The popular uprisings in Tunisia and Egypt in 2011 were sparked by citizen frustration based on a range of grievances including lack of opportunity, dissatisfaction with local governance, corruption, and unemployment. The public self-immolation by Tunisian informal entrepreneur, Mohamed Bouazizi, was a shocking demonstration of the frustration and hopelessness felt by some sectors of society and led to calls for political and economic reforms to address citizen grievances. Today, however, North African economies still urgently need economic reforms to promote greater economic inclusion and provide opportunities for youth.
The Center on Development, Democracy, and the Rule of Law at Stanford, in cooperation with CIPE, has conducted a survey of 131 Egyptian and Tunisian entrepreneurs and business owners to find what that the greatest barriers are to the growth of businesses in these countries. As Global Entrepreneurship Week comes to a close, CIPE is releasing an Economic Reform Feature Service article by Amr Adly about the study to contribute to the continuing conversation on supporting entrepreneurs around the world.
In 2011, both Tunisia and Egypt were rocked by popular protests against economic and political repression that ended in the ouster of their authoritarian governments. Three years later, how much progress have these states made in reforming their economies? And what has happened to the entrepreneurs whose grievances helped fuel these revolutions?
Reforming the Entrepreneurship Ecosystem in Post-Revolutionary Egypt and Tunisia, a report from CIPE and Stanford University’s Center for Democracy, Development, and the Rule of Law (CDDRL), attempts to answer these key questions. With this report, CIPE staff and IACE will engage policymakers and stakeholders in roundtable discussions to formulate policy recommendations in the coming weeks.
Working with CIPE Cairo staff and CIPE partner L’Institut Arabe des Chefs d’Entreprises (IACE) in Tunisia, lead researcher Amr Adly conducted an extensive study of existing literature and over 100 detailed interviews with entrepreneurs in each country to shed light on the obstacles and opportunities that comprise the entrepreneurial ecosystems in these post-revolutionary states.
The survey results paint a small yet detailed portrait of what life is like for the Egyptians and Tunisians trying to make ends meet in countries with increasing unemployment rates, among other worries. Dysfunctional and inaccessible regulatory structures, crony networks solidified by corrupt past regimes, and a lack of access to information for the private sector and policymakers are only a few of the areas for which Adly’s research provides nuance.
Who are the entrepreneurs that can withstand such an unstable environment? The majority of respondents in both countries affirmed that they do not trust formal contract enforcement, managed to start their business largely through self-financing due to a lack of access to loans, and endure high transaction costs as a result of inadequate institutions. They are men and women, younger and older, more or less educated, formally registered or informally operating, risking bankruptcy and/or jail time for a failed venture, running joint or solo endeavors—and they are all citizens for whom their government is not working.
More than two years ago, the suicide of a Tunisian street vendor named Mohammed Tarek Bouazizi set off a string of protests that eventually led to regime change and promises of reform throughout the Arab world. Unfortunately, the root causes of Bouazizi’s frustrations have still not been addressed in countries like Yemen.
In 2011, after having his wares confiscated for failing to pay a bribe, Bouazizi succumbed to the pressures of poverty and desperation, committing suicide by self-immolation. This tragic act led to what later became known as the Arab Spring, arguably the greatest geopolitical realignment since the fall of the Berlin Wall.
But the millions of street vendors and others who work in the informal sector have not yet realized the promise of democracy. They remain vulnerable to extortion, harassment, and other forms of abuse. By not addressing the root causes of the Arab Spring, emerging democracies such as Yemen risk losing the popular support and legitimacy that are essential to a thriving democracy.
Examples of some of the informal legal documents used by “extralegal” businesses in the Arab world. (Source: ILD)
On December 17, 2010, police expropriated the equipment and goods of a fruit seller in Sidi Bouzid, Tunisia. Because of his informal status, the fruit seller had no option of appeal or avenue for official protest. He also had no collateral to secure a loan to buy new equipment, let alone grow his business. With no means of supporting his family of seven, the man now world famous for lighting the first spark of the Arab Spring, Mohammed Bouazizi, committed suicide by self immolation.
Bouazizi’s tragedy stemmed from an affront to his dignity, an absence of justice, and economic disenfranchisement. He was not alone. As the following months unfolded, it became clear just how many businesspersons and citizens across the region shared these same grievances when hundreds of thousands took to the streets to demand political and economic freedom.
Since then over two years have passed and Tunisians, Egyptians, and Libyans have experienced the unprecedented democratic elections and the chance to choose their own leaders. But free and fair elections, even at their best, are only half the battle.
Since 1995, Transparency International’s Corruption Perceptions Index has been putting corruption on the map by scoring the level of public sector corruption in countries around the world. What can we learn from this report — aside from the fact that corruption remains a widespread problem requiring urgent attention?
The top and bottom countries in this year’s index are no surprise: once again, Denmark, New Zealand, and Finland are tied at the top of the list of cleanest countries, while Afghanistan, North Korea, and Somalia share the bottom spot as most corrupt. It is interesting to note the geographic, cultural, and economic diversity of the world’s least corrupt countries. They include some of the wealthiest nations, such as Switzerland and Luxembourg; middle-income countries like Uruguay and Chile; small countries like Iceland and Barbados; and large, diverse societies like the United States.
One thing the least corrupt countries have in common: all but one of the countries in the top 20 is a democracy and is currently rated “Free” by Freedom House; Singapore and the territory of Hong Kong, also in the top 20, are rated “Partly Free.” Thirteen of the top 20 also sit in the top 20 on the World Bank’s Doing Business ranking. The bottom-ranked countries on the transparency index are also considered by Freedom House to be the world’s most undemocratic, and, not coincidentally, are difficult places to do business.
Of course, few observers expected Denmark or North Korea to switch positions this year. But the failure of countries like Egypt, Tunisia, Libya, and Yemen to improve may be more more worrying. In 2011, popular revolts sparked by high levels of corruption (among other factors) led to a change of leadership in each these countries. The mandate for their new, post-Arab Spring regimes was clear: fighting corruption should be a top priority.
Social media provided a continuous flow of updates about the government’s crackdowns on peaceful demonstrators, news about detainees, and maps of the location of the scattered protests. Just as in Egypt, Tunisia, and now Syria, activists in Sudan are using these online tools not only to coordinate their own activities, but also in hopes of drawing the attention of the wider world.
Interestingly, despite the fact that Sudan is a very poor country with nearly half the population under the poverty line, 10 percent still had access to the Internet as of 2008. It is estimated that this proportion has doubled in the last four years, and the country may now have as many as 8 million regular Internet users.