How to overcome the lack of information on alternative financing in green economy for entrepreneurs in Tunisia
Since 2011, the economic environment in Tunisia has evolved considerably. Indeed, social events have highlighted the important level of unemployment, especially among young people, and lifted the veil on a situation of extreme poverty. The fight against unemployment has since become a national priority through the development of regions and support measures for job creation, entrepreneurship, youth training, and project financing.
In this context, microcredit has emerged as an essential vector for the financing of small projects. An overhaul of the regulatory texts has helped to introduce in Tunisia the new concept of microfinance and to offer new services. Today, the microcredit sector is composed of 6 institutions, including an Islamic microcredit institution, and about 150 associations that offer microcredit in remote areas.
Other financing devices appeared after 2011 through associations established on the model of existing French structures such as "Réseau Entreprendre" or the "Initiative France" network, which offer to the founders and business buyers in Tunisia interest-free loans tied to specific support. Several coworking platforms have also emerged such as Cogite, Dar El Harka, El Space, etc., offering support solutions that complete Tunisia's entrepreneurship ecosystem. A single platform (Flat6Lab) offers a work space, support, training, as well as equity financing.
These devices respond to a need for project funding and support that traditional financing through banks and investment funds are unable to finance, either because the amounts are too small and don't allow for profitability, or due to a risk estimated too high or unknown.
All these new financing solutions that combine support and funding are not dedicated to a specific business sector. To better identify the structures specifically dedicated to green economy projects, SwitchMED, which offers technical assistance to social and economic innovation projects through a network of partners in eight countries of the MENA region, launched in May 2016 a study in Tunisia in order to identify the sector's financing devices.
This study found that the green economy in Tunisia is not a sector that benefits from ad hoc financing structures. The elevated risk and technical nature of these types of projects render their study and financing difficult. These projects require, furthermore, start-up funds for preliminary studies, patents, and other intangible assets which are difficult to fund by debt or equity.
A reflection on the launch of a product dedicated to this type of project could be launched in order to offer a device which would provide start-up financing in the form of grants or equity, backed by a guarantee to minimize the risk for the investor, and tied to technical support to secure the project's progress. This tool would act as a lever to facilitate access to traditional financing.
Moreover, the project leaders are not aware of existing devices. In order to remedy this, it might be useful to create a tool, in the form of a mapping or a website, for regrouping all the existing devices, whether they are public or led by private initiatives, and whether it is support, technical assistance, or facilitating financing.
This tool would be a guidebook to the entrepreneur in order to inform them of what exists, to help them understand the process of funding their project, and to orient them toward the best solution according to the typology of their project. The objective of this tool would be to eventually pull the entrepreneur out of isolation by putting them into contact with the actors who are useful to their project, engendering confidence and mutual understanding. It could be distributed through financing support structures, but also through universities, engineering schools, training structures, employment offices spread out over the regions, or in post offices that have a dense coverage network in the territory, thus creating new project ambitions.
Finally, Tunisia has a significant potential for green economy project development given its natural and rich ecosystem. A census of these projects through the realization of a study of potential could facilitate the financing and support of these projects by raising the awareness of the authorities and international donors on the pool of job creation in this sector.
Katia Mehanneche As an inclusive finance consultant, Katia Mehanneche has experience in the financing of business projects, VSME and SMEs, in the private sector in France. She is also an expert in financing private banks and supporting Tunisian donors in the microfinance and financial inclusion sector. For more information see her Linkedin .