.
← 6. Administrative instruction n° 2016-06.
← 7. The bill has been developed in support of the Enhancement of the Business Environment in the Southern Mediterranean project. See http://www.ebesm.eu/posts/developing-a-legal-framework-for-crowdfunding-for-tunisia.
← 8. For example the Swiss Fund, the Qatar Friendship Fund, Intilak Fund 2 (in co-operation with the Ministry of Development and International Cooperation), the BADER Fund (in co-operation with the Ministry of Finance), and the Corporate Social Responsibility Fund (in co-operation with the Tunisian Company of Petroleum Activities and the Company of the Phosphates of Gafsa).
← 9. These include Wajjahni, http://wajjahni.com/fr/categories/financement; and Entrepreneurs of Tunisia, www.eot.tn.
← 10. Agency for the Promotion of Industry and Innovation, Tunisian Industry Portal, www.tunisieindustrie.nat.tn/en/doc.asp?mcat=16&mrub=138.
← 11. B@labs, www.biatlabs.com.
← 12. The Founder Institute, https://fi.co/about?target=tunis.
← 13. Flat6labs Tunis, www.flat6labs.com/location-offering/?l=2653#top.
← 14. Wajjahni, http://wajjahni.com/fr.
← 15. HP Inc, “HP Life creates hope and opportunity in Tunisia as Mashrou3i program expands”, www.life-global.org/?q=node/112&language=en.
← 16. Companies in activities or recently constituted and defined by paragraph 2 of article 20 of decree 1039 -2014.
← 17. Article 20 of Decree 1039 -2014 in particular, which replaced Decree 3158-2002.
← 18. For participation except for study contracts which do not require the payment of a provisional deposit to participate.
← 19. Decree 416-2018 of 11-05-2018 amending Decree 1039-2014 on the regulation of public markets.
← 20. A youth-centered non-profit organisation established in Jordan in 1999 active in the European Union and worldwide, including in the Middle East, North-Africa and Pakistan.