There has been unmistakeable progress in Tunisia’s ecosystem growth. But it is far from the potential of the ecosystem that produced InstaDeep and Expensya. Infographic: Ayomide Agbaje for TC Insights

While InstaDeep’s exit brought a lot of attention to Tunisia, it was not sufficient to spur investment into startups domiciled in Tunisia. If anything, it probably demonstrated the benefit of building technology with global market reach. As Yassir Idrissi, former Careem entrepreneur and co-founder of the Egyptian food supply startup Nomu, told Al-Monitor earlier this year, “The [InstaDeep] exit is a step in the right direction but not really a game-changer in itself,” adding, “It could have been, but the market is so difficult that it will continue to drive investors away.”

With Europe’s homegrown startup ecosystem picking up even more steam, Tunisia’s links to the rich Gulf countries are a crucial lifeline market for tech entrepreneurs. But the difficulties of operating in a small closeted market held down by bureaucracy weigh heavily on Tunisia’s ecosystem. The result is that an expected nearshoring of IT services in Tunisia from foreign firms is undercut by the relocation of tech talent to Europe or nearby Gulf countries.

The government’s collaboration with the private sector has yielded a clear boost to entrepreneurial activity. A decade ago, heck even 5 years ago, you would have to turn on the searchlight to try to find Tunisian startups. Today they are a dime a dozen. In some ways, it is a good problem to have. On the other hand, some of the benefits of government initiatives like the Startup Act are not widely available to unlabeled startups (i.e startups not captured by the Startup Tunisia database of registered startups). This predictably limits the scope for entrepreneurship.

Thankfully, work and advocacy is ongoing on a Startup Act 2.0 that will propose additional reforms and amendments to the first startup law. Only a few other African countries have enacted similar startup-focused laws. Even fewer countries have the level of government support and extensive reforms that Startup Tunisia have been able to muster.

While encouraging local tech entrepreneurship is important. Promoting innovation in the hard sciences is an advantage Tunisia’s ecosystem should not lose while pursuing venture-capital-driven innovation. The nation will be well served if the view of technology innovation is not limited to marketplace apps, the odd business process application or enterprise solutions.

From the days of William Shockley to today, the making things—especially physical things—has always had the most defensibility and Tunisia can build a reputation for itself here. It is already on the way, with Kumulus Water, which makes machines that turn humidity into fresh drinking water. Tunisia needs to double down on these types of innovation without ignoring its strength in software development.

Software may have been “eating the world” in the 2010s, but the 2020s have demonstrated a strong signal that making things, creating technical breakthroughs and birthing new applications for science is cool. Africa and the Middle East need to build/adapt a lot of things to solve both uniquely African problems and persistent global challenges.

Two weeks ago, I wrote that Rwanda should follow the Tunisian example and expand its market outlook to accommodate global solutions. Tunisia could benefit from adjusting its market orientation in the opposite direction. That means among other things, leveraging its talent advantage to build products that meet African needs, at scale. If Tunisian startups can compete with European firms in Belgium, I don’t see why they cannot compete with European agritech products in Botswana, for example.

This type of “Build in Tunisia” programme will necessarily mean opening the doors to significant ties to innovation ecosystems in Africa. Egypt is leading the way already and Tunisia can learn from it.

It will take some getting used to and a lot of adjustments. But in the end, it may just be the liftoff spark Tunisia’s tech ecosystem has been waiting for. To do this effectively, the Tunisian government may need to loosen up on restrictive rules and bureaucratic processes a little bit more. Even if only to allow its entrepreneurs comfortably build from Tunisia, without all leaving for the UAE, Riyadh, France or Doha. That leaves the ball squarely at the government’s feet and to how much of a role it sees for Tunisia’s technology ecosystem in its economic programme.

If Africa were to have it’s version of Taiwan’s TSMC or the Dutch AMSL today, Tunisia would probably be a frontrunner for where it will be located. But this will not happen without making it easier for the Morris Chang’s of this world to come in, build and scale the technology behemoths that can command 55% of the world’s semiconductor manufacturing market as well as respect from the two largest economies, United States and China.

I would love to meet more of the people who are building in, from or for Tunisia. Ditto if you’re interested in exploring opportunities in Tunisia as an entrepreneur, venture builder, investor, or otherwise involved in how technology is progressing in Tunisia or the wider MENA region. I’d love to hear from you. Please feel free to reach out to abraham[at]bigcabal[dot]com. I’ll be looking out for your emails.