Digitalisation, the future of start-ups in South Mediterranean?

Micro, small and medium-sized enterprises (MSMEs) constitute about 95% of the total enterprises in the South Mediterranean region and are considered to be the driving forces behind economic growth, job creation and green and inclusive growth. Entrepreneurs, especially start-ups, still face many challenges when it comes to creating, promoting and managing their businesses.

Supporting these entrepreneurs through innovative initiatives and enhancing the ecosystems in which they operate will contribute to their development. In turn, entrepreneurs will contribute to the achievement of several Sustainable Development Goals (SDGs).

It is in this context that the Next Society Project (TNS) and FEMISE have decided to launch this initiative to produce “The Next Society Policy Briefs Series”. This series of Briefs aims to better understand the challenges faced by entrepreneurs (through the lens of entrepreneurs themselves) and to provide customised operational policy recommendations. These Briefs are based on collaborative work and exchange of knowledge and experience between the researcher(s)/author(s) and the entrepreneur(s), many of whom have benefited from the TNS project, ensuring their relevance and impact.

Digital technology seems to be progressing worldwide more than any other innovation in history, having reached over 50% of the population in developing countries. The COVID-19 crisis has strengthened the importance of digitalization as a solution to many of the challenges that have been faced in almost every sector and around the world. The size of the global digital transformation market has been estimated at USD 589.7 million in 2021 and is expected to grow at 15.6% per annum to 2030. The benefits of digital technologies are wide-ranging, from economies and businesses to communities and individuals. However, the adoption of digitalization requires the availability of appropriate skills and knowledge and a change in culture.

During the Covid-19 crisis, economies had to find ways to increase the use of technology in order to survive. This ongoing trend can provide great opportunities for new business development, entrepreneurship and start-ups. However, the technology and software sector in the South Med region is not yet fully developed and many barriers remain that prevent start-ups from being competitive. Some support strategies are being implemented in order to adopt the most appropriate tools to develop the sector and in particular to provide opportunities for the creation of digital start-ups, but the journey is still long.

The objective of this policy brief is to highlight the importance of the ICT sector in the South Med region as a new opportunity for start-ups to launch their activities.

After giving an overview of the ICT sector in this region, we will provide some examples of government initiatives, and highlight the main challenges faced by the sector and the impact of COVID-19. We will then focus our analysis on the success stories of three ICT start-ups in Egypt, Lebanon and Tunisia that have benefited from THE NEXT SOCIETY project.

Through a survey, we will highlight that some of the main sectoral barriers that these startups have identified are the lack of digital competence of users, the difficulty to penetrate the digital market, the lack of knowledge and skills of the populations and the ability to grow their projects and internationalise them.

These barriers are in addition to the traditional barriers faced by entrepreneurs, such as funding, bureaucracy and visibility. The brief then presents conclusions and policy recommendations on how to promote the sector, including strengthening administrative digitalization, improving coordination between different public authorities, monitoring the implementation of innovation and digitalization policies, and creating a suitable environment for young people to take risks and encourage digital entrepreneurship.

Brief, entitled “Embracing digitalisation: the future of startups in the South Med region”, by Walid Hadhri, University of Tunis, is available by clicking here :

https://www.femise.org/en/slideshow-en/report-on-post-covid-19-opportunities-for-growth-regional-value-chains-and-mediterranean-integration