A year after the fall of President Zine el-Abidine Ben Ali, Tunisians can demonstrate some tangible changes in the North African country. Elections were held, installing a new prime minister and constituent assembly. But anxieties over the economy and unemployment have heightened, and stark ideological cleavages have emerged. Yet Mondher Ben Ayed, president and CEO of the Tunis-based technology firm TMI remains optimistic.
After earning his PhD in computer engineering from University of Rochester in New York in 1990, Ben Ayed returned to Tunisia. He spent a year as a university professor before joining the fledgling TMI, which then had six workers and US$500,000 turnover. Ben Ayed gradually acquired and expanded TMI to its current 70 employees and US$20 million turnover. In addition, he also created two other successful engineering companies.
TMI has long worked with Oracle, Sun Microsystems and Acer, providing services around value-added solutions — including training, installation, maintenance, software implementation and consulting work — to telecommunications operators, banks, financial institutions and government entities. The company also works in Europe and Francophone Africa.
Ben Ayed, who has been active in civil society through business organizations such as the Tunisian American Chamber of Commerce, recently spoke with Arabic Knowledge at Wharton at his Tunis office about what he calls Tunisia’s "post-revolution era." He highlighted what he sees as triumphs as well as ongoing social and economic challenges, strategies for how Tunisian companies can grow, the potential of this small country’s technology sector and the promise of innovation in the region following the Arab Spring.
An edited transcript of the conversation follows.
Arabic Knowledge at Wharton: What was it like watching the revolution unfold before your eyes? How have conditions evolved in the year since Ben Ali’s fall?
Mondher Ben Ayed: Nobody expected it. I don’t think people even had time to form emotions or reactions about it. It happened quickly and in a relatively non-violent fashion in Tunis, we thank Allah for that. The democratic transition process went very smoothly here, mainly because the fundamentals of the country are good: The people are educated; Tunisia has the most advanced status of women in the Arab world; there is a middle class in Tunisia, and there is a vibrant private sector. There is some maturity to Tunisia, and although there was a political void, society was able to regroup and build consensus. Even if there were crises, we were able to move beyond those crises and solve them in a peaceful manner.
Probably the biggest innovation in this revolution is that there is neither a strong man nor a party behind it. It was completely spontaneous; even the democratic transition process had no army behind it. By consensus we made the Yadh Ben Achour committee, meaning the committee for political reform, which changed the electoral code and allowed free elections to happen. An independent election committee for the first time in the history of Tunisia was created, and given the means to work. Everything was done in a consensual manner with the participation of all components of political life and civil society to allow for the elections to be free and fair.
Now we can say Tunisia is in the post-revolution era. We’re constructing our institutions; there is a lot of excitement. Of course, we paid an economic price due to the insecurity associated to the revolution. The touristic season was not good this year, the Libyan crisis and the Libyan war weighed in quite heavily on the Tunisian economy for some time. At a certain period we were feeding Tunisians and Libyans, and all our production in the agribusiness was (impacted), so there was water shortages, milk shortages, and food shortages. We had 1.2 million Libyan refugees for few months here.
Arabic Knowledge at Wharton: What problems did the business community have with the previous regime? Did they intimidate business owners?
Ben Ayed: Corruption was very rampant and the ruling families used to be dominant. There was a lot of racketeering and the business community was a victim. Many people were disowned of their businesses. The regime took shares of their businesses and if owners didn’t collaborate properly or did not share interest, they would penalize them through abuse of tax controls. That’s all very known.
Arabic Knowledge at Wharton: You made several choices early on, from leaving the United States to then resigning from your university post to move into the private sector, all of which could be seen as risky. How did others take your decisions?
Mondher Ben Ayed: When I left the United States, I never looked back, and I never had any regrets. When I faced difficulties, I never said, ‘Well, in the States, it’s like this or that.’ When I came back to Tunisia it wasn’t because of constraints or because of immigration, (but) because I wanted to go back and start my life here. It was a deliberate, conscious choice… Also, I was absorbed in succeeding in what I did, so I didn’t care much about the perceptions of others, really. It’s not because I was careless; I was not interested at all. What mattered to me was what I did inside the company and how my customers perceived me.
Arabic Knowledge at Wharton: How do you rate the current economic climate in Tunisia?
Ben Ayed: It’s not as bad as I imagined it would be last January. I expected it to be worse, honestly. But it’s not in good shape. The revolution was triggered by unemployment, especially of college-educated people. So before the revolution, we used to have 480,000 unemployed, among which there were 150,000 people with college degrees. Today, that stands at about 800,000 because of job losses and the inability to create new jobs.
Tunisia was growing at 5% before the revolution, last year we grew at 0%, so we did not create any new jobs. We will go back slowly to normal levels; 2012 probably is going to be a very difficult year, but the future is good. I am optimistic we will go back to growth levels of 7% to 8%. And also Libya, which was a problem during the war, today is an opportunity for employment and for business reconstruction opportunities. And Libya is a rich country. Libyans, because of what Tunisians did to help, have a "Tunis first" policy in every domain.
Arabic Knowledge at Wharton: What role will the technology sector have in boosting Tunisia’s economy?
Ben Ayed: It’s going to be very important, because in the past we were creating low value-added jobs, with low salaries, mainly with European companies creating businesses here in the automotive industry using cheap labor. That economic model is to be reviewed. Today there is much focus on building a knowledge economy and using Tunisian talent, especially in fields that are high in value, such as the medical field and higher education, even for exports. Information and communications technology [ICT] is at the top of the list because we have so much potential and tradition in this field. There are so many opportunities to provide jobs.
Certainly, overcoming economic challenges will probably be the most important in the next coming phase of development, and with some luck and patience we can. Foreign direct investment is an important component of that. Tunisia has signed a free trade agreement with Europe and many European companies have established a base in Tunis because of the competiveness of the environment.
Arabic Knowledge at Wharton: What are some of the obstacles that you and other Tunisian companies face when you look to expand?
Ben Ayed: There are two major challenges that I will stress. The first one is the size of the Tunisian market, which is very small, making it very difficult for newcomers to start a business. The other challenge is financing the activity. You don’t find easy financing, and for young entrepreneurs banks require guarantees, which is usually a difficult thing to get if you’re not from a wealthy family. These are the two main challenges. The advantage though is that locally we do find cheap, good technical resources. The engineers in Tunisia are of good quality, we find them in numbers and they don’t cost much, which gives us a competitive edge. Another market that we target, especially in the consulting and software implementation of Oracle solutions, is Europe. We do work in France and Belgium also. And when we go to Europe, usually we are two to three times cheaper than the local European firms.
Arabic Knowledge at Wharton: Was that your strategy for growth in terms of looking outside your borders?
Ben Ayed: Today it is necessarily our strategy. For a company to grow, it needs to export in Tunisia. If it relies on the Tunisian market it cannot grow that much because the size of the market is very small. Tunisia is a country with a population of 10 million and it’s not very rich. It does not have mineral resources, it does not have oil, gas or uranium, and so the size of the market is quite modest. And there are many companies that operate here, so competition is fierce. The only way to be successful then, in my mind, is to leverage the local market, build some experience and develop a critical size. But then you quickly need to go to the export market, whether in Africa — and when I say Africa it can include Libya, Algeria, Morocco, as still for us it’s our region — and also Europe. Now the European market is rich compared to Tunisia, so even a small niche in the European market can provide a lot of opportunity for a Tunisian company. There are many companies that have established business today in Tunis that work for the European Union, Tunisian companies and foreign companies. If you go to [Elgazala technology park] today you will see that Hewlett Packard has a worldwide support center there that employs 800 engineers and technicians. You have SunGard, which is a major U.S. company, which has about 600 engineers and technicians. Many companies now are recognizing Tunisia as an IT destination.
Arabic Knowledge at Wharton: What are some sectors where you think Tunisia could deepen its reach?
Ben Ayed: Tourism and textiles, which are traditional sectors; the electromechanical automotive component industry, mainly for European carmakers; the aeronautical industry — Airbus has a big business here in Tunisia; renewable energy, as there is potential for solar energy here in Tunis; the export of medical and financial services, especially on a regional basis, for nearby countries, as Tunisia has been, for some time, the key provider of health services for Libyans and Algerians; agribusiness, and IT, of course.
Arabic Knowledge at Wharton: How do you see technology and innovation taking shape in the region, as you move beyond the revolutions?
Ben Ayed: The region has potential that still has not revealed itself. It’s always been seen as a petrol-producing and mainly consuming region of the world. Probably these revolutions will unleash the potential of all the young women and men in this region, and they will show their capacity to produce and innovate, and not just rely on natural resources. In the past, at least in history, this region was a producing zone in the world. It produced a full civilization, with arts, technology, style, architecture — just look at what Islamic civilization did in Spain in eight centuries. If [Arabs] did that then, it means there is talent to produce better than that. I am sure. But because of dictatorship and years of lack of freedoms and democracy, there has not been enough empowerment to extract talent and unleash the potential of the human being. We will see. That’s one of the promises of the Arab Spring.
Arabic Knowledge at Wharton: You assert that Tunisia is in its post-revolution phase. In what direction do you see your neighbors moving, including Egypt and Libya?
Ben Ayed: Egypt is a more complicated case than Tunisia. I always look at the fundamentals. When you are in deep problems, it’s the fundamentals that kick in and save you. And Egypt’s fundamentals are shaky — a lot of illiteracy, a lot of poverty, much more than here; difficult regional context, especially with the Israeli-Palestinian conflict just next door. So Egypt is complicated, and their transition might take many years. Like one Egyptian friend put it to me, ‘I’m very optimistic about Egypt, but in 40 years we’ll be a great country.’ Even Egyptians look at this transition as a long-term process.
I’m quite optimistic for Libya. Libya is a much easier case than Egypt. Libya is rich, so the economic problems can be easily solved and prosperity can be shared easily. They can rebuild their infrastructure, and they can make people happy on a personal level very quickly. It’s the institution building that might take some time because they don’t have anything. Tunisia and Egypt have traditional institutions and they have civil society, and in Libya that does not exist. But Libya is homogenous; there are no religious conflicts. There is not even left and right like here in Tunisia. We have liberals, communists, socialists, and the secularists that are in conflict with the Islamists. Because Libya never had any political life, it’s more homogenous, except for tribal divisions; probably the challenge is that they have this tribal division and the ability to overcome their grievances in terms of what happened. It was a bloody revolution.
Morocco is another model. It’s not undergoing a revolution, but the king, I guess because he’s young, he’s seeing the necessity for change and has made some promising steps. I hope that they will continue, because a revolution is not something desirable, it’s something that you’re forced to do, because you have exhausted all other solutions.
Arabic Knowledge at Wharton: Political groups that have Islamist roots are gaining ground post-Arab Spring, including the Ennahda party in Tunisia, but some critics say even though these organizations may hold wide support or have experience in social services, they lack the know-how to address urgent economic concerns. What do you think about such observations?
Ben Ayed: Of course, all new parties lack experience. It’s obvious for me. I see this scientifically. I don’t think there is any existing party that can claim that they have experience in government, because there was no positive and active participation in government before. There is focus on Ennahda today because they won the majority, but the others don’t have the know-how either. But they’re going to learn and it’s the cost of transition.
How do you change faces, from old faces to new faces? You need to bring people who are new, who necessarily don’t have any experience. What you hope for is that at least, if they’re going to do some damage because of the learning curve, that that damage is the minimum possible, and that the learning curve is the fastest possible. And then at least you compensate that by saying in three years or four years, when things go back normal, that we built a democracy. So if we have that, then it was worth the hassle.