VZCZCXYZ0007
PP RUEHWEB

DE RUEHTU #0921/01 3551522
ZNR UUUUU ZZH
P 211522Z DEC 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 7085
INFO RUCNMGH/MAGHREB COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC

UNCLAS TUNIS 000921 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR S/P (BEHRMAN), S/SRMC (CHANDLER), R 
(NOOR-ALI) 
ALSO FOR NEA/MAG AND NEA/RA 
USDOC FOR CLDP (TEJTEL AND MCMANUS) 
STATE PASS U.S. SMALL BUSINESS ADMINISTRATION (TANYA SMITH) 
NSC STAFF FOR SENIOR DIRECTOR RAMAMURTHY 
 
E.O. 12958: N/A 
TAGS: ECON EAID PREL SOCI TS
SUBJECT: ENTREPRENEURSHIP SUMMIT: EMBASSY TUNIS OUTREACH 
 
REF: A. TUNIS 907 
     ¶B. TUNIS 880 
     ¶C. TUNIS 833 
     ¶D. STATE 112468 
     ¶E. 2008 TUNIS 113 
 
Sensitive but Unclassified.  Please protect accordingly. 
 
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Summary 
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¶1. (SBU) Our engagement with public and private sector 
Tunisians continues to build support for the Entrepreneurship 
Summit and other Cairo speech initiatives.  Tunisians are 
widely supportive of the President's vision of comprehensive 
engagement and partnership, and have identified the potential 
for entrepreneurship, science and technology, and other key 
Cairo speech themes to help solve Tunisia's most critical 
challenges.  With high unemployment among college graduates, 
Tunisia is fertile ground for promoting entrepreneurship. 
However, as we have learned from bankers, entrepreneurs, and 
others, banking sector reform is needed to provide financing 
to entrepreneurs, and small businesses need better coaching 
and support to enable them to grow.  End Summary. 
 
--------------------------------------------- --- 
Roundtables focus on key entrepreneurship issues 
--------------------------------------------- --- 
 
¶2. (SBU) In two back-to-back roundtable discussions hosted by 
the Ambassador December 14 and 15, participants highlighted 
key challenges and opportunities for entrepreneurship in 
Tunisia.  The first roundtable focused on macro-level 
analysis and included bankers, business heavyweights, and 
civic leaders, while the second roundtable gathered 
testimonials from small- and medium-scale entrepreneurs and 
microcredit non-governmental organizations (NGOs).  These two 
groups were highly consistent on the issues affecting 
entrepreneurship in Tunisia: 
 
- The potential for entrepreneurship to spur growth: 
Tunisia's high rate of unemployment among college graduates 
(22 percent, compared to an official unemployment rate of 14 
percent) has fueled a "brain drain" as skilled job-seekers 
flee to Europe and elsewhere.  It also raises the specter of 
social unrest and has thus become a national priority for the 
Government of Tunisia (GOT).  Roundtable participants agreed 
that small business creation through entrepreneurship has the 
potential to employ many of Tunisia's skilled graduates. 
They also agreed, however, that this potential is weakened by 
a lack of "entrepreneurial spirit" and difficulty in 
obtaining financing for small businesses. 
 
- The "entrepreneurial spirit":  While some pointed to a 
tradition of self-reliance in Tunisian society, all agreed 
that the entrepreneurial spirit is underdeveloped in today's 
Tunisia.  Focusing on youth, participants complained of a 
sense of entitlement, a lack of preparation, and an aversion 
to risk among college-aged Tunisians.  University students, 
particularly in the large engineering and science programs, 
are not trained in business or management.  Graduates seek a 
stable job in a large firm or ministry, hoping to set the 
stage for home ownership, marriage, and family life.  While 
many focused on social and cultural biases against 
entrepreneurship, one participant ventured that the GOT, by 
suppressing free speech and independent thought, has failed 
to create an environment in which entrepreneurship can 
flourish. 
 
- Financing for entrepreneurship:  Participants were nearly 
unanimous in criticizing the Tunisian banking sector for its 
failure to support entrepreneurs.  As we have reported in the 
past, banks lack the skills and methodology to extend capital 
to business projects, continuing to focus exclusively on the 
credit-worthiness of the borrower (ref E).  While microcredit 
loans up to TD 5,000 ($3,780) are generally available through 
NGOs and GOT agencies, this weakness in the banking sector 
effectively puts a low ceiling on small business growth. 
Entrepreneurs were also united in praising the business 
coaching and training services offered by microcredit NGOs, 
and on the need to extend these services to small- and 
medium-sized firms. 
 
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Embassy outreach continues to build support 
------------------------------------------- 
 
¶3. (SBU) Embassy Tunis has taken advantage of meetings and 
other outreach opportunities to seek partners and gather 
input on entrepreneurship and other key elements of the 
President's Cairo speech.  The Ambassador, who arrived in 
September, has used courtesy calls to engage on these themes 
with the Prime Minister, the Ministers of Agriculture, 
Finance, Foreign Affairs, Public Health, Higher Education and 
Scientific Research, and Development and International 
Cooperation.  These GOT officials have expressed strong 
support for the President's Cairo agenda and have noted the 
linkages between key Cairo themes (science and technology, 
women's rights, entrepreneurship) and GOT policy priorities. 
In a noteworthy spirit of cooperation, two of these meetings 
(the Ministries of Agriculture and Higher Education) have 
been followed by draft MOUs proposing enhanced U.S.-Tunisian 
cooperation on Cairo-related issues. 
 
¶4. (SBU)  The Ambassador has also discussed President Obama's 
speech with local business leaders, the Tunisian American 
Chamber of Commerce, and local offices and affiliates of U.S. 
companies, including Citibank, Microsoft, Pfizer, Coca-Cola, 
Cisco, Hewlett-Packard.  In these meetings, the Ambassador 
discussed the local business climate, key investment 
opportunities, and the prospects for expanding and deepening 
the U.S. commercial linkages with Tunisia. 
 
¶5. (SBU) The recent Tunis-Med Franchise Show (ref A) offered 
an opportunity for the Ambassador and Emboffs to engage with 
GOT and private sector partners on the issue of franchising. 
Until recently, strict capital controls and an insufficient 
legal framework have kept all but a handful of international 
franchises from successfully establishing a presence in 
Tunisia.  A recent law promises new avenues for 
entrepreneurship and investment through franchising by 
facilitating registration and royalty repatriation.  The 
recent visit of American franchising expert Bachir Mihoubi, 
whose travel was funded by the Commercial Law Development 
Program (CLDP) at the Department of Commerce, included 
engagement with the Ministry of Commerce, the Center for 
Young Entrepreneurs, the National Chamber of Women 
Entrepreneurs, and the Bank for Small and Medium-Enterprises 
on this key entrepreneurship development. 
 
¶6. (SBU) In other areas, the Embassy continues to engage with 
stakeholders to advance entrepreneurship along with other 
Cairo speech themes.  The ESF-funded program on "Innovation, 
Entrepreneurship, and Good Governance" (implemented by CLDP) 
continues to make progress, with plans underway for a study 
visit by a group from the National Agency for the Promotion 
of Research and Innovation to key U.S. research and 
technology sites.  The Embassy has shared a draft MOU with 
the Ministry of Industry for another assistance program 
(implemented by the U.S. Small Business Administration) that 
will promote entrepreneurship through improved GOT assistance 
and financing for small and medium enterprises (SMEs). 
 
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Comment 
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¶7. (SBU) With its skilled labor pool, market proximity to 
Europe, modern infrastructure, and large middle class, 
Tunisia is fertile ground for entrepreneurship.  And with 22 
percent of its college graduates unemployed (compared to five 
percent of the illiterate workforce), Tunisia is full of 
young, educated, and motivated potential entrepreneurs. 
While in some cases, risk-averse social attitudes dampen the 
"spirit of entrepreneurship," for the most part the barriers 
to entrepreneurship are rooted in insufficient bank loans, 
inadequate business education, and weak support to SMEs.  The 
Tunisians put forward by the Embassy to attend the Summit on 
Entrepreneurship (ref B) are uniquely positioned to tackle 
these issues in both the public and private sectors; the 
Embassy is supporting those efforts through technical 
assistance programs (see paragraph six above) and by engaging 
on franchising and U.S. investment.  We will continue our 
active outreach with a broad spectrum of Tunisians to help 
make the Summit a success and to better address the 
challenges facing entrepreneurship in Tunisia.  End comment. 
 
 
GRAY