Restrictive AI laws and 'false hope' hinder technological innovation in Tunisia

A disastrous investment climate has doomed startups as authorities sell fantasies to founders

Are restrictive AI laws and modern technology frameworks hindering innovation in Tunisia?
Jay Torres
Are restrictive AI laws and modern technology frameworks hindering innovation in Tunisia?

Restrictive AI laws and 'false hope' hinder technological innovation in Tunisia

Tunisian excellence has long existed outside the realm of institutional or governmental support. Those who have fought to succeed have done so without the presence of public policies to give them a boost.

One example is Tunisian tennis player Ons Jabeur, who recently stole hearts at Wimbledon. Hailing from a small village on the Tunisian coast, she grew up without suitable tennis courts for training and local competition. Against all odds, she made it to the world stage.

Swimming champion Ayoub Hafnaoui, 20, is another example. He recently won two gold medals at the World Swimming Championship in Japan. There, the Tunisian flag flew proudly high to honour Hafnaoui, whose country’s swimming pools are mostly closed for maintenance, except for a few that struggle to attract fans of the sport.

The reality is no different in the field of artificial intelligence (AI). The remarkable success of Tunisians in this promising sector does not come with official backing. In fact, quite the opposite.

Tunisian President Kais Saied recently described AI as an imminent threat and an “assassination of human intelligence,” warning of its impending dangers for all of humanity.

Tunisian President Kais Saied recently described AI as an imminent threat and an "assassination of human intelligence," warning of its impending dangers for all of humanity.

Saied's comments, which came during Flag Day, not only dashed the hopes of those who anticipated a healthy and swift engagement in the Fourth Industrial Revolution, but also gave the green light to current authorities to enact laws banning and combating modern technologies.

This could halt the progress of AI implementation, which according to Saeid has turned into a kind of conspiracy, despite the fact that several successful experiments and stories have been honoured during his tenure in a country filled with young talent.

Proof of potential

One of the most significant success stories is undoubtedly that of the emerging company 'Instadeep,' which specialises in the design of AI systems. Tunisian engineers Karim Beguir and Zohra Slim founded the company in 2014, armed with only two computers and a starting capital of approximately 5,000 Tunisian dinars (around $1,600 at the time).

'Instadeep' quickly became one of the world's top 100 global companies in AI and even took part in the Covid-19 vaccine research along with Pfizer.

In early January 2023, entrepreneurs Beguir and Slim announced that their company had been acquired by German giants 'Biontech', who specialise in biotechnology to develop a vaccine against cancer, for a whopping €410mn.

The value of the deal amounted to 1.3bn Tunisian dinars. This is about 250% of the budget of the Presidency of the Republic (191mn dinars, or about $62mn) and the budget of the Prime Minister's office (307.7mn dinars, or about $100mn) for the year 2023.

It is also equivalent to half of the budget of the Ministry of Higher Education (2.2bn dinars, or about $710mn) and half of the total value of the national subscription (internal loan of 2.8bn dinars, or about $910mn), which is open to companies, businessmen, and citizens to finance the state budget for the current year.

The deal's value also exceeds the net profit of Banque Tunisienne Internationale, Tunisia's largest bank (1.26bn dinars for 2022, or about $410mn).

The massive and record-breaking deal with 'Bointech' constituted a major event in the country. It was a window into the fast-growing potential of AI.

It also sparked the beginnings of a revolt among entrepreneurs, whose projects have failed due to restrictive legislature.

However, Tunisia has not yet approved its national AI strategy (or implemented reforms), even though several years have passed since the announcement of its development.

Global ranking

In the meantime, Tunisia has fallen three places in the Global Artificial Intelligence Index according to "Tortoise Media".

Tunisia has fallen three places in the Global Artificial Intelligence Index, according to "Tortoise Media". The index tracks developments related to AI across 62 countries.

The index tracks developments related to AI across 62 countries. It's based on 143 sub-indicators derived from seven criteria: talent, infrastructure strength, business climate, scientific research, development, government strategy, and trade.

Tunisia dropped from 53rd place in 2020 (the year it registered its presence on the index) to 56th as of July 2023.

Tunisia's relatively high starting position in 2020 was thanks to a leap the country experienced in research and innovation in AI during the Covid-19 pandemic. This was aided by the government's "Challenge" initiative at that time, which pushed for positive transformations.

The numbers were good – the turnover of startups specialising in AI grew from 69mn dinars (about $22mn) in 2018 to 719mn dinars (about $233mn) in 2020.

The number of startups in Tunisia reached 904 in June 2023, compared to only 10 companies in 2018.

However, despite efforts to localise AI, Tunisia can still not effectively harness the immense potential of the so-called knowledge economy and modern technologies.

This has led to an alarming exodus, as hundreds of promising startups leave the country in search of better investment external climates, which offer more incentives and fewer complications, especially regarding bureaucracy and restrictive laws.

Meanwhile, major global companies, institutions, and banks have adopted AI and embraced its rapid advancements.

Inevitable demise?

Renowned economic expert Ezzedine Saidan, who is the head of a prestigious research centre and closely acquainted with the experiences of several entrepreneurs and software/system developers, says, "The survival of a startup in Tunisia under current laws, particularly the foreign exchange control law, simply means its demise." 

Jay Torres
Are restrictive AI laws and modern technology frameworks hindering innovation in Tunisia?

However, the official line takes an entirely opposite view.

At the end of last year, the Director-General of the Deposit and Consignment Fund, Najia Gharbi, affirmed that Tunisia aims to become a "central hub" for modern and innovative technologies. She believed that achieving this strategic goal is possible, especially with the availability of funding and a favourable economic environment.

She also revealed the merger of all funding mechanisms of startups under "Smart Capital," which combines investment funds and "FlyWheel", a grant-based financing program for startups.

She also mentioned that the funds available to innovative project owners using AI technologies encompass $75mn from the World Bank and the German Development Bank (KfW) and $35mn in credits from the European Union.

Furthermore, the "ANAVA" fund aims to raise €200mn, in addition to the 125mn dinars (approximately $40.5mn) available in the specialised "InnovaTech" fund for small and medium-sized enterprises.

Tunisia versus the world

However, there is a disconnect between the current global discourse on AI, and the discussions happening in Tunisia.

There is a disconnect between the current global discourse on AI, and the discussions happening in Tunisia.

Internationally, the debate revolves around continuous updates to the regulatory framework of the AI-driven ChatGPT programme. Some see it as a huge contribution to improving our lives, and those who fear it may lead to our destruction.

Meanwhile, the debate among Tunisia among experts, academics, and stakeholders shows another division.

At a scientific seminar organised by the House of Wisdom Foundation (a public non-administrative institution), some rejected the idea of total reliance on the strategic planning of official and governmental systems, emphasising the importance of individual and private initiatives.

In contrast, others believed that strategic planning for investment in AI is inevitable, especially given the multiple and interrelated factors involved. Education, training, finance, and the infrastructure of laboratories and research centres all play a crucial role.

This underscores the importance of governmental commitment and the massive economic potential of AI.

Missing the digital tsunami

Adel Ben Youssef, a university professor and expert in digitisation and AI, believes that economic entrepreneurs are more aware of the importance of AI, and its added value to their companies, than decision-makers and politicians.

He participated in drafting a reference document on AI as a member of a team at the Centre for Strategic Studies (an institution affiliated with the presidency) and pointed out that political instability has affected the country's ability to benefit from the developments offered by AI systems.

Speaking to Al Majalla, Ben Youssef expressed surprise over the limited discussions surrounding the national strategy for AI, which involves five ministries. He also emphasised the need for swift and wide-ranging societal discussions on the matter.

According to him, AI is a multidimensional issue that encompasses economic, educational, social, and legal aspects and is not just related to policy-making.

He also warned that a lack of awareness around the effects of the Fourth Industrial Revolution on individuals and society could bring about dire consequences. Collective thinking is needed to create regulatory and strategic frameworks based on Tunisia's vision of the future and its use of AI for economic and social development.

In addition, there is a large gap between rapid developments and the country's laws, which poses a major obstacle to the growth of startups and disrupts engagement in an advanced economy.

According to him, the foreign exchange law harms the country's interests as startups sell their products abroad without being able to freely manage their revenues.

The professor had six working sessions with Central Bank Governor Marwan Al Abbasi when he was involved in the preparation of the Tunisia 2030 digital transformation strategy, during which it became clear that there is significant pressure aimed at preventing startups from harnessing the potential of economic change. He attributed this pressure to "cartels" representing large economic conglomerates clinging to their influence.

Speaking from his experience within the system, he stated that administrative bodies share responsibility for hindering participation in what he referred to as a "digital tsunami."

He added that this delay could potentially set Tunisia back by up to 40 years, if nothing changes.

Professor and digitisation expert Adel Ben Youssef added that this delay (in adopting AI) could potentially set Tunisia back by up to 40 years, if nothing changes.

Engagement with advanced technologies and AI is inevitable. Tunisia faces two options, he adds: either accelerate Tunisian capabilities by encouraging and empowering them with development tools – or resign to playing catch up and forcing the country to rely on software and systems from abroad. However, the latter is a dangerous option as it lacks vision and strategy.

Differing points of view

Two young Tunisian businessmen spoke to Al Majalla about their contrasting experiences with AI.

Razi Milliani, the president and general manager of a leading pharmaceutical distribution company, and a member of the Young Leaders Centre, has benefited greatly.

Initially checking out the generative AI tool GPT-3 out of curiosity, he soon began implementing its "endless uses" in his company. It radically improved productivity, motivation, and employee engagement, helping write emails and social media posts, develop marketing and trade strategies, prepare programs and agendas, and even analyse data.

A task that used to take a month could now be done in an hour.


However, companies looking to integrate AI must reckon with major restructuring. Milliani gave the example of a Chinese company with more than 8,000 employees in which AI assumed the general manager role. It operated around the clock and was accessible to all employees to answer their questions and evaluate their work.

Milliani stated that his ambition today is to have AI run his company, as his employees have already responded positively to its integration. He also ruled out the possibility of employee layoffs; after eight months of using ChatGPT, he has only witnessed a boost in productivity across his workforce.

According to him, 80% of economic actors, specialists, academics, and researchers approached by large institutions view ChatGPT as a threat. Out of the remaining 20% who embrace AI, only about 5% are willing to explore ChatGPT's full (and paid) potential.

Meanwhile, Ziad Teber, a civil society activist, university professor and startup owner, sees major obstacles everywhere.

According to him, laws and banking transactions hinder the growth of startups to a catastrophic extent.

He strongly criticised the official narrative on incentives and support for startups. He finds the investment climate disastrous and believes authorities sell entrepreneurs false hope.

Startup founder Ziad Teber finds the investment climate disastrous and believes authorities sell entrepreneurs false hope.

In Teber's view, more people should be aware of the consequences of laws that restrict the movement of funds and impose conditional banking commissions on any foreign transfers. He shared an example of a young Tunisian, who provided a simple service worth about $100 but only received $81 in his account after the bank charged him a commission of $19.

Due to a combination of restrictive legislature, the current economic and administrative climate, and a lack of meaningful incentives, success is now an exception to the rule in Tunisia, said Teber.

As a result, many Tunisians have had to abandon their projects, the most notable of which is a man who is considered Tunisia's first technology startup founder. His pioneering efforts kicked off after parliament approved the first legal framework exclusively directed towards innovative entrepreneurship in April 2018, accompanied by promises of tax and financial incentives.

Eventually, said Teber, the man had to pivot toward investing in a shawarma restaurant instead.

A history of excellence

Tunisia boasts highly skilled talent in modern technologies, and history shows that the Tunisian computer scientist Farouk Kamoun is among the founders of internet fundamentals worldwide.

His inspiring journey in Tunisia began when he received a scholarship in 1970 to study in France, which coincided with the start of instruction in computer sciences.

After France, he moved to the University of California, where he received a master's degree and a doctorate under the supervision of Professor Leonard Kleinrock, one of the founding fathers of the "Arpanet" network, which later became the internet.

Kamoun, alongside his professor, developed hierarchical routing protocols for large networks. He also became a supervisor and instructor at major Tunisian institutes for four decades.

He continues to lead pioneering research, especially in AI, which has made a quantum leap in solving national problems in various fields, such as agriculture and education. This successful approach has fostered partnerships between universities, research centres, and state institutions and structures.

This was particularly evident during the first wave of the Covid-19 pandemic, as Tunisians and the world focused on innovations that utilised AI.

The Ministry of the Interior used robots to track violations of quarantine measures. Public health agencies also used Tunisian-made robots to screen individuals suspected of having Covid-19.

Moreover, thanks to the efforts of engineers and researchers, and with the help of doctors, the world benefited from the manufacturing of artificial ventilators using 3D printing.

During the first wave of the Covid-19 pandemic, Tunisians focused on innovations that utilised AI ... Public health agencies also used Tunisian-made robots to screen individuals suspected of having the virus.

Amid the wide-ranging debate over the illegal immigration crisis, engineer Hafiz Al-Arabi Yehmedi wondered why the partnership between government institutions and universities had stalled.

He recalled that his graduation project as a senior engineer relied on AI to monitor and track the movement of locusts from Southern Sahara to Tunisia. This pioneering project involved experts from the Ministries of Agriculture and Defence, led by the Regional Institute of Media Sciences and Communication and the National Unit for Media Sciences.

Professor Kamoun himself supervised it.

This project aimed to use AI to predict the potential locust trajectories on the Tunisia map dynamically. It allowed the Ministry of Defense to preempt and combat this plague before threatening Tunisian fields and farms.

This project dates back to the late 1990s, and the revision of some details, according to its owner, serves as a reminder of such successes achieved by the country thanks to Tunisian intellect.

He believes in the potential of technology and partnerships between universities and government institutions and the integration of young people in developing innovative Tunisian solutions.

He calls for relying on Tunisian minds and expertise to design intelligent systems that gather and process data and guide devices to protect our borders, rather than importing traditional models and advanced technological systems from abroad.

However, relying on external sources appears to have become an option for Tunisian rulers, perhaps due to the constraints imposed by foreign aid conditions.

Tunisians on the sidelines

Professor Kamoun, considered the spiritual father of AI in Tunisia, has for months criticised the appointment of foreigners to develop the national AI strategy, funded by a German organisation.

He also said he was surprised by the request made to Tunisian experts and professionals to participate in the development of this strategy, led by four ministries, as mere observers. It is worth noting that Tunisia ranks high in the number of engineering graduates recruited abroad each year (around 40,000 engineers have left Tunisia since 2015).

It is also interesting to note that the Kingdom of Morocco has tasked him with supervising the development of its AI strategy.

However, civil society, AI-focused associations, activists, experts, academics, and researchers continue to exert pressure to accelerate steps and remove obstacles. This includes allocating funding to training and research and changing curricula to integrate AI.

Many continue to exert pressure to accelerate steps and remove obstacles in Tunisia. This includes allocating funding to training and research and changing curricula to integrate AI.

Meanwhile, the National School of Administration has organised courses for state employees on the uses of ChatGPT. There is also an increasing number of workshops, seminars, and courses on modern technologies taking place in financial and economic circles.

Prepare or fall behind

Experts argue that integrating AI into businesses is inevitable, and its impact on sectors will be comparable to that of the pandemic.

The challenge today is how to harness it by encouraging investments, changing regulations to make them more favourable and flexible for projects based on AI, and focusing on cybersecurity by continuously coordinating and engaging with major AI players worldwide.

The aim is to prevent the loss of national sovereignty due to falling behind frenzied developments in AI technologies and systems.

Today, in Tunisia, the biggest concern remains how AI will be utilised in the 2024 presidential elections.

There is currently a comprehensive study on the challenges, stakes, and dangers of AI on the desk of President Saied, prepared by the Institute of Strategic Studies.

No one knows how it will be dealt with, especially since the 2019 election file has not been fully opened, nor has its secrets fully revealed, including the specific role that algorithms and social media played during the electoral campaign.

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