From Revolutions to Institutions

A report by the World Bank & Reboot
Business Incubators:
Revising an Old Model for a New Environment
Zack Brisson & Kate Krontiris | March 14, 2012

Countries as diverse as Jordan, Brazil, and Indonesia have used business incubators to promote the growth and development of SMEs, particularly in high-growth sectors such as technology and clean energy. While the incubators take a variety of forms, their core purpose is to provide infrastructure, skills, and training to help entrepreneurs build successful, high-growth companies.

In 2001, as part of a larger strategy to grow the country’s knowledge economy, the Tunisian government made a decision to invest in business incubation. Ben Ali was known, in some global circles, as a “strong sector picker,” and in recent years, he invested heavily in Tunisia’s technology sector. Incubators were a key piece of that investment, and were housed in a series of technoparks, with a heavier distribution in better-resourced coastal regions.

Despite the promise of this model, these incubators have struggled to produce results, often because of shortcomings that mirror larger challenges faced by Tunisian businesses. In many instances, government officials used the incubator platform as a patronage program, a reality reflected in the profiles of incubator staff. Many who are charged with dispensing business advice to entrepreneurs have themselves never held a private-sector job. Additionally, many of the incubator staff interviewed for this study had received their job placements immediately after finishing university, without ever developing their own professional experience.

A consistent weakness of the Ben Ali regime was creating development initiatives that looked promising on the surface, but ultimately lacked measurable impact. The metrics established for judging incubator success epitomize this, as they fail to paint an accurate picture of their contributions to the economy. Incubators are evaluated based on imprecise indicators, such as occupancy rates and number of foreign visitors. Many stakeholders in the incubator community would prefer to see their performance measured by total revenue earned, jobs created by resident companies, or other indicators that track more accurately to the amount of economic value generated by incubator activities.

Despite these weaknesses, the existing incubators are relatively well-distributed across the country and provide an infrastructure that can be improved and iterated upon. While some incubator staff lack in the soft skills and training necessary to support business success, the incubators’ physical locations are nonetheless useful for lowering startup costs for entrepreneurs. Likewise, because they are housed in technoparks, incubators often have better access to ICTs than the surrounding region.

Finally, awareness of these incubators is building demand for more government support of SMEs. Investments in the incubator programs have also signaled to interested parties, both domestic and foreign, that there is a growing community of new businesses in Tunisia.

To find out more about entrepreneurs in Tunisia, download the full report.

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