17 May 2016

A strategic five-year plan targeting Tunisias ICT sector, Tunisie Digitale 2020, looks to dramatically increase the industrys contribution to employment and revenues.

First launched in 2014 as Tunisie Digitale 2018, the plan was revised last year to harmonise its timelines and objectives with the government's new five-year general economic development plan for the 2016-20 period.

The plan aims to create 100,000 jobs and double the GDP of the country's digital economy to TD9bn (4.1bn) by 2020. Sector exports, meanwhile, are expected to increase four-fold between 2014 and 2020 to TD4bn (1.7bn).

The ICT sector has been growing quickly, expanding at a compound annual growth rate of 11% in real terms in the five years to 2014. As of the end of last year, ICT activities contributed around 1.75bn, or just under 7%, to Tunisia's GDP.

Bolstering ICT exports

The Tunisie Digitale 2020 programme provides a number of pro-business measures that look to encourage investment and employment in the ICT sector. Under the initiative, companies can benefit from subsidies and tax incentives for creating between 50 and 900 jobs, depending of the ICT segment in question, as well as funding to train new recruits.

One of the key targets for job creation under the programme is the offshoring sector, including call centres and business process outsourcing.

Offshoring services are one of the Tunisie Digitale 2020 plan's four strategic pillars - which also include e-government, e-business and infrastructure development - with the country looking to leverage its multi-lingual, skilled workforce and relatively low labour costs to generate business from neighbouring European countries.

The industry is comparatively well established, contributing roughly 1.2% to GDP in 2014, with a turnover of just under 500m and a roster of nearly 32,000 employees, according to government figures.

While competition for offshoring activity in the region is high, with Morocco and Egypt also targeting the labour-intensive sector, the country fares well against its neighbours.

Tunisia was ranked 9th in the region last year in ICT development by the International Telecom Union, behind most markets in the Gulf but ahead of North African peers like Morocco, Algeria and Egypt.

Bridging the digital divide

Tunisie Digitiale 2020 will also see significant public and private investment in domestic infrastructure - in the form of both network deployment and financial aid for last-mile connections - as the government works to equip 60% of all households with fixed internet by 2018 and achieve universal coverage by 2020.

According to officials, some 250,000 families that are currently unable to afford internet access could benefit from the programme.

In particular, the government will be looking to even out geographic disparities and improve coverage of historically underserved areas in inland desert and mountain regions.

The roll out of 4G mobile data earlier this year is expected to be instrumental in this regard, with the Ministry of Communication Technologies and Digital Economy mandating that operators bidding for 4G licences commit to covering at least two of the lagging inland regions.

The country's three operators - incumbent Tunisie Tlcom, Qatari-owned Ooredoo Tunisie, and France-based Orange's local subsidiary Orange Tunisia - each paid around TD160m (70m) to procure their licences before rolling out their 4G LTE services at the beginning of April.

Niche coverage

The arrival of a pair of new mobile virtual network operators (MVNOs) should also help improve domestic connectivity and drive up demand for data and online services.

The UK-based MVNO Lycamobile, which entered the market last year via Tunisie Tlcom's infrastructure, has attracted more than 130,000 active pre-paid users in its first six months of operation, with a particular emphasis on international calls.

The company's strategy has focused on the diaspora market, which currently numbers around 1.2m and grapples with some of the highest per-minute fees; according to a 2014 World Bank report, the cost of outgoing international voice calls from Tunisia was roughly 10 times the average international market price.

According to mid-April reports from local media, another MNVO, Watani, plans to launch its services later this year, also using Tunisie Tlcom's infrastructure, which could see coverage expanded further.

Oxford Business Group 2016