How smaller African economies can become leading tech ecosystems, with Tunisia a case study
In the Africa of 2023, four countries still dominate the continent’s startup ecosystem, attracting 75% of VC funding and most of the media’s attention. Nigeria, Egypt, Kenya and South Africa dominate the continent on almost every relevant metric: market size, doing business, access to capital, openness to foreign markets, infrastructure development, access to talents and so forth. As a result, most startups — the ones operating basic digital businesses that bring incremental innovation to traditional value chains — have better chances to thrive in these ecosystems, which is reflected in all sorts of statistics.
Yet in the shadow of the Big 4, mired in what appears to be a deep political and economic crisis with severe consequences for the country’s economic and social fabric, Tunisia nurtures some of the most innovative startups in the continent. The dazzling rise of Instadeep is more than an epiphenomenon. It is rooted in solid foundations and could become the bedrock of a deeptech cluster in the country.
Tunisia, STEM education and AI expertise
Tunisia is a small country of 12 million people, at the northernmost point of Africa between Algeria and Libya and facing Italy across the Mediterranean Sea. After a peaceful independence obtained from France’s protectorate, Tunisia was ruled for 30 years by President Habib Bourguiba, a primary advocate for Tunisian independence who abolished the one-year monarchy that followed and was elected president in 1957. Bourguiba’s priorities were the development of the education system, equality between men and women, and economic development that gave birth to considerable achievements during his 30-year reign. Tunisia’s education system is a legacy of the Bourguiba regime, now ranking first in Africa by the World Economic Forum.
In January 2011, the nation rose against the rule of Zine el-Abidine Ben Ali, president since 1987 and former prime minister under Bourguiba. The revolution triggered a strong feeling of involvement among all spheres of the population in rebuilding the country, which carried into its entrepreneurial ecosystem. A strong bottom-up dynamic emerged from a handful of dedicated and passionate people: entrepreneurs, support organisations, ecosystem builders, and investors all sat together to put together the first building blocks of today’s ecosystem.
The result is that Tunisia’s ecosystem today is arguably the most structured, transparent and inclusive in Africa. Tunisia’s Startup Act (passed in 2018) and Startup Act 2.0 are a perfect case study of governance and clarity of processes. Led by Smart Capital, the ecosystem’s responsibilities are well shared among public and private structures across the country, answering pragmatically the country’s evolving challenges and perspectives regarding entrepreneurship and innovation.
Tunisia’s strong legacy in education system quality (STEM especially), the return of the diaspora after the Jasmin revolution and a well-structured ecosystem empowering local talents with entrepreneurial capacities have led to Tunisia’s ecosystem becoming one of the most prolific in terms of innovative startups that leverage product innovation based on scientific research.
Besides Instadeep, recently acquired by biotech giant Biontech, several deeptech nuggets are blossoming inside a turmoiled economy.
Kumulus Water, for instance, is building self-sufficient water kiosks that produce 30l of drinking water per day, out of sun and air. nextProtein is building a large-scale and self-sufficient insect-based source of protein for livestock. Many more local scientific talents are finding the entrepreneurial capacity they need in Tunisia to turn their research into a business. Many face important challenges in scaling their business in a small market not so connected continentally. Yet, the scientific evidence that combining quality education, a democratic and structured ecosystem, and entrepreneurial capacities can offer a small economy the opportunity to punch above its weight in terms of innovation cannot be denied.
Another African example of this phenomenon is Ghana. While sporting a different history and background, the country now presents similar characteristics to Tunisia, with a region-leading education system, an added legacy of STEM education and a strong network of support structures and capital providers. Again, this results in a unique ecosystem able to produce some of the continent’s most innovative healthtech and biotech startups. Yemaachi Biotechnology, a YC-backed startup, raised $3.2m from investors such as Tencent and LoftyInc to accelerate the development of cancer detection and cure strategies using cutting-edge immunogenomics, bioinformatics, and artificial intelligence.
Amid promise, the brain drain continues to hamper innovation capacity
Scientific talent on the continent can live a strained existence. While vital for the continent’s future growth, bar a few exceptions, they do not always find at-home opportunities they want to pursue in the form of research, funding or venture development. Algeria is, unfortunately a perfect illustration. For example, Professor Mabrouk Aib, head of the Industrial Design, Data Science and Artificial Intelligence at the National Polytechnic School of Algiers, testifies, “In my department, we are witnessing an alarming exodus: for some years now, the overwhelming majority of our students have been leaving Algeria within three months of graduating (in some years, up to 90% of the graduating class)”.
One of these local talents left the National Polytechnic School of Algiers some years ago and later graduated with a Ph.D. in electrical engineering from Stanford in the United States. His name is Noureddine Tayebi, the founder of Yassir, North Africa’s most valued startup. Noureddine knows that reality too well, and through Yassir, he nurtures the ambition to offer local tech talents an opportunity to stay and contribute to their country’s ecosystem.
In Tunisia once, OST launched a pilot program in 2022, BRAIN, in partnership with MIT, to foster the development of a deeptech ecosystem in the country. This program aims to empower scientific talents with the entrepreneurial capacities they need to help them transform their idea into profitable businesses. It is hoped that BRAIN can seed the creation of strong local expertise and give birth to an economic cluster that can impact economic growth in the region.
This program is being extended Africa-wide, bringing together experts to advocate locally and lay the foundations for future deeptech ecosystems in the continent. It is an excellent example of an initiative that can not only shed light on small ecosystems’ hidden gems but, most importantly, help retain some of the continent’s most talented minds by offering them opportunities to build upon their research and contribute to the development of their country.
Aiming for the infinite value loop
As Ghana and Tunisia demonstrate, with the right ingredients, small ecosystems can produce among the most innovative businesses on the continent. The secret is to rely on three pillars: an enabling environment (legal, financial, etc.), entrepreneurial capacities (support structures, access to capital, stakeholders’ involvement) and innovation capacities (education, research centres, corporates and so on). Combining these three elements can help retain talent, drive local research and help turn some of this research into innovative businesses.
This should be the end game for ecosystems outside the Big Four, small or complicated markets that possess a reliable education system. By strengthening local expertise, it can create local opportunities that, in turn, help retain some talent. The wider the talent pool, the greater the chance of projects and innovations that capture the interest of national and international capital providers, corporations and other stakeholders.
This cycle strengthens the business environment and creates more economic development opportunities, which incentivises local talent to remain in-market, thereby deepening expertise.
Abderrahmane Chaoui is an African ecosystem researcher, consultant, and writer.
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