TNS/ FEMISE Policy Brief no.6: Embracing Digitalization: the future of startups in the South Med region

Micro, small and medium enterprises (MSMEs) constitute about 95% of total enterprises in the South Med region and are considered the driving forces of economic growth, job creation and green and inclusive growth. Entrepreneurs, particularity start-ups, still face numerous challenges when it comes to establishing, promoting and running their businesses. Providing them with support through innovative initiatives and enhancing the ecosystem where they operate will contribute to their development. In their turn, entrepreneurs will contribute to achieving several of the Sustainable Development Goals (SDGs).

It is in this context that the Next Society (TNS) project and FEMISE 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 the entrepreneurs themselves) and to provide tailor-made 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 which have benefited from TNS project, ensuring their relevance and impact.

The sixth TNS/ FEMISE Policy Brief, entitled Embracing Digitalization: the future of startups in the South Med region, by Walid Hadhri, University of Tunis, is available here


Digital technology seems to be advancing worldwide more than any other innovation in history, as it has reached more than 50% of the population in developing countries. The COVID-19 crisis has reinforced the importance of digitization as a solution to many of the challenges that were faced in almost all sectors and across the globe. The global digital transformation market size has been estimated at USD 589.7 million in 2021 and is projected to grow at a 15.6% per year until 2030. The benefits of digital technologies are vast either on the economies and businesses or on the communities and individuals. However, embracing digitalization requires the availability of the 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 the development of new businesses, 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 startups 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 road is still long.

The aim of this policy brief is to emphasize on the importance of the technology sector in the South Med region as a new door for start-ups to start their business. After providing an overview of the ICT sector in this region, we will provide some examples of government’s initiatives, and highlight the main challenges facing the sector and the impact of COVID-19. We will then focus our analysis on the success stories of three technology start-ups from Egypt, Lebanon and Tunisia who benefited from THE NEXT SOCIETY Project. Through a questionnaire, we will highlight that some of the main sector-related obstacles that these startups identified are the lack of digital proficiency among users, difficulty to penetrate the digital market, lack of knowledge and skills among the populations and the capacity to grow their projects and internationalize them. These obstacles are in addition to the standard obstacles facing entrepreneurs such as financing, bureaucracy and visibility. The brief then provides conclusion and policy recommendations on how to promote the sector, among which strengthening administrative digitization, improving coordination between the various public authorities, monitor the implementation of innovation and digitization policies and provide a favorable environment for young people to take risks and to encourage digital entrepreneurship.

Watch this video by the author of the Brief and the entrepreneurs who are sharing their experiences,  highlighting the challenges and providing recommendations and lessons learnt.


*This Policy Brief and this Video are produced as part of the series of TNS/FEMISE Policy Briefs on “Entrepreneurship in South Mediterranean Countries” that is undertaken in partnership between FEMISE and ANIMA Investment Network.

*”This policy brief and this Video have been produced with the financial support of the European Union. The contents of these products are the sole responsibility of the authors and entreprenerus and can under no circumstances be regarded as reflecting the position of the European Union.”