Five years after President Kais Saied suspended parliament and began consolidating power, the bill for Tunisia’s political drift has come due in an unexpected place: its startup ecosystem. In the first six months of 2026, not a single disclosed equity round closed in the country. A year earlier, at least six Tunisian companies had raised capital over the same stretch. The pipeline hasn’t slowed. It has stopped.
Just across the border, the opposite is happening. Moroccan startups pulled in more than $30mn across eight disclosed rounds in the same six months, with domestic funds increasingly doing the leading rather than the following. Capital hasn’t disappeared from North Africa — it has relocated.
The numbers, side by side
Data compiled by Launch Base Africa tells the story starkly. Tunisia went from six disclosed deals and roughly $5.4 million in equity funding in H1 2025 — including a $3.5 million round for water-harvesting startup Kumulus, a Visa accelerator placement for fintech Konnect, and smaller raises by Dabchy, GENOW, EasyBank, and Pixii Motors — to just one disclosed equity deal in H1 2026: a six-figure investment by 216 Capital in agritech startup RoboCare.
Morocco’s H1 2026 tally, by contrast, included property-tech startup Yakeey closing a $15mn Series A backed by Enza Capital, the IFC, Beltone VC and CDG Invest; fintech WafR raising $4mn from LoftyInc, Attijariwafa, Al Mada, UM6P and First Circle; and seed rounds for Enakl, Z.systems and Weego, most of them touched in some way by a single fast-emerging local investor: the Azur Innovation Fund.
What Changed?
The clearest trigger for Tunisia’s decline appears to be regulatory. Law №16–2025, passed in May 2025, effectively outlaws subcontracting for roles deemed permanent, requiring companies to hire core staff on indefinite contracts. The government presented the reform as a way to close a loophole that had allowed employers to keep workers in perpetual temporary employment.
The impact was swift. Adecco, which had operated in Tunisia for 23 years and placed more than 100,000 workers, announced in August 2025 that it would leave the market by the end of October, arguing that the new rules had rendered its business model unviable. For startups that rely on outsourced developers, customer support teams, or quality assurance staff — a common practice for early-stage companies worldwide — the law leaves two choices: absorb the costs of converting those workers into permanent employees, including higher payroll and severance obligations, or demonstrate that the roles are genuinely temporary, a difficult legal threshold to meet.
Neither InstaDeep nor Expensya — two of Africa’s largest startup exits — ultimately achieved their liquidity events through corporate entities domiciled in Tunisia. Although much of their engineering talent remained based in the country, both companies established overseas holding structures — InstaDeep in the United Kingdom and Expensya in France — to navigate Tunisia’s foreign exchange controls, satisfy international investors’ fund structures, and facilitate cross-border transactions. Their Tunisian workforce could then provide services to these foreign entities under subcontracting arrangements.
The end of that subcontracting model removes one of Tunisia’s longstanding competitive advantages. For Tunisian founders building companies from Europe, the country becomes a less attractive source of cost-effective engineering talent if hiring those workers now requires permanent local employment rather than flexible service contracts.
Tunisia’s other long-standing constraint has been access to hard currency. Until December 2025, residents could not legally hold foreign-currency bank accounts, forcing freelancers and startups earning in dollars or euros to rely on costly intermediaries or offshore wallets operating in a legal grey area. At the same time, traditional banks remained prohibited from facilitating cryptocurrency transactions or peer-to-peer digital asset networks.
Parliament moved to ease those restrictions in December 2025, approving an amendment to the 2026 Finance Law by 69 votes to 17, with 17 abstentions. The measure reversed a similar proposal that had failed in November 2024 and, for the first time, allowed residents to open foreign-currency accounts.
The reform, however, remains incomplete. Its practical implementation depends on circulars from the central bank that have yet to be issued, while key details — including transaction limits, eligibility criteria, and compliance requirements for commercial banks — remain largely undefined.
In practice, many freelancers say local bank branches are still unequipped or insufficiently trained to process foreign-currency account applications, leaving applicants unable to open fully functional accounts. As a result, and amid continued capital controls and the managed exchange rate for the dinar, many digital workers continue to rely on peer-to-peer (P2P) cryptocurrency networks to receive international payments and convert them at market rates rather than through the formal banking system.
Why Morocco currently looks different to investors
None of Morocco’s advantages are exotic — that’s rather the point. What’s newer is the depth of homegrown capital. The Azur Innovation Fund alone touched four of Morocco’s H1 2026 deals — Enakl, Weego, GoSwap and Z.systems — typically syndicating with Witamax and MFounders. State-linked CDG Invest co-backed Yakeey’s Series A, while Attijariwafa Ventures and Al Mada Ventures both appeared on WafR’s cap table. That’s a different picture from a market dependent entirely on foreign VCs parachuting in: it looks like an ecosystem that can fund a company from seed through growth using its own institutions.
International development finance has followed the same pattern. Proparco, France’s development finance arm, has been active this year in Guinea, Senegal and Côte d’Ivoire but put no fresh capital into Tunisia in H1 2026. Bpifrance, which co-led a €3.1mn seed round for Kumulus back in 2025, has since backed Moroccan AI startup ToumAI along with deals in Senegal and Côte d’Ivoire — and nothing new in Tunisia.
Tunisia’s talent problem was never the issue. The country produced InstaDeep, the AI company co-founded by Karim Beguir and Zohra Slim that BioNTech acquired in 2023 for up to £562mn (roughly $680mn), and Expensya, the spend-management startup founded by Karim Jouini and Jihed Othmani that was bought by Medius the same year after raising $20mn in Series B funding.
But neither exit seeded a local reinvestment cycle. Founders and early employees largely relocated to London, Paris or Silicon Valley, and the proceeds mostly left the country with them. One Tunisian founder, speaking anonymously to Launch Base Africa, put it bluntly: the successes were real, but the money and the people who made them went abroad rather than recycling back into local companies. Without a domestic venture industry with enough capital to absorb returns like these, isolated wins don’t compound into an ecosystem.
A domestic backstop, with limited reach
Tunisia isn’t without a countermeasure. The ANAVA Fund of Funds, a $60mn vehicle run by Smart Capital and backed by the Caisse des Dépôts et Consignations, Germany’s KfW, the World Bank and several government ministries, has committed €45mn across ten venture funds — seven focused on Tunisia and three pan-African, including 216 Capital Ventures, Flat6Labs, Janngo Capital and LoftyInc Capital. A companion programme, DEAL 2.0, aims to get investment-ready capital of between €50,000 and €7mn to more than 200 startups.
The catch is scope: ANAVA has so far supported 45 startups across 12 African countries, from Nigeria to Kenya, which means its impact on Tunisia specifically is diluted by design. It’s a partial cushion, not a replacement for the international capital that’s stopped showing up.
Behind the regulatory specifics sits a broader deterioration. Economist Ridha Chkoundali has tracked Tunisia’s investment rate falling from an average of 20% of GDP between 2015 and 2019 to just 8% in 2023. Food inflation is running at roughly three times the headline rate, and graduate unemployment has accelerated a brain drain toward Europe and the Gulf. Tunisia rejected an IMF programme in 2023 on political grounds, then quietly adopted several of its austerity measures — freezing public hiring, cutting imports — without the financing cushion a deal would have provided.
Civil liberties have factored in too. The detention of opposition figures, including former parliament speaker Rached Ghannouchi, and broader restrictions on political activity have drawn repeated criticism from Western governments; in July 2026, US Representative Joe Wilson called for sanctions targeting Saied’s inner circle. Venture capital prices in predictability, and Tunisia currently offers investors very little of it.
What happens next
Tunisia hasn’t lost its engineers or its entrepreneurial instincts — those remain intact. What it’s lost, for now, seems to be the confidence of the investors who fund the gap between an idea and a company. The currency reform could help once it’s actually implemented; ANAVA could seed a new generation of local funds if given time. But a labour law that broke the subcontracting model most startups run on, layered onto a shrinking economy and a tightening political system, isn’t something a single fund or a delayed central bank circular is likely to reverse quickly.
Morocco’s edge isn’t inevitable — it’s still a smaller market than Egypt or Nigeria and competes with both for pan-African investor attention. But regulatory predictability and a growing bench of local capital have made it, for now, the default destination for money that used to flow to Tunis.