Tunisia ICT Competitiveness Project Quarterly Report July – September 2012

Key accomplishments include the rapid assessment of the ICT market and the identification of target segments and subsectors. Component 1, Increasing and Developing ICT Entrepreneurship, involved conducting a rapid assessment and identifying target ICT market segments and ICT-enabled subsectors. Partnerships were developed with two anchor firms, Microsoft and TELNET, one of the largest companies in the Tunisian IT services market. The Project and Microsoft jointly held outreach events to recruit SMEs to participate in the Project's training and job placement program, and also organized an ICT project management workshop. Partnership agreements were signed with Banque de Financement des Petites et Moyennes Entreprises (BFPME) and Banque Internationale Arabe de Tunisie (BIAT) to improve their SME lending practices. The Project worked closely with BFPME to streamline its loan processing and approval processes based on sound credit risk management principles. The groundwork was laid for developing Development Credit Authority (DCA) partial guarantee facilities, and a concept paper was drafted for a DCA loan portfolio guarantee facility. A partnership agreement was also signed with Alternative Capital Partners (ACP), and the Project will refer ICT and ICT-enabled SMEs to ACP, providing technical assistance and training for select ACP investee companies. Component 2, Growing and Developing Tunisia's ICT Workforce, involved organizing and participating in four events aimed at identifying companies to partner with on training, capacity building, and job placement activities. A request for proposals (RFP) was released to identify training organizations to provide training for INFOTICA member companies in business workplace skills, sales skills, and business English skills. A blanket purchase agreement (BPA) mechanism was designed to create a pool of training providers that will be tapped over the life of the Project to provide training to job seekers and partner companies. Training areas in demand by the private sector were identified and defined, covering general business skills, ICT technical skills, and industry-specific technical skills for targeted ICT-enabled subsectors. Preparations were undertaken for the Project's first job fair, scheduled to take place on November 8, 2012. A job fair committee was formed with members from the private and public sectors to actively identify companies with jobs to fill and mobilize them for the fair. Component 3, Developing ICT Policy and Regulatory Reform, involved finalizing the enabling environment reform agenda for ICT job growth. The Project worked closely with the National IT Federation (NITF) to establish an ICT Task Force, drafting a Task Force Agreement describing the Task Force's mission, scope of work, and the roles and responsibilities of members. A comprehensive analysis of the Telecommunications Code was produced, with recommendations to bring Tunisia's ICT regulatory structure in line with international best practices. An analysis of tax policy was conducted, and proposals were formulated to reduce the overall tax burden and rationalize the payroll tax regime. Operational challenges faced by the Project include the economic downturn, which has reduced demand for Tunisian goods and services. To maximize impact and job creation, the Project broadened targeted sectors to include ICT-enabled sectors. Limited expansion of the TACT program was also experienced, due to the EU economic crisis. The Project has expanded partners for training beyond TACT. Policy challenges and opportunities were also identified, including the challenge of going through a whole cycle of policy reform during the short project period, and with a temporary Parliament in power. The Project is moving forward proactively in targeting areas where there is interest and momentum for policy reform. Hiring Tunisian staff was initially difficult, but the Project conducted an analysis of local salaries and submitted a blanket waiver to hire cooperating country nationals (CCNs) above the local maximum at the TND equivalent of $200/day. USAID approved the waiver, allowing the Project to hire local technical staff within the FSN salary scale.