Making Tunisia the 'SiliconValley' of the Maghreb. Youth unemployment remains a major challenge of the Tunisian economy. Lack of access to decent jobs represents a major difficulty particularly for Tunisian graduates. In order to foster socio-economic development as well as creating sustainable job creation it is necessary to strengthen the private sector and facilitate the creation of new enterprises. However, starting a business requires as much financial and managerial knowledge as it doestechnologicalandmarket expertise.While many Tunisians have technical skills, they lack entrepreneurial skills. In order to address these challenges this policy briefs suggests investing in the creation of innovation laboratories and co-working spaces as well as designing a new legal framework that can facilitate entrepreneurial procedures.

1. Le Palmeraie du Silicium:
MakingTunisia the'SiliconValley'
of theMaghreb
Executive Summary
Youth unemployment remains a major challenge of the Tunisian
economy.Lack of access to decent jobs represents a major difficulty
particularly for Tunisian high-graduates. In order to foster
socio-economic development as well as creating sustainable job
creation it is necessary to strengthen the private sector and
facilitate the creation of new enterprises. However, starting a
business requires as much financial and managerial knowledge as it
doestechnological and market expertise.Whilemany Tunisianshave
technical skills, they lack entrepreneurial skills. In order to address
these challengesthis policy briefssuggestsinvesting in the creation
of Innovation laboratories and co-working spaces as well as
designing a new legal framework that can facilitate entrepreneurial
procedures.
.June 2017
Policy Brief
About "Jobsfor Tunisia"
?Jobs for Tunisia?is a project
developed by the Maghreb
Economic Forum with the aim
of exploring opportunities for
job creation in three strategic
sectors: Agriculture,
Information Technology and
Renewable Energies. At the
core of the project are a
series of workshops and
round-tables held in different
regions of Tunisia and
through which experts have
developed key policy
recommendations.

2. 2 MEF Policy Brief
By 2011 people in various Arab countries took the street raising their
voices against their economic, social and political exclusion. As survey
data suggest, the main demands of the protesters were related to
political change but also, crucially, to socio-economic rights. These are
particularly related to high unemployment rates and lack of job security.
Lack of access to decent jobs, in particular among young people, has
been a central factor not only in triggering the wave of revolts but
also in refocusing the attention on the Arab youth and on the
significant challenges it faces. Indeed, youth unemployment rate in
North Africa region as a whole amounted to 24%[1] in 2009 and has
reached 29.3% in 2016[2]. Considering the Arab States, young people
constitute the 60%[3] of the total Arab population and suffer from the
highest youth unemployment ratein the world.
In thisregional scenario,Tunisiaisby no meansan exception recordingan
unemployment rate of 15.5%[4] corresponding to 623,000 citizens
unable to access the labor market. Besides, youth unemployment rate
(15-24) that has increased from about 30 % in 2010 to 42% in 2011
and it is recorded today (2016) at 36% [5]. The situation appears even
more worrying considering that higher educated people are those facing
major difficulties to find jobs. Indeed, according to the National Institute
of Statistics (INS), higher education graduates unemployment stands at
31.6%(fourth quarter of 2016).
Introduction
[1] http://www.un.org/esa/population/meetings/egm-adolescents/p06_roudi.pdf
[2] https://www.ilo.org/global/research/global-reports/weso/2016/WCMS_513739/lang--en/index.htm
[3] https://www.ilo.org/global/research/global-reports/weso/2016/WCMS_513739/lang--en/index.htm
[4] National Instituteof Statisticshttp://dataportal.ins.tn/en/DataAnalysis?vfDyz93cp0G38FqDKS4qJA
[5] https://www.worldbank.org/en/country/tunisia/publication/economic-outlook-april-2018
What is
theproblem?

3. 3 MEF Policy Brief
Considering higher graduates?unemployment, skill mismatching between
job openings and applicants?qualifications represents a major challenge.
The MEF has noted that there are 145,000 jobs open in Tunisia that are
not filled due to a skills gap between the labor force and labor market
demand.However,even not considering thisnumber,there are still nearly
480,000 citizenswho have no job.
This means that existing enterprises alone are not able absorb this labor
surplus and hence the creation of new business is necessary. However,
starting a business requires as much financial and managerial savvy as
it doestechnological and market expertise.While many Tunisianshave
technical skills, they do not necessarily know how to start a business, a
problem not unique to Tunisia,by any means.
Besides, the traditionally overwhelming role played by the state as a main
employee has for decades prevented the development of a competitive
private sector. For decades before the events of 2011 the private sector
has been strongly dependent on state patronage that has prevented the
development of private investments and independent entrepreneurs at
theexpensesof small firmsand youngentrepreneurs.
As a result, the private sector is weak and the development of
entrepreneurship has impeded by the lack of an adequate legal and
regulatory framework, especially excessive bureaucratic
requirementsand procedures.
Why shouldwe
beconcerned
with
entrepreneurship
today?

4. 4 MEF Policy Brief
In dealing with these challenges, it is necessary to launch a series of
policy and programmatic initiatives to promote youth employment
and self-entrepreneurship as key policy issues to foster
socio-economic development and sustainable job creation.
Entrepreneurs and small businesses drive job creation, being twice as
likely to increase hiring as corporations,according to the World Economic
Forum[6] Tunisia can educate its citizens how to start and operate their
own businesses. The government can accomplish this goal by creating the
right environment for start-ups and young entrepreneurs based on
pre-eminent models found in Singapore and the US. The following
proposal has been modeled for both an immediate pilot scheme and a
nationwide scheme capable of providing capacity for every single
unemployed Tunisian. Highlights of the financial models are attached as
appendix,and Northcotecan share thefull model if requested.
[6]Pinelli,Martin.?Can entrepreneurship solvetheyouth unemployment crisis??World EconomicForum.
September 11,2015.
How tofoster
socio-economic
development
and
sustainable
jobcreation?

5. 5 MEF Policy Brief
Technical and professional skills gained through education training are the
basis for starting new businesses. However, entrepreneurial skills are
necessary to establish a new company as well as sustain its growth and
success. Young graduates need to be trained in order to gain relevant
entrepreneurial skillsto establish and develop their own businesses.
I-labs should provide training and coaching for young entrepreneurs.
For example, TUMO in Armenia, Peace Innovation Lab in Tunis and
Harvard I-Lab hold workshops and training programs to guide
start-up teams through the incubation and launch process.[7] In the
US, most Ivy League schools and Silicon Valley corporations have
?Innovation Labs,?or ?i-labs,?that coach young entrepreneurs through the
business creation process. Harvard University?s Innovation Lab is the
leading example; since its launch in 2011, it has assisted over 203,000
students and helped raise over 300 million USD in outside financing for
their ventures[8]. Tunisian i-labs should follow these existing successful
models as a template for their own projects. Tunisia should establish
similar i-labs in its major universities and cities. Private start-ups and
enterprises have already begun similar endeavors on a small scale, such as
Cogite[9] and thePeaceInnovation Lab[10] in Tunis.
Policy Recommendations
Phase 1. Build Start-Up Infrastructure
[7] (15.5%(unemployment rate) x4.04 million total labor force) = total unemployed Tunisians.
Assume 145,000 eventually takeall thejobscurrently open in theTunisian economy; 480,000
workersstill need new jobsto open up.If they all go to work in i-labs,thisimpliesanet cost of
480,000 peoplex18 dinarsper person x0.43 USD per dinar = approx.3.75 million USD.
[8] For example,seeTheHarvard I-Lab.?VentureIncubation Program.?Harvard University.2016
https://i-lab.harvard.edu/prototype/venture-incubation/
[9] Cogite CoworkingSpace.?Home.?Cogite.2016 https://www.cogite.tn
[10] Peace Innovation Lab at Stanford.?TunisTeam.?Stanford University.2016.
https://peaceinnovation.stanford.edu/field-lab-network/tunis/
Invest in
InnovationLab
toteach
entrepreneurial
skillsandbuild
co-working
spaces

6. 6 MEF Policy Brief
Cogite began with an initial investment of 9000 dinars in 2013 and now
serves over 500 entrepreneurs, implying an initial cost of 18 dinars per
person[11]. If Tunisia copied this model to build co-working space for all
480,000 unemployed workers in Tunisia, it would only require initial
investment of 8.6 million dinars,or 3.75 million USD.[12]
Tunisiacan partner with tech companieswith their own innovation labslike
Google, Jigsaw, and IBM to help design a program for Tunisia. In addition,
Tunisia can forge partnerships between top foreign university-attached
i-labs and its own to help with program design. Tunisian i-labs, in turn,
should guide start-upsthrough the registration,incorporation,and taxation
process. Besides they could establish a foundation, which would take an
equity stake in all start-ups or simply establish start-ups as controlled
subsidiaries. Current Tunisian law would allow the companies to legally
represent the start-ups during the initial phase and conduct all the
necessary preliminary registration and taxation.[13] After business
maturation, the foundation could sell its equity stake at a discount to the
foundersor convert it to subordinated debt.Thissystem could alleviate the
difficult legal framework that many young Tunisians have cited as an
obstacle to start-up creation.[14]
Furthermore, i-labs would require spaces. They can be informal and only
need to provide basic security, utilities and IT infrastructure. These may be
located in suburban areas at a cheap real estate value. For example, Cogite
in Tunis and TUMO in Yerevan (Armenia) have already pioneered this
model and currently rent out cheap, affordable space to small
start-ups.[15] With large enough scale and subsidization, Tunisian
government and NGOscould providethese spacesat an even lower cost by
simply refurbishing warehouses and re-purposing university buildings or
old libraries.
[11] Blaise and Sbouai 2016.
[12] (15.5%(unemployment rate) x 4.04 million total labor force ) = total unemployed Tunisians. Assume
145,000 eventually take all the jobs currently open in the Tunisian economy; 480,000 workers still
need new jobs to open up. If they all go to work in i-labs, this implies a net cost of 480,000 people x 18
dinars per person x0.43 USD per dinar = approx.3.75 million USD.
[13] Tunisian Industry Portal.?Legal Constitution of Companies.? Republic of Tunisia Ministry of Industry
and Trade. 2016
http://www.tunisieindustrie.nat.tn/en/doc.asp?mcat=16&mrub=186&msrub=269&dev=true
[14] Blaise, Lilia and Sana Sbouai. ?Revolution has allowed young Tunisian entrepreneurs to dream big.?
True Africa.August 19,2016. http://trueafrica.co/article/co-working-spaces-in-tunisia/
[15] ?Armenia?s TUMO Looks Beyond the Caucasus.? Red Herring. July 13, 2016.
http://www.redherring.com/startups/armenias-tumo-center-looks-beyond-caucasus/
Partner with
techcompanies
withtheir own
innovationlabs
todesign
a programfor
Tunisia

7. 7 MEF Policy Brief
16] TheTunisian PrivateEquity and VentureCapital Association (ATIC).Section 3.(Key Challenges).
Making FinanceWork for Africa.April 28,2014.
http://www.mfw4a.org/news/news-details/article/2829/the-tunisian-private-equity-and-venture-capital-asso
[17] Groh,Alexandar,et al.?TheVentureCapital & PrivateEquity Country AttractivenessIndex:Tunisia.?
IESEBusinessSchool,University of Navarra.2015.
http://blog.iese.edu/vcpeindex/tunisia/
[18] Calculated from datareported in ?What next for the start-up nation??TheEconomist.January 21,
2012. http://www.economist.com/node/21543151
[19] Zgheib,Nibal.?EBRD to boost competitive lendingin local currency to SMEsin Tunisia.?European
Bank for Reconstruction and Development.May 27,2016.
http://www.ebrd.com/news/2016/ebrd-to-boost-competitive-lending-in-local-currency-to-smes-in-tunisia.htm
[20] DataBank.?Grosscapital formation (constant LCU) (Tunisia).?World Bank.2013.
http://data.worldbank.org/indicator/NE.GDI.TOTL.KN?locations=TN
Phase 2.Funding a Start-Up Empire
Thesei-labs,like their counterpartsabroad,can serve ashubsfor connecting
start-ups with financiers. The Harvard i-lab has helped raise $300 million
USD for its start-ups in the last five years. Financing for start-ups and SMEs
derivesfrom three main sources:equity,debt,and grants.
Most equity financing for start-ups takes the form of venture capital (VC).
Tunisia has a private equity and VC association, which has identified
problemswith VC financing in Tunisia.These include capital scarcity and the
inability to connect start-upswith investors.[16] To solve the latter problem,
a comprehensive Tunisian Innovation Lab Foundation could partner with
private Tunisian investors, NGOs, and foreign developmental banks and
connect them to start-upswithin Tunisian i-labs.
Tunisia ranks in the bottom quartile globally for total VC funding.[17] To
bring Tunisiaup to the world-beating USlevelsof VC fundsper capitawould
require approximately 830 million USD.[18] While this may seem like a
major challenge, foreign developmental banks have demonstrated
commitment to financing SMEs in Tunisia. The European Bank for
Reconstruction and Development (EDRB) has funded projects in Tunisia
over $300 million USD since 2012 and has already agreed to increasing
funding for Tunisian SMEs.[19] Moreover, this 830 million USD only
representsabout 11%of Tunisia?sannual gross capital formation (GCF).[20]
Broken over a period of several years, Tunisia could easily accumulate the
necessary capital infrastructure for VC financing by diverting a mere 2%of
itsGCF annually.
Establish
anI-Lab
VentureCapital
fund

8. 8 MEF Policy Brief
[21] Khaled,Mohammed.?MicrofinanceRegulation in Post Revolution Tunisia.?CGAP,World Bank
Group.April 29,2011.
https://www.cgap.org/blog/microfinance-regulation-post-revolution-tunisia
[22] Simulateur.?Le Microcredit Avec Taysir.?Taysir Microfinance.2016.
http://taysirmicrofinance.com/microcredit/#simulateur
[23] World Bank News.?Opportunitiesand Challengesfor ExpandingFinancial Inclusion in Tunisia.?
October 13,2015.
http://www.worldbank.org/en/news/feature/2015/10/13/opportunities-and-challenges-for-expanding-fin
To accumulate venture capital, Tunisian i-labs can work with financial
institutions to establish a VC fund specifically geared toward the i-lab
start-ups. The i-lab fund could coordinate directly with the i-lab?s start-ups
and oversee their operation, thus eliminating the transparency and
communication problemsthat currently plague themarket.
Debt financing represents a current obstacle for start-ups. Because of a
ceiling on interest rates, debt financing has not been able to loan at rates
competitive with SME risk profiles. Only one microcredit organization,
ENDA-IA,became sustainable since itsinternational statusexempted it from
rate ceilings[21]. Even after the 2011 microcredit reforms, microcredit
institutions often require a guarantor or collateral for SME loans,[22] Over
half of all Tunisian businesses have limited access to credit[23]. In
response, Tunisian i-labs can enlist developmental banks to establish a
microcredit fund specifically devoted to loaning or guaranteeing loansto
start-ups.
I-lab foundations create synergies facilitating the financing process for
start-ups. Their specialists would already have intimate knowledge of the
start-ups? business models through the i-lab coaching and incubation
program. Additionally, if cases the i-lab held equity in its start-ups, it could
legally represent and accredit these start-ups to banks while ensuring that
the start-ups themselves used their financing responsibly. Additionally, part
of the i-lab coaching process would involve teaching young entrepreneurs
how to manage and service debt. These are valuable skills for a business
owner, but not necessarily common knowledge among graduates with
technicaldegrees.
Create
anI-Lab
micro-creditor
and
guarantor

9. 9 MEF Policy Brief
[24] Switchmed.?Crowdfundingin Tunisia,what isthecurrent status,challenges,and benefits??
Regional Activity Centrefor SustainableConsumption and Production.2016.
https://www.switchmed.eu/en/country-hubs/tunisia/actions/copy_of_tes-tunisia-industry-service-providers
[25] Cornick,Alixe.?Equity CrowdfundingRegulations.?National CrowdfundingAssociation of Canada.
February,2016.http://ncfacanada.org/equity-crowdfunding-regulations/
Outside of debt and equity financing, crowd-funding is a powerful tool for
financing start-ups. However, in Tunisia it suffers from legal hurdles and
underfunding. The four main crowd-funding platforms operating in Tunisia
are based in France or Lebanon because Tunisia does not have a clear legal
framework for crowd-funding [24]. Tunisian government can pass a law to
define the legal boundaries of crowd-funding so that businesses can benefit
from itsfinancingoptions.
Currently, Canada has enacted the most progressive and start-up friendly
legislation towards crowd-funding. Certain provinces exempt start-ups and
SMEs from the normal securities regulations to ease their compliance
burden.[25] We recommend that Tunisia adopt a policy based on the
Canadian model, but regulated and standardized nationally, rather
than provincially.
In addition to introducing a clear legal framework, Tunisian i-labs can launch
an affiliated crowd-funding platform. To do so, the i-labs can partner with
existing crowd-funding platforms in Tunisia like CoFundy and Afrikwity for
input and technology transfer. The i-labs can also collaborate with
internationally successful crowd-funding platforms like Kickstarter and
GoFundMe. Joint Ventures are not new in Tunisia and have had success in
stimulating technology transfer. Moreover, the actual technology behind
crowd-funding merely requires adequate investment in existing IT
infrastructure.
Launch
a Tunisian
crowd-funding
platform

10. 10 MEF Policy Brief
[26] Ben Sassi,Imen,et al.?Tunisia: Corporate Tax:Significant Developments.?PWC.December 16,
2016.
http://taxsummaries.pwc.com/uk/taxsummaries/wwts.nsf/ID/Tunisia-Corporate-Significant-developments
[27] Bureau of Economicand BusinessAffairs.?2014 Investment ClimateStatement:Tunisia.?U.S.
Department of State.June2014. http://www.state.gov/e/eb/rls/othr/ics/2014/227298.htm
[28] Blaise,and Sbouai 2016.
[29] Tunisian Industry Portal.?Legal Constitution of Companies.?Republicof TunisiaMinistry of
Industry and Trade.2016.
http://www.tunisieindustrie.nat.tn/en/doc.asp?mcat=16&mrub=186&msrub=269&dev=true
[30] DoingBusiness.?Singapore.?World Bank,IBRD,IDA.2016
http://www.doingbusiness.org/data/exploreeconomies/singapore
[31] World Bank 2016.
[32] Ibid.
[33] Ibid.
Phase 3.Designing the Right Legal Framework
The last few years saw positive reforms to Tunisian tax and business law,
namely a three-year complete exemption for SMEs[26] and a tax credit for
50% of training costs [27]. There is still work to be done. Young
entrepreneurs have cited bureaucratic procedures and poor legal
framework as an obstacle to starting a business in Tunisia [28].
Registering an LLC in Tunisia can require more than seventy copies of forms
and declarations [29]. As discussed, an i-lab can guide entrepreneurs
through this process or even register LLC?s on their behalf by accepting
power of attorney.
However, the underlying problem is excessive bureaucratic requirements.
Tunisian regulators can learn from Singapore, a country consistently praise
for its ease of doing business [30]. Singapore has digitized registration and
taxation through online platforms called Bizfile and MyTax [31]. While
Tunisia does have a single intermediary registration process through the
Agency for the Promotion of Industry and Innovation, this process is not
actionable online or via mobile. The Agency has tried to bring these
procedures online but lacks the necessary IT infrastructure.For this reason,
Tunisian government can invite tech companies such as Google and
Facebook that have already demonstrated a track record of
infrastructural innovation in the developing world. In terms of financing,
any number of developmental banks could fund this project. Digital filing is
not particularly capital intensive. It is also financially feasible since it
conserveshuman labor for more creative tasks,and thussavesmoney in the
long run. As a corollary to this innovation, Tunisia can lower the number of
tax payments per year down from eight[32] and move from a joint filing
requirement and acceptingsingleonlinefilings[33].

11. 11 MEF Policy Brief
[34] OECD (2015),Investingin Youth: Tunisia: Strengtheningthe Employability of Youth duringthe
Transition to aGreen Economy,OECD Publishing,Paris.
[35] Lau,Paul and ChrisWoo.?Singapore: CorporateTax: Deductions.?PWC.December 19,2016.
http://taxsummaries.pwc.com/uk/taxsummaries/wwts.nsf/ID/Singapore-Corporate-Deductions
[36] Bogliacino,Francesco and Marco Vivarelli.?TheJob Creation Effect of R&D Expenditures.?IZA
4728,January 2010: 15-16. http://ftp.iza.org/dp4728.pdf
In addition to these reforms, Tunisia can bridge its skills gap by drawing on
educated, but unemployed, women. According to the OECD, lack of
childcare has pushed qualified Tunisian women out of the workforce and
contributes to the gender wage gap[34]. Tunisia can mitigate these
problems by introducing a corporate childcare deduction and a higher
individual childcare tax credit for working mothers. I-labs can also create
synergies in this area by providing childcare facilities on their premises so
that female entrepreneurs will have access to the same opportunities as
males.
To stimulate innovation, Tunisia can learn from other countries by
instituting an R&D tax deduction. Singapore, for example, has legislated a
150%tax deduction for domestic R&D expenditures,[35] and thispolicy has
been extremely favorable to capital intensive, high-tech firms and start-ups.
More importantly, economic research has demonstrated an empirical
connection between R&D expenditures and employment[36]. Logically, real
sector innovation produces new markets, products, and services, and these
in turn lead to sustainable job creation.
Bridge
theskillsgap
by empowering
Tunisia?sWomen
Encourage
investment
inR&D

12. 12 MEF Policy Brief
[37] "Industrial Roofing Shed." Barathi Steel BuildingSolutions.2016.Accessed December 22,2016.
http://www.bsbuildingsolutions.com/industrial-roofing-shed.html#heat-protected-shed-on-terrace.
[38] PC Liquidations.?AsusEee PC 1011PX10" Laptop Intel Atom N570 1.66GHz1 GB Memory No
HDD.?
http://www.pcliquidations.com/p39065-asus-eee-pc-1011px?utm_source=google&utm_medium=cse&utm_t
[39] Average Salary Survey (2016).?Tunisia.?November 16,2016.
http://www.averagesalarysurvey.com/tunisia
4.Feasibility Study
The first step to implementing these i-labsisasmall-scale,soft launch of the
i-lab in amajor city.Exhibit A in the Appendix isafeasibility study for asingle
i-lab at zero operating losses. We have estimated the costs of creating and
running an i-lab to accommodate one thousand entrepreneur members.The
cost estimates assume allocation of 3 square meters per member and about
20 USD per square meter based on quotes from warehouse construction
firms in the developing world[37]. It proposes essential furnishing and 500
computers, assuming that half of the participants can bring their own
computers or two members can share one, with a unit cost per computer
referenced and estimated at 100 USD[38]. It also accounts for staffing
thirty-four i-lab specialists (each specialist leads thirty members, or six
start-up teams) to guide and coach start-up teams, each paid an annual
salary of 27,495 TND in line with national averages[39].
In terms of financial sustainability, this study proposes a thirty-year
loan of about 300,000 TND at the national interest rate of 4.25%, repaid
annually. This could be provided through sovereign debt, which is
guaranteed at the national rate,or from afriendly developmental bank,since
several have already extended large loans to Tunisia. The i-lab debt will pay
itsdebt and operational expensesby charging amonthly membership fee for
these full-time entrepreneursof about 79 TND,with affordability at roughly
10.6%of GDPper capita.

13. 13 MEF Policy Brief
[40] Cogite CoworkingSpace(2016).
[41] Stölting,Sarah,et al.Neighbourhood SMEFinancing:Tunisia.European Investment Bank.
October 2015.14.
http://www.eib.org/attachments/efs/economic_report_neighbourhood_sme_financing_tunisia_en.pdf
5.National Operational Feasibility & Impact Study
Appendix Exhibit B includes a nationwide feasibility and impact study,
followed up by ayear-by-year job creation and GDPgrowth model in Exhibit
C.The national feasibility study includes the recurring operational costs per
member of 935 TND per annum associated with staffing. In reality, costs
include interest and depreciation expense, but these have been omitted
sincethey areminimal and highly scalable.
For a nationwide i-lab program serving the 480,000 workers currently
unemployed, total yearly operational cost would be 450 million TND at 935
TND per member. If the government allocated 1.6% of its budget to
subsidize these costs by half, the average monthly membership fee paid by
each member would drop to roughly 40 TND per month, making the
program not only affordable, but 74% cheaper than membership fees at
current privateco-workingspaceslikeCogite[40].
A national i-lab program for 480,000 student members would produce
roughly 96,000 start-ups,assumingan average of five membersto astart-up
team. In a worst-case scenario, 90% of these start-ups fail. However, the
remaining 10% of successful start-ups would only need to grow their
headcount to 50 total employees on average to fully absorb the 480,000
into the labor force.This headcount of 50 employees on average per SME is
standard for Tunisia, according to European Investment Bank reports[41].
Thus, on the whole, even if 90% of all start-ups in the national program
failed, and the 10% of successful start-ups only grew into medium-sized
enterprises, the program would create nearly 500,000 jobs, lower
unemployment by nearly 12%, and boost GDP growth by 1.2%for the next
ten years.

14. 14 MEF Policy Brief
[42] Ibid.
[43] Gorevic,Brittany.?Maturiy Map: Expansion Stage30-50 Employees.?Medium.August 19,2014.
https://medium.com/startup-maturity/maturity-map-expansion-stage-30-50-employees-b2bec6433f4d#.196ow0p93
In Appendix Exhibit C,we have also included a year-by-year impact scenario
for the program. It begins with the assumption of 9,600 start-ups with five
members on average in the first year of the program, corresponding to the
90% failure rate worst-case scenario described above. Based on Tunisia?s
current GDP and GDP per worker, it models the year by year boost to
employment and GDP growth as a result of the program for the next ten
years. It reasonably assumes that successful start-ups eventually grow from
5 to 100 employees (i.e.from a micro-enterprise to a large-sized enterprise)
after aten-year mature process[42].It assumesthat the successful start-ups
will hire about 9 to 10 employees per year on average, which is reasonable
and plausible given trends in start-up maturity identified by VC experts. It
also assumes a 1%growth in the labor force in line with population growth.
GDP growth increase is modeled by multiplying the average, current GDP
per worker in Tunisia by the estimated number of jobs created by the
program each year.
The model makes sure to accurately project GDP per worker and GDP
growth due to this program without counting any additional growth in the
economy.This allows us to examine the program in a vacuum and isolate the
boost to growth of the program. However, it includes a labor force growth
projection of 1%and accountsfor theGDPgrowth of the previousyear in its
GDP per capita due to the program in order to accurately and realistically
project from the previous year. We also checked for discrepancies between
the economic indicators we used, and the margin of error came to a mere
2%.

15. 15 MEF Policy Brief
Conclusion
While unemployment is a daunting challenge to Tunisia, the huge amount of
young people entering the labor market represents also a monumental
opportunity. Tunisia has a talented labor with serious potential for
innovation. The government and civil society should accordingly do all in
their power to help Tunisians to create their own innovative ventures.
Above, we have attempted to highlight a comprehensive initiative for
businessand job creation using start-upsand innovation labswith education
of would-be entrepreneurs. In order to demonstrate feasibility, we have
based this initiative almost exclusively on pre-existing models and policies
found around the globe and advocate that Tunisia emulate and replicate
them domestically.

16. 16 MEF Policy Brief
Exhibit A: Single I-Lab Feasibility Study

17. 17 MEF Policy Brief
Exhibit B: National Operational Feasibility Study

18. 18 MEF Policy Brief
Exhibit C:Year by Year Job Creation and GDP Growth Model
(diagram compressed to two-year period to allow for easy reading.The full model spreadsheet is
available upon request).

19. MEF Policy Brief
About MEF
The Maghreb Economic Forum
(MEF) is an independent
Think-and-Do Tank founded in
2011 on the premise of
supporting economic and social
development in the five
Maghreb countries.
Our mission is to convene and
mobilize diverse actors to
catalyze sustainable economic
and social development in the
Maghreb.
MEF believes that an informed,
active citizenry is the key to
building sustainable economies
and inclusivesocieties.
Contacts:
contact@magef.work