Date of Submission to Coordination Unit:
April 4th, 2014
A. GENERAL INFORMATION
1. Activity Name
Support for the Holistic Social Business Movement in Tunisia
2. Requestor Information
Name: Mr. Noureddine Zekri
Title: Secretary of State of Development and International
Cooperation
Organization and Address: Ministry of Development and International Cooperation, 98 Avenue Mohamed V (Place
Pasteur), Tunis-Belvédère, Tunisia
Telephone: +216-71 796 213
Email: [email protected]
3. Recipient Entity
Name: Mr. Imed Turki
Title: Chief of Staff
Name: Ms. Mariem Lissari
Title: Senior Advisor and Head of International
Cooperation
Name: Ms. Faiza Kallel
Title: Director General of Employment Promotion (DGPE)
Organization and Address: Ministry of Vocational Training and Employment,10 Boulevard Ouled Haffouz, 1002 Tunis,
Tunisia
Telephone: +216- 71791572, 71791331, 71798196
Email: [email protected];
[email protected]; [email protected]
4. ISASC Representative
Name: Jacob KOLSTER
Title: Director
Organization and Address: North African Regional Department, the African Development Bank, 13 Avenue du Ghana,
P.O. Box 323-1002, Tunis, Tunisia
Telephone: +216-71102165
Email: [email protected]
5. Type of Execution (check the applicable box)
√
√
Type
CountryExecution
Joint
Country/ISAExecution
Endorsements
Attach written endorsement from
designated ISA
Attach written endorsement from
designated ISA
Justification
The African Development Bank (AfDB) launched the pilot
Program of Holistic Social Business Movement (HSBM) in Africa in
the end of 2012 with Tunisia as one of the three beneficiary
countries. The HSBM Program has been moving on well, with the
Tunisian part progressed faster with considerable demand
identified from the field. It is time to upgrade the pilot HSBM
Program in Tunisia by strengthening the government’s capacity in
enabling the country’s social business environment and by
mobilizing more financial and technical resources to back up the
1
social business investment and entrepreneurship development to
meet the increasing demand.
The pilot HSBM Program, financed by the Japanese Trust Fund
and Multi-donor Trust Fund for Countries in Transition, is
currently under implementation by the Human Development
Department (OSHD) of the AfDB. The present proposal, as a scaleup of the existing HSBM Program in Tunisia, is aimed to ramp up
the HSBM for 2 more years that will contribute to establishing a
mature eco-system of social business in the country, with key
stakeholders capable of participating in the social business
movement, including the government, private sector, service
providers, youth, women and the vulnerable.
The ramp-up phase of the HSBM Program, as proposed in the
present proposal, will thus be implemented jointly by the
Government of Tunisia (GoT) and the AfDB given the need of
necessary continuity of the on-going HSBM activities. This
arrangement echoes and will form synergy with the GoT’s
ongoing efforts in job creation and entrepreneurship
development, which are also under the AfDB’s support through,
for example, its technical assistance to the Ministry of Vocational
Training and Employment in structuring the “Solidarity
Enterprises” Project (PES), and through its coordination of 19
donors and development partners for the Souk At-Tanmia (or
“Development Marketplace”) initiative. Based on the synergy and
recognizing the potential significant impact, the GoT plans to cofinance the HSBM Program through its PES Project to enable
about 300 Solidarity Enterprises to build social businesses.
ISA-Execution
for Country
ISA-Execution
for
Parliaments
Attach written endorsement from
designated ISA
Attach written endorsements
from designated Ministry and ISA
The choice of the AfDB as the ISA for joint implementation in the
MENA Fund financed activities will allow to ramp up smoothly the
progress of the HSBM pilot program into a mature stage, on which
AfDB has been developing an expertise to be transferred to the
GoT, as envisioned through the present proposal. The joint
implementation of the program will ensure the spillover of a
demonstration effect from fast movers being supported by the
AfDB and a smooth transfer of expertise and experiences from the
AfDB to the GoT by enabling and institutionalizing the
government’s capacity in managing private sector-led job creation
and entrepreneurship development programmes and in engaging
key stakeholders, especially private sector players to participate
and contribute. The joint implementation will also facilitate
shaping the GoT’s efforts in mainstreaming social inclusion and
environmental dividends into relevant policies / strategies
through practices and monitoring and evaluating the progress
and results. By the completion of the program, the GoT will be
full-fledged to carry it over to subsequent phases.
Not applicable.
2
6. Geographic Focus
√
Individual country (name of country): Republic of Tunisia
Regional or multiple countries (list countries):
7. Amount Requested (USD)
Amount Requested for direct Project Activities:
(of which Amount Requested for direct ISA-Executed Project
Activities):
Amount Requested for ISA Indirect Costs: 1
Total Amount Requested from the MENA Trust Fund:
Co-financing by the GoT (executed by the GoT):
Total Program Amount:
USD 2,460,000 including:
 GoT executed activities: 743,125
 ISA (AfDB) executed activities: 1,716,875
USD 100,000
USD 2,560,000
USD 15,000,000
USD 17,560,000
8. Expected Project Start, Closing and Final Disbursement Dates
Start Date:
04/08/2014 (for
ramp up phase)
Closing Date:
03/08/2016
End Disbursement
Date:
30/04/2016
9. Pillar(s) to which Activity Responds
Pillar
Primary
(One only)
Investing in Sustainable Growth.
This could include such topics as
innovation and technology policy,
enhancing the business environment
(including for small and medium-sized
enterprises as well as for local and foreign
investment
promotion), competition
policy, private sector development
strategies, access to finance, addressing
urban congestion and energy intensity.
Inclusive Development and Job
Creation. This could include support of
policies for integrating lagging regions,
skills and labor market policies, increasing
youth employability, enhancing female
labor force participation, integrating
people with disabilities, vocational
training, pension reform, improving job
conditions and regulations, financial
inclusion, promoting equitable fiscal
policies and social safety net reform.
√
Secondary
Pillar
√
Enhancing Economic Governance.
(All that apply)
This could include areas such as
transparency,
anti-corruption
and
accountability policies, asset recovery,
public
financial
management
and
oversight, public sector audit and
evaluation, integrity, procurement reform,
regulatory quality and administrative
simplification, investor and consumer
protection, access to economic data and
information,
management
of
environmental and social impacts,
capacity building for local government and
decentralization, support for the Open
Government Partnership, creation of new
and innovative government agencies
related to new transitional reforms,
reform of public service delivery in the
social and infrastructure sectors, and
sound banking systems.
Primary
(One only)
Secondary
(All that apply)
√
Competitiveness and Integration.
This could include such topics as logistics,
behind-the-border
regulatory
convergence,
trade
strategy
and
negotiations, planning and facilitation of
cross-border
infrastructure,
and
promoting and facilitating infrastructure
projects, particularly in the areas of urban
infrastructure, transport, trade facilitation
and private sector development.
1
ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including
staff time, travel, consultant costs, etc.
3
STRATEGIC CONTEXT
10. Country and Sector Issues
10.1 For many years, Tunisia has been considered as one of the highest performing economies in the African Continent.
However the revolution of 2011, which started the Arab Spring, and the political, economic and social challenges indicate
that in spite of economic success, growth did not reach out inclusively. The country is challenged with high levels of youth
and women unemployment, regional disparities, challenging adaption to green economy and more generally a slower
growth which does not always trickle down to the most vulnerable parts of the society.
10.2 In the aftermath of the Arab Spring, the macroeconomic performance has been weakened. The GDP growth rate is
2.6% in 2013 while the growth rate of real GDP per capital is 1.5%, both lower than the counterpart in 2012 (3.7% and 2.6%
respectively). The macroeconomic situation is characterized by an increase in budget deficit (from 3.4% of GDP in 2011 to
an estimate of 6.4% in 2014 against 4.8% in 2012 and 6.2% in 2013) largely due to the contraction of agricultural production
and weakening Tunisian Dinar. It is in this context of deterioration of macroeconomic balances that since 2011, Standard &
Poor’s has downgraded the sovereign rating of Tunisia from BBB to B (in August 2013). Current account deficit also widened
from 7.4% of GDP in 2011 to an estimated 8.2% in 2013, but is projected to drop to 7.4% in 2014 following the depreciation
of the exchange rate. The political risk largely deteriorates the country’s competitiveness – Tunisia lost 43 seats in the
Report on the International Competitiveness of the World Economic Forum (WEF) to rank at the 83rd place in August 2013.
In the Doing Business ranking in 2014, Tunisia was downgraded with 2 positions from the 49th to the 51st.
10.3 The inflation pressure has caused the Central Bank of Tunisia to slow down and revert from the expansive monetary
policy. Within this context, it is increasingly difficult for the private sector, especially Micro, Small and Medium Enterprises
(MSMEs) – the largest contributor to employment, to operate and flourish. The difficult access to finance is an obstacle to
private sector development: the ratio of loans to SMEs in all loans is 15% in Tunisia, while this figure is 24% in Morocco. 2 A
May 2012 survey conducted by GeoPoll in 24 governorates revealed that 66% of respondents consider that the two main
obstacles to developing entrepreneurship were the inability to provide the personal contribution required (41%) and
difficult access to bank loans (25%). Furthermore, many entrepreneurs lack the business skills to develop their own
businesses, for which they could have been able to benefit from a number of business support and capacity building
initiatives on-going in the country.
10.4 For the third quarter of 2013, the average unemployment rate decreased to 15.7% from 17% for the same period in
2012. However, the unemployment rate of graduates increases to 34% from 31.8% in 2012. In gender aspect, even though
Tunisia is perceived as a leader in the area of women's rights in the Middle East and North Africa (MENA) region, women
represent only 26% of the labor force and are more affected by unemployment than men. The distribution of
unemployment remains an important indicator of regional disparities. Unemployment rate is higher in the Center, the West
and the South: The unemployment rate is above 20% in Kasserine (21%), Gafsa (28%), and Tataouine (24%); and Gafsa
(47%), SidiBouzid (41%), Kébili (43%), and Jendouba (40%) have the highest unemployment rates of graduates.3Given the
significant variation in average consumption and poverty from one region to another, with poverty index (national average)
varying from 6.9% in Tunis district to 30.8% in the Mid-West, the regional imbalances prevent Tunisia from unleashing its
full potential.
10.5 A sustainable growth also implies a special attention to companies’ social and environmental impacts. The transition
towards a new green economy requires that the private sector adopts sound business models that respect both the
environment and the society.
10.6 The Government of Tunisia (GoT) has been undertaking measures in reforms of policies, strategies and implementing
projects and programs to target employment, regional disparity and green growth problems. The GoT has reformed the
Decree of Employment, issued the National Employment Strategy and initialized several government-led programs to
encourage job creation for youth and support creation of small business, etc. Through its Ministry of Development and
International Cooperation (MDCI), the GoT has been implementing the Integrated Development Program (Programme de
2
Union of Arab Banks and the World Bank, 2011, The Status of Lending in the Middle East and North Africa Region.
A study is currently underway for the government and the private sector with technical and financial support from certain
development partners to identify new growth engines for sustainable and inclusive development.
3
4
Développement Intégré, IDP) in addition to the Program of Building Regional Development (Programme des Chantiers
Régionaux de Développement), to promote a dynamic of sustainable local development, strengthening employment in the
regions, and promote human development by improving the quality of life and protect the natural environment. In
September 2013, the Commissioner General for Regional Development (CGDR) signed agreements with three public banks,
namely the Tunisian Bank of Solidarity (BTS), the Bank of Financing Small and Medium Enterprises (BFPME) and the
National Bank of Agriculture (BNA), to establish the terms of cooperation to achieve the objectives of the IDP in the
creation of approximately 6,000 individual projects, nearly 25,000 jobs with 2,400 jobs for graduates. It is to be mentioned
that the “Seed Funds” (fonds d'amorçage) agreement signed in 2012 between the MDCI and the BTS fits in this new
initiative. Meanwhile, through its Ministry of Vocational Training and Employment (MFPE), the GoT has been implementing
the National Employment Strategy and various programs to support job creation. Recently, by launching the Project of
Promoting Solidarity Enterprises (Projet de Promotion des Entreprises Solidaires, the PES Project), the GoT aims to create
an accommodative business environment with financial and non-financial services provided to the graduates for their
establishment of ”solidarity enterprises” that have high potential of business sustainability and labor absorptive capacity.
The pilot phase of the PES Project is to create 100 solidarity enterprises in 2014/2015, financed by the GoT sponsored TND
8 million. Upon the completion of the pilot phase, an action plan will be formulated to guide the roll-out in the follow-up
phase. It is expected that by 2018/2020, at least 50,000 graduates seeking employment will work in the solidarity
enterprises.
Box 1: Donors’ support for job creation through SME development in Tunisia
The GoT welcomes support from donors and international development partners (DPs) for the country’s initiatives
to enhance private sector led job creation and sustainable and inclusive growth. Donors have been involved in
supporting Tunisia through either direct financing or budget support or technical assistances.
In the field of SME development, USA has launched the new SME initiative as part of its renewed engagement with
Tunisia under the U.S.-Tunisia Trade and Investment Framework Agreement (TIFA), which seeks to promote
broad-based Tunisian growth by building the capacity of small business development centers (SBDCs) and
providing technical assistance to small firms. A Tunisia-America Enterprise Fund (TAEF) was established in 2013,
aiming to promote the development of Tunisian private sector with a particular focus on SMEs.
Within the framework of the OECD-MENA Initiative, Italy has supported for SMEs governance, the “Mediterranean
Partnership Fund” to expand financing options for entrepreneurs, and the working group on SME policy,
entrepreneurship and human capital development; France has provided direct financial services and non-financial
supports through business development and commercial capacity building for SMEs; Germany has helped forge
“employment compacts” through vocational training to boost job creation by linking companies, training colleges
and chambers of commerce; and Japan has initiated Borj Cedria Science and Technology Park in Tunisia and
implemented Quality/Productivity Improvement Projects (KAIZEN) for SMEs.
Moreover, the European Bank for Reconstruction and Development (EBRD) launched in 2012 the Program of Small
Business Support in Tunisia, mainly aiming at increasing efficiency, productivity and governance of the small
enterprises. It also started to support the development of private equity sector in Tunisia for the growth of equity
funding for SMEs. In addition, Tunisia is a beneficiary in the EBRD’s “Local Enterprise Facility”, a fund dedicated to
investments in SMEs.
The European Investment Bank (EIB) plans to grant EUR 90 million in 2014 to support sustainable development in
Tunisia – special attention will be paid to promoting accessibility to public services in order to encourage social
integration and to developing local SMEs in order to boost employment, particularly in the construction and
services sectors.
The World Bank Group’s on-going support for Tunisia focuses on improved governance and accountability,
opportunities for women and youth, private sector job creation and investments in interior regions. In 2013, its
private arm - the International Finance Corporation - announced a USD 48 million investment to support the
growth of Tunisian private entrepreneurs. In February 2014, the World Bank announced to grant Tunisia USD 100
million for funding SMEs.
5
To these aims, the African Development Bank Group (AfDB), through its private sector window approved a Line of
Credit in 2011 at an amount of USD 50 million to support SME financing in Tunisia to help mitigate the funding
challenges faced by the country under difficult economic circumstances. The AfDB is also implementing the Souk
At-Tanmia (or “Marketplace for Development”) Partnership in Tunisia by collaborating with 19 partners, which
now moves to the design of the second edition following the success of the first one. Financed by the Multi-donor
Trust Fund for Countries in Transition (TFT Fund), the AfDB is providing technical assistance to the GoT (MFPE) for
structuring the implementation of the PES Project. In February 2014, the AfDB granted USD 950,000 to the BFPME
through its Fund for African Private Sector Assistance (FAPA). It is aimed at enhancing the capacity of BFPME in
investment appraisal and portfolio management of SMEs.
10.7 Despite all the efforts that the GoT, in joint with international DPs, has been undertaking, the pressure of employment
and inclusive growth still mounts. More detailed analysis found that there are areas where there is lack of either market
services or government services thus the demands by certain population, communities and regions could not be served. It
largely constrains the socio-economic activeness of these people, limit their access to economic opportunities and prevent
them from participation in economic activities, including those on-going initiatives of job creation and entrepreneurship
development that they could have benefited from. These areas are often found relevant to meeting the social and
environmental needs, and faced by vulnerable people including youth, women and rural poor. For example, in certain
underserved regions, there is lack of collective transport services that are needed to enable poor women to step out of
home to go easily to market or other economically active places due to the high transaction cost of collecting passengers
spottily dispersed in various villages. This case illustrates the importance of bridging the gap between the market-based
supply and social and environmental demands under the framework of inclusive growth - entrepreneurship development
to build this linkage will thus contribute to both job creation and service provision. However, in the current business
environment, such projects with high social and environmental impacts often have difficulty to attract funding resources
that can be flexible and adaptable to their needs. They also have to seek proper technical assistances for them to survive
and thrive. Once funded, the growth of these vital projects may still be challenged by the under-developed ecosystem for
this kind of businesses.
10.8 Furthermore, it is found that although there have been various initiatives which aim at promoting SMEs and
developing entrepreneurship in Tunisia, there is lack of synergy in shaping and pooling of key stakeholders in the process.
 The capacity of the GoT in business and entrepreneurship development for job creation is still constrained. This
influences not only its capacity in coordinating the various initiatives within the government or with the DPs, but
also its capacity in cooperating with private sector to move on with the interventions. The AfDB’s on-going
technical assistance for the GoT in the MFPE’s “Solidarity Enterprises” Project (PES Project) will help improve the
GoT’s capacity in coordinating relevant ministries to perform of the tasks of creating MSMEs and jobs for
graduates. However, there is still lack of a mechanism to build up the GoT’s capacity in engaging private sector’
participation and strengthening private sector’s capacity in jointly performing the tasks.
 In Tunisia, there is lack of a mature group of MSME incubators and service providers. Currently, the National
Network of Business Incubators (Le Réseau National des Pépinières d’Entreprises) aims to gather incubator
services across the country. However, their potential shall be amplified through engagement in performing tasks in
national programs or DPs’ financed programs. Meanwhile, there is lack of a strong linkage between incubators and
fund providers, which influences business development in two ways. On the one hand the incubators may have
difficulty to link the entrepreneurs to financial services. On the other hand, the fund providers may have difficulty
in identifying and following up with the potential MSME entrepreneurs. Realizing these challenges, the Financial
Services Volunteer Corps (FSVC), who works in the area of venture capital for SMEs in Tunisia, has organized three
consultations with some specialized incubators, including the Microsoft Innovation Center (MIC), the Engineering
School of Sfax (ENIS), and the Mediterranean School of Business (MSB). However, the gap is still considerable and
needs to be bridged up.
10.9 Based on these observed challenges, in joint with the on-going efforts by the GoT and the DPs, it is critical to assist in
developing a business model to reach the fields where the usual businesses are lack of presence, strengthening the
government capacity and harmonizing the environment for MSME and entrepreneurship development in these fields. Social
Business modality, as initialized and operationalized in Tunisia under the AfDB’s support, is a consolidated intervention
6
which includes developing locally-based incubators, structuring mandated fund, and building a friendly eco-system,
especially in pursuit of targeting and benefitting people who have been marginalized in the economic empowerment
process. This proposal is thus prepared in order to leverage social business modality for the GoT’s use to contribute to its
objective of jobs creation and entrepreneurship development, and to improve the impact on growth inclusiveness.
11. Alignment with Transition Fund Objective
11.1 Social Business modality caters to the need of meeting social and environmental objectives by sticking to business
rules that can target specific population groups. Social Business addresses economic growth by satisfying social and
environmental needs in business friendly and financially sustainable ways. They combine a focus on meeting social needs
with entrepreneurial energy and market discipline. Like a traditional NGO, a social business has a social mission, and a social
business’s financial surplus is largely reinvested for greater social impact rather than distributed only for private profit.
However, like a business, a social business delivers products and services to its beneficiaries in a way which allows it to
cover its costs, based on a clear revenue model and investment rather than on grants or donations. In this way, funding to a
social business can be made as an investment, and the impact of each “social business dollar” is multiplied as it is recycled
and re-invested again and again.
11.2 The Holistic Social Business Movement (HSBM) aims to promote inclusive growth, by proactively supporting Social
Businesses which involve the most vulnerable segments of the Tunisian society, such as the youth, women, and the
population in disadvantaged regions. Tunisia experiences an important phase of its development. The Social Business
approach can contribute to the development of the country, by reinforcing the economic activities, tackling social and
environmental issues, and inspiring a new generation of young social business entrepreneurs.
11.3 The objective of the MENA Transition Fund is “to support the reforms currently under way in transition countries and
improve the lives of their citizens, including by supporting policies for improving skills and labour market policies, increasing
youth employability and improving job conditions and regulations”.
11.4 The proposed Program of Holistic Social Business Movement in Tunisia is in line with the overall objective of the
Transition Fund:

The Program aims at creating a supportive environment within which Social Businesses can thrive. The objective
is to build a strong ecosystem of institutions, policies, networks, activities and resources to promote Social
Business with the use of a locally based social business incubator and a social business investment fund to enable
the access to financing and technical services of Social Businesses.

The Program targets direct beneficiaries including potential social business entrepreneurs and job seekers
among the youth, women, and population in disadvantaged areas. The goal of each Social Business is to promote
inclusion of the most vulnerable either by providing them affordable products or services, or by providing them
employment or improved livelihoods. Examples of social businesses that have been identified for support during
the pilot phase of the Program (granted by the Japanese Trust Fund in December 2012), are illustrated below with
focuses on key issues including:
 Youth, regional disparities and environment: Partnership with a plastic recycling company in order to
open a new recycling site in Kairouan. The Social Business would focus on recycling, but also in supporting
the work of street collectors, and improving health and safety conditions at the working sites.
 Women: The women agricultural labourers in poor and remote regions, who currently have unstable jobs
due to lack of reliable transport services to reach big farms, are to be provided with reliable, safe and
fairly-priced transport services to be linked to the work sites. To facilitate their transformation to frequent
workers, social services will be provided to help their housework and improve their socio-economic status
in the households.
 Green growth: Biological agriculture social businesses focus on environmentally friendly exploitation of
unusual agricultural products, and commercialization of the outputs. Eco-tourism social businesses aim at
opening rural lodgings, promoting local agricultural products and handicraft, and providing tourist guides
for historical sites. It focuses on hiring rural women and unemployed youth.
7

The Program is aimed at setting up a Social Business Investment Fund (SBIF) in Tunisia to support the most
promising social businesses. The SBIF will be structured as a mezzanine fund which can invest in either equity or
credit. The loans to Social Businesses are at lower interest rates and with less stringent terms than what currently
prevail as from commercial banks in Tunisia (e.g. concerning collateral requirements, the length of repayment, and
action taken in case of repayment difficulties, etc.). Indeed, in most cases, these Social Business projects would not
be financed at all by commercial banks since they would be considered too risky or otherwise unsuitable for most
commercial finance providers. Meanwhile, equity intake can also be justified for the Social Businesses which can
have significant social and environmental impact but are lack of the start-up capital. The SBIF will also serve to
crowd in more funding from other investors interested in financing social businesses. In doing so, the Program will
fill the gap of the financial market and improve financial accessibility of the Social Business entrepreneurs.

The Program will provide training and coaching to social business entrepreneurs through using the Social
Business Incubator to help develop bankable proposals and enhance business growth and sustainability. The
strong support that it will provide to the entrepreneurs through its team of professionals include hands-on support
of the entrepreneur developing the business plan, maximizing the social impact and financial sustainability of the
business, and then put the entrepreneur in contact with specific expertise and networks (national and/or
international buyers/suppliers for instance) that he/she may need during the years for the growth of the business.
The Incubator will hence contribute to supporting private sector development by building capacity and coaching of
entrepreneurs and helping them access national and international markets.

The Program will aim more generally to enhance the business environment and ecosystem for SMEs which have
a social objective and/or corporate social responsibilities (CSR). This will take place along with the functioning of
the Steering Committee on Social Business, which was established in Tunisia with members from government,
private sector, service providers and civil society organizations (CSOs). It will be enlarged to contain
representatives of youth, women and local communities. It will oversee the functioning of the Social Business
Incubator and the Social Business Investment Fund and coordinate actions across the stakeholders concerned.

The Program will also contribute to enhancing economic governance especially the management of
environmental and social impacts. Ensuring a diligent and solid monitoring and evaluation (M&E) of both the
social and financial Key Performance Indicators (KPIs) of the incubated Social Businesses is pivotal to the long-term
positive impact of the Program in Tunisia. It is a guarantee of social impact and a requirement for the reporting to
investors and partners. To this end, a special set of KPIs, including those measuring social and environmental
impacts, are to be developed jointly between the target investee social businesses, Social Business Incubator,
Social Business Investment Fund and the Program management team.
12. Alignment with Country’s National Strategy
12.1 Employment, especially private sector-led job creation, is a top priority in Tunisia. A large consensus has emerged
around the necessity for Tunisia to transit to a new model of more inclusive growth that also acts as a catalyst for
generating new jobs in productive business activities. The approval of the 2014 Constitution will lay down a foundation for
the pursuit of continuous economic growth of the country.
12.2 The HSBM Program aligns with the GoT’s Guidelines 4 presented in March 2013, which are footed on: (i) the Jasmine
Plan in September 2011 and (ii) the Letter of Development Policy in October 2012; and five pillars for strategic priority: (i)
economic reform, (ii) modernization of infrastructure, (iii) strengthening the social sectors, education and employment, (iv)
the regional balance, and (v) promoting sustainable development. Based on the2013 Guidelines, the GoT plans to further
issue a development plan in 2014.
4
After the revolution, Tunisia has stopped the development of five-year development plans implemented since the sixties.
In the context of transition, the authorities have opted for a flexible strategy focused on alleviating social and economic
demands while preparing the necessary structural reforms.
8
12.3 In the 2013 Guidelines, a set of structural reforms and investment in the medium and long term are proposed to
create the conditions for accelerated growth and job creation in order to balance regional and inclusive development.
However, a more detailed map of its operationalization shall be put in place. The HSBM Program fits in the third pillar of
“strengthening the social sectors, education and employment”, and can develop the modality for key stakeholders,
including the government, private sector, social business incubator and investment fund, and social business entrepreneurs,
under clear map of operationalization of the initiative of creating jobs and entrepreneurship through social business
development. The Program also fits in the fourth pillar for “regional balance”, and in the fifth pillar for “promoting
sustainable development” in relation to natural resources wherever the social businesses incubated are in the sectors such
as waste management, environmental protection, bio agriculture/tourism and renewable energy for improving green
growth. Thus the HSBM Program will contribute to filling in the gaps in terms of operationalization of the Guidelines.
12.4 The Program also aligns with other policies, strategies and conventions:

The proposed Program is in line with the objectives of the newly adopted Social Pact. The agreement, covering
areas such as labour legislation and industrial relations, employment policies, vocational training and education,
social protection, as well as balanced regional development, underlines the importance of social dialogue as a
genuine pillar of a democratic transition towards greater social justice. The Program emphasizes participatory
communication and a bottom-up method for stakeholder dialogue and social business development. It also
emphasizes achieving positive social and environmental impact based on a solid M&E system.

This Program contributes to implementation of the Tunisia’s National Employment Strategy (NES, 2013-2017):
The MFPE organized in June 2012 a National Dialogue on Employment. This inclusive initiative reached out to all
stakeholders - government, social partners, unemployed representatives, youth associations, political parties and
international partners. It has helped form the NES, which aims to gradually reduce the unemployment rate from
18% in 2012 to 10% by 2017. The NES stresses the importance of better quality job creation, especially for young
people, improved governance and transparency, and greater social dialogue in order to achieve a more socially and
economically sustainable growth. The NES also emphasizes the critical task of promoting a culture of self-reliance
and entrepreneurship among graduates. Henceforth, the Program will directly contribute to the implementation of
the NES in all these aspects.

This Program responds to transitioning to inclusive and green growth, as contained in the Green Growth
Agenda, on exploring emerging sectors such as green jobs, which represent an untapped source of jobs for youth,
by anticipating needs for qualifications and encouraging entrepreneurship. In this aspect, the Program will form
synergy with the Project of “Strengthening the Employability of Youth during Tunisia’s Transition to a Green
Economy”, which is being implemented by the MFPE with technical support from the OECD and Islamic
Development Bank (IsDB) and financial support from the MENA Trust Fund.

The Program is in line with the National Vocational Training Strategy, which aims at supporting the employment
policies and increasing the work return. The main orientations of the strategy are; (i) stimulating the partnership
between the system and the economic sectors; (ii) strengthening the quality of training at all levels; (iii) developing
training in the new sectors (aeronautic, renewable energy, business process outsourcing) by creating, modernizing
and/or updating the vocational training centres; (iv) increasing the capacities of the training centers; (v) promoting
the apprenticeship and (vi) improving the management of the system. The Program, by stressing the importance of
capacity building through technical assistance by training and coaching the social business entrepreneurs, building
social business eco-system with colleges on curriculum development, and organizing workshops and experience
sharing events, will directly contribute to the implementation of the National Vocational Training Strategy.
B. PROJECT DESCRIPTION
13. Project Objective
13.1 The HSBM Program is aimed at creating a supportive environment within which Social Businesses can thrive. The
objective is to strengthen the capacity of key stakeholders, mobilize seed fund, and build a strong ecosystem of institutions,
resources, networks and activities to promote Social Business. It will contribute directly to private-sector led job creation
9
and skills and entrepreneurship development in Tunisia, and generate significant social and environmental impact.
13.2 The direct beneficiaries of this nationwide program will be youth, women and other vulnerable people who aim to
develop their own social businesses, private companies who have social incentives thus can be categorized as “social
enterprises”, small business owners and youth and women who want to launch their own businesses, and local
communities whose habitants join the social business projects and benefit from direct employment and/or social services
provision. The indirect beneficiaries will include the entire Tunisian population through the supply-chain effect and spillover from the direct beneficiaries through consumption and other activities. Moreover specifically, population including
youth, women, the vulnerable and rural poor, especially those in disadvantaged regions, will be targeted with priority.
13.3 The HSBM Program will be carried out through enhancing capacities of key stakeholders, strengthening the Social
Business Incubator and establishing and operationalizing a Social Business Investment Fund (SBIF) in order to support the
development of Social Business in Tunisia. It is structured with two (2) phases, of which the second or ramp-up phase will
solicit support from the MENA Transition Fund:

A pilot phase of the HSBM in Tunisia, co-funded by the Japanese Trust Fund, the TFT Fund and the AfDB, is being
implemented by the AfDB between 2013- 2014. During this time, the focus is on generating awareness and piloting
social business projects. A National Conference on Social Business was held in Tunis in March 2013. Over 500
stakeholders including government officials, private sector, academia, NGOs, CSOs, and youth and women
representatives, attended the conference. The local Social Business Incubator in Tunisia has been established and
operationalized, for the incubation of social businesses in Tunisia. An SBIF is being structured with an aim to
channel financial resources to social business investment. A pipeline of social business projects to target 25 direct
beneficiaries (including entrepreneurs and core employees) have been identified and under preparation with
technical assistance to reach bankable level, and further to operationalize the businesses. In addition, most
recently, the “iBDA – Social Business Accelerator” has been launched to map and call for proposals from the
potential social business entrepreneurs and has so far effectively reached out to the targeted clients.
Box 2: Brief of the Pilot Phase of the HSBM Program
The AfDB is leading the Holistic Social Business Movement (HSBM) in Africa, with Tunisia as one of the three
beneficiary countries (the other two countries are Uganda and Togo). During the implementation of the Program,
significant demand by the countries is brought up and more resources are needed to scale up the Program to
enlarge its coverage and impact. The pilot HSBM Program has raised awareness among stakeholders (including
government, private sector, civil societies, NGOs, academia, etc.) on social business, identified and trained 136 youth
and women as potential social business entrepreneurs5, built localized capacity on social business incubation, and
pipelined and appraised investment-ready pilot social businesses to benefit in total 50 social business entrepreneurs
and key employees. Most recently, on March 25, 2014, the “iBDA – Social Business Accelerator” was launched in
Tunisia to map country-wide potential social business entrepreneurs and call for proposals from them. Just within
one week (by April 1, 2014) there were 1,237 candidates filling their applications and 48 business plans formulated
and submitted. Given that by far the amount of seed fund is limited – about USD 200,000 for Tunisia, it is critical to
mobilize more sources to enable the sufficiency of the seed fund to meet the significant demand in the country. The
Japanese Trust Fund, donor of the pilot phase of the HSBM Program in Africa, has called the AfDB to consider a
ramp-up phase of the Program, based on its satisfaction of the so-far achieved results with the foundation laid down
for further progress. Its financing emphasis is expected to be put on other two beneficiary countries, namely Uganda
and Togo, as it aims to balance the overall potential resources to be mobilized from other channels.
Some useful experience and lessons have been drawn from the implementation of the pilot HSBM Program as
follows:
 To differentiate the mandates of social business from other conventional businesses, it needs to specify
social/environmental profit objectives clearly and early for the key stakeholders.
 Capacity of the local social business incubator in accounting, tax and legal advice, market access, and
5
A training evaluation showed that the satisfaction rate of the trainees is on average 95%.
10
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
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portfolio management should be enhanced.
Seed fund amount should be largely increased to meet people’s high expectation after awareness raised and
capacities built.
Setting up collaborative partnership is a major step in building social business models. Thus finding
complementary partners and undertaken continuous experiments is important to this initiative. 6
Achieving financial sustainability is critical not only to enable the long-last impact on job creation and
business development, but also to attract and scale up resource mobilization from potential donors,
investors, or development partners.
Public relationship, communication and advertising are critical for an innovative initiative to gain wider
public awareness, and also important for newly created social businesses to reach market acknowledgement
and acceptance.
The ramp-up phase of the HSBM Program will address these issues with concrete actions.

A ramp-up phase will then take place for 2 years from August 2014 to August 2016. The GoT is seeking support
from MENA Transition Fund for this phase. The ramp-up phase will contribute to: 1) building capacity of key
stakeholders to participate in social business development, including for relevant government institutions to
coordinate the social business initiative, and steer and oversee the implementation of the HSBM Program; 2)
incubation and investment in social businesses to cater to the high demand on creating and growing social
businesses; and 3) catalyzing an friendly eco-system for the thrift of social businesses in the country.
13.4 The resources, requested from the MENA Transition Fund, will be used to implement this Program at the macro, meso
and micro levels. At the macro level, it will contribute to mainstreaming social business development in relevant
policy/strategy by publishing policy issues paper and issuing guidelines. At the meso level, activities will be institutionbased, focusing on the needs of the key stakeholders, and will include capacity building, information sharing and
dissemination, and the creation of linkages. As a key stakeholder, the government will be built capacity for its key
institutional task forces in coordinating and implementing private sector-led job creation and business development
initiatives as well as in ensuring social and environmental impact in the process. At the micro level, the Social Business
Incubator and the SBIF are the two entities to support the creation and development of social businesses with the youth,
women and MSME entrepreneurs in corporation with investors, financial institutions, service providers and technical
expertise in private sector. Components under the Program will be implemented in parallel, and their outputs will build
upon one another.
14. Project Components
14.1 The HSBM Program consists of the following three components:

Component 1: Capacity building for key stakeholders in participating in social business development
(implemented by the Government)
14.2 Sub-component 1.1: Capacity building for the Government in policy orientation and initiative management to
accommodate, coordinate and oversee the social business movement
14.3 The first component is aimed at formalizing the social business environment in Tunisia through support for the
Government in providing an enabling policy and strategic framework and in capacity building for coordination and oversight
at governmental level of the social business initiative evolving in the country.
14.4 Policy orientation towards a smooth accommodation of the social business initiative is needed to enable the
6
The latest practice in launching “iBDA – Social Business Accelerator” in Tunisia provides a good answer to this
requirement. iBDA has solicited technical partnership from Yale University (Yale World Fellows), Marzars and JWT, who
focus on providing training services, legal and business consulting services, and public relationship, communication and
advertising services for the potential entrepreneurs.
11
government’s firm endorsement of the rationale and activities of the HSBM Program. Social Business, as a recognized
movement that promotes entrepreneurship and social innovation, will directly enrich the government’s engagement in
supporting inclusive private sector development for sustainable job creation. It is critical to mainstream Social Business in
the government’s strategic actions to crowd in more forces to contribute to inclusive growth.
14.5 Meanwhile, the GoT is still constrained in critical capacities such as structuring initiatives, developing programmes,
and coordinately managing them. The HSBM Program will help build capacity for the GoT in initiative management with
focus on the aspects which are commonly shared across the relevant initiatives. More specifically, the achievements during
the pilot phase of the HSBM Program will be used to shape this capacity building. For example, the Operations Manual
issued on social business identification, appraisal, investment and management can be adopted by the GoT in developing
implementation guidelines for programmes relevant to entrepreneurship and business development. Furthermore, the
Steering Committee established in Tunisia with representation from the GoT and other stakeholders will enable active
dialogues and serve as a platform for participatory decision making. In addition, facing the challenges as analyzed in
paragraph 10.7 and 10.8, the HSBM Program further aims to form strong synergy with the ongoing government
programmes by establishing expertise in the GoT on engaging private sector participation.
14.6 Henceforth, capacity building for the GoT in policy orientation and initiative management will be carried out in the
following aspects: (i) Integrate social business development into strategic action plans for relevant policy / strategy /
initiative; (ii) Strengthen performance in the Steering Committee of the HSBM Program to oversee the implementation of
the Program; and (iii) Enable the government to identify, mobilize and cooperate with private sector, especially through
technical cooperation in the fields of incubation, training and coaching, and business advisory services. The existing
government programmes, such as the PES Project, will then be benefited by crowding in private sector participation in
contributing to fulfilling the goals of business development and job creation.
Box 3: PES Project
The MFPE started structuring the PES Project in late 2013, and will commence the pilot phase in 2014. It will then be
followed with scaled-up phase for a total of five years. The PES project has the following key features:
 It encourages the establishment of business by at least three shareholder-employees who shall perform the
three core functions (production, management and marketing) in the enterprise;
 It solicits support for technical assistance during all stages of business creation and the first years of operation
of the business system;
 It plans to create solidarity for the delegations enterprises , creating jobs with at least half of them for graduates
from vocational training and higher education;
 It is funded by the National Fund for Employment (NFE), directly managed by the MFPE through credit lines
administered by the BTS – with loans at subsidized interest rate.
The PES Project is currently supported by the AfDB with technical assistance for the structuring period. The GoT aims to
solicit additional technical assistance supports for the period of incubating, establishing and growing businesses.
Innovative modalities are also pursued to enlarge the sectoral coverage.
14.7 Sub-component 1.2: Capacity building for other key stakeholders in supporting social businesses
14.8 The HSBM is greater than the operation of the single Social Business Incubator (as established in the pilot phase) and
the single SBIF (as structured in the pilot phase). They will be at the core of a new social business ecosystem in Tunisia,
comprising of enthusiastic local entrepreneurs, financial institutions, investors, service providers, technical expertise
network, community leaders, NGOs and hubs such as universities and training institutions. Such actors will operate within
the ecosystem, driven by the philosophy of social business as “business as usual”, and empowered with the tool of social
business to solve social and environmental problems faced by their own communities. The Social Business Incubator and
the SBIF will perform as catalyst of social business development especially at the start-up and early growth period, following
which it is envisioned that with a more mature environment of social business cultivation, social businesses can more easily
access market-based finance such as from commercial banks. The different actors of the ecosystem will themselves take
12
center stage in the future of this concept.
14.9 Capacity building activities under this sub-component mainly include:
 For private sector companies: To fulfill the corporate social responsibilities (CSR) through supporting social
business development by establishing social business functions, and/or participating in value-chain of the grassroot social businesses.
 For service providers and technical expertise network: To learn about social business and enable participation in
social business development by streamlining their respective functions in facilitating social business incubation,
business advisory services, access to market, and access to technical expertise, etc.
 For financial institutions and investors: To transfer knowledge and experience to the financial institutions /
investors who are willing to contribute to financing social businesses in Tunisia. These include the best practices in
appraising, investing and supervising social businesses.
14.10 The Program aims to disseminate the expertise in social business development to other incubators and services
providers in order to mobilize more technical resources and collaborate with sector technical expertise networks for the
nourishment of social business in Tunisia. It also targets at leveraging more financial resources for the thrift of social
business by building co-financing or cooperative relationship with other investors and financial institutions.

Component 2: Support for social businesses incubation and investment (implemented by the ISA)
14.11 Sub-component 2.1: Support for social businesses incubation
14.12 A Social Business Incubator is an essential component of the HSBM Program. It is an organization that provides social
businesses with training and coaching to make them investment ready, and to provide post-investment business
development assistance towards the business growth. An achievement of the pilot phase of the HSBM Program is the
establishment and functioning of a country-based Social Business Incubator.
14.13 The incubation process is a vital part of the local Social Business Incubator’s operations. From the moment a
preliminary business plan is received, analysis will be done to pick out the promising ones to join the investment “Pipeline”.
The business proposal will be developed, and will move through different stages of the investment process given that the
investment criteria set out at each stage can be satisfied. The Incubator works closely with the social business
entrepreneurs throughout this process, helping them to improve and realize their business plans, offering technical and soft
skill expertise. The incubation process normally takes 2 – 6 months for each social business project.
14.14 For the ramp-up phase of the HSBM Program, a more cooperative pipeline development method will be adopted to
increase the quantity and improve the quality of projects at entry. A core technical assistance partnership will be
established, led by the Social Business Incubator to engage other service providers. The core technical assistance
partnership will pool up joint and consistent inputs from the Incubator and service providers to guide the social businesses
from birth to growth. The services will include legal, accounting, financial analysis, marketing and business management, as
well as sector expert consultations should a certain social business requests for sector-specific technical assistance.
14.15 Social Business Incubator services will thus benefit the on-going government programmes in the following aspects: (i)
provide services to potential solidarity enterprises who hope to develop social businesses; and (ii) facilitate private sector
participation and engagement by encouraging technical assistances from a locally based pool of service providers and
experts / specialists. The GoT, recognizing the potential of social business for promoting private sector-led inclusive growth,
will co-finance the HSBM Program through its PES Project by investing in a target of 300 solidarity enterprises who aim to
establish social businesses.
14.16 Key activities under this sub-component include: (i) Support for the continuity of the Social Business Incubator’s
operations; (ii) Identify pipeline and appraise the promising social business projects to submit to SBIF for investment
decision making; (iii) Provide training and coaching to social business entrepreneurs in both prior- and post- start-up period;
(iv) Conduct routine supervision of the pipeline and on-going projects; and (v) Establish technical partnerships with other
13
service providers and technical expertise network.
14.17 Sub-component 2.2: Support for social businesses investment
14.18 The SBIF bridges the gap between social businesses and favorable investors / donors to deliver sustainable
development results through financing and investing in local social businesses and entrepreneurs to help their own
communities. Unlike many other impact investing organizations, the SBIF’s staffs shall be based in Tunisia. They have
profound knowledge of fund investment, and extensive experience with the country, which allow them to perform sound
fund investment and management, and get to the heart of regional social and environmental problems. The principle of
establishing and running the SBIF is the adherence to market disciplines, by avoiding non-market oriented intervention,
influence or pressure, which is critical for its success.
14.19 The SBIF is a fund that will be capitalized through the contributions of philanthropic partners such as international
development agencies, foundations, companies or individuals who share an interest in creating sustainable economic and
social impact in Tunisia. The Fund can also attract resources from the government, given that market disciplines and the
principles of autonomic operation and management are conformed to. For example, if an entrepreneur who establishes a
social business would also adopt the structure as a solidarity enterprise, funding from the PES Project, as implemented by
the GoT and sponsored by the NFE, will be an add-on to top up the total financing. The HSBM Program will continue to raise
additional resources to increase the investment capital of the Fund and will match the contribution from other co-financiers
with the seed funding to be sought from the MENA Trust Fund.
14.20 The synergy of the HSBM Program with the government programmes, for example, the PES Project, is obvious:
Firstly, the PES Project targets at businesses at the scale of around TND 80,000 (equivalent to about USD 50,000), while the
SBIF allows the amount up to TND 600,000 (equivalent to about USD 350,000). The SBIF will thus help to scale up support
for potential businesses. Secondly, the PES Project provides credit financing, whereas the SBIF is structured to
accommodate both equity and credit financing. Henceforth, the SBIF can help improve financial accessibility, especially
seed-fund accessibility for the MSMEs who are lack of start-up capital. It will further help reduce the financial leverage ratio
of the MSMEs so as to mitigate the credit risk. Thirdly, the SBIF has the mandate to develop customized financial products /
services for the social businesses. Instruments such as shareholder loan and lease financing will be considered for their
appropriate utilization. As described in paragraph 14.15, the PES Project will directly benefit from the technical services
from the Social Business Incubator for those potential solidarity enterprises which would develop social businesses. To
contribute to this incentive, the PES Project will provide TND 24 million (or equivalent to about USD 15 million) as seed
funding to finance these solidarity enterprises building up social businesses.
14.21 A proper due diligence process contributes to the quality of social businesses. This process, although time-intensive,
ensure an optimally effective use of limited investment funds. Potential investees pass through three screenings and two
committees (the Review Committee and the Investment Committee), with increasing attention to details concerning the
business model, the social impact, the reliability of the management team and the financials. Most of the potential
investees are not able to fulfill the conditions on their own – based on previous experience, very few have an investable,
documented business plan with coherent financial statements – so close support by the incubation team throughout the
process is of paramount importance.
14.22 Ultimately, all investment decisions are made by the Investment Committee at the end of the process and are based
on five types of criteria that are used to select the social businesses to be included in the investment portfolio of the Fund.
These five types of criteria are eligibility, social and environmental impact, financial sustainability, management and
governance, and portfolio balance. To guide the investment decision making process, a comprehensive impact
measurement and projection methodology has been developed based on internationally recognized Impact Reporting and
Investment Standards (IRIS). Each potential social business undergoes an intensive investment review process in which
financial, social and environmental impacts are assessed. Once the business is invested in, the Fund continues to track its
impact through regular reporting process, which is supported by an Enterprise Resource Planning (ERP) system (to be
developed) and presented to investors / donors in quarterly and annual reports.
14.23 Key activities under this sub-component include: (i) Formally establish and operationalize the SBIF by using a local
14
financial institution which is familiar with MSME financing or investment; (ii) Provide seed fund to finance the start-up
capital of social businesses; (iii) Conduct portfolio management; (iv) Establish partnerships or co-financing relationships
with social-business friendly investors and financial institutions and (v) Develop suitable financial instruments / services for
social businesses.

Component 3: Program management(implemented by the Government)
14.24 Under this component, all activities related to program management will be addressed. It aims to: (i) Put in place a
Project Implementation Unit (PIU) at the executing agency of the GoT to coordinate and monitor the Program
implementation; (ii) Enable the realization of synergies between the HSBM Program and other government-led
initiatives/programmes; and (iii) Produce required reporting.
14.25 The activities under this component include mainly: (i) establishing a PIU by hiring consultants, (ii) supervising the
Social Business Incubator and the to-be-established SBIF, and (iii) preparing quarterly monitoring and evaluation (M&E)
report, annual external audits, and a program completion report (PCR) upon completion of the Program.
14.26 Procurement activities relevant to establishing the PIU will be done with assistance from the ISA in terms of: (i)
development of TORs; (ii) identification of potential candidates; and (iii) guidance on setting the technical evaluation
criteria. The Government, through the PIU, will ensure the coordination between the HSBM Program and other initiatives in
the areas where the services of Social Business Incubator and SBIF will be engaged. The coordination is expected to improve
value for money and enhance operational efficiency, such as sharing the pool of pipelined projects, and serving the
potential entrepreneurs who share common interest in social business and in another initiative (such as solidarity
enterprise).
14.27 A key aspect of project management is financial, social and environmental impact measurement and validation in
the M&E process. Financial impact can be tracked through using the portfolio management report by SBIF. Social and
environmental impact is tracked through the reporting of beneficiaries. Beneficiaries can include employees, students,
micro-entrepreneurs, customers and business partners of the social business. Indirect beneficiaries can include family
members of the direct beneficiaries. The objective is to quantify and compare the success of this social business against
others in its portfolio, as well as other social enterprises, so as to draw experiences and share best practices.
14.28 By envisioning an enlarging social business pipeline and portfolio, an IT-based project management system is
needed. It will be developed and installed in the PIU for the use of M&E, as well as in the Social Business Incubator for
routine supervision of the pipeline and on-going projects, and in the SBIF for portfolio management. The users of the ITbased system will be trained.
15. Key Indicators Linked to Objectives
The overall outputs of the whole Program to be expected will be the following:
 Create, support and finance social business ideas from Tunisian social business entrepreneurs;
 Increase seed fund availability in the Social Business Investment Fund in Tunisia;
 Enable an amiable environment and eco-system for social business to thrive in Tunisia.
Component 1: Capacity building for key stakeholders in HSBM(implemented by the Government)
 Number of government policy-making staff and steering committee members (gender disaggregated) trained on
social business model for job creation and business development;
 1 Policy Issues Paper issued on social business development in Tunisia;
 Issuance of Guidelines on Social Business Development as customized to the Tunisian context;
 Number of private sector companies, service providers, technical expertise groups, investor representatives,
financial institutions trained in workshops;
Component 2: Support for social business incubation and investment(implemented by the ISA)
 Number of received requests for support for social business projects (gender disaggregated);
15
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Number of approved and established social business projects (gender disaggregated);
Number of trained and incubated social business entrepreneurs (gender disaggregated);
Number of direct job created (gender disaggregated);
Number of technical and financial partnerships developed;
Social Business Investment Fund established and functional;
Special financial instruments / services designed and applied for social business;
Supervision on social business projects and portfolio management carried out;
Component 3: Program management(implemented by the Government)
 PIU established;
 Introduce IT-based project management system (installed for the PIU, the Social Business Incubator and the Social
Business Investment Fund);
 Quarterly M&E report;
 Annual auditing report;
 Program Completion report.
C. IMPLEMENTATION
16. Partnership Arrangements
16.1 The HSBM in Tunisia has been co-funded by the Japanese Trust Fund, the Multi-donor Trust Fund for Countries in
Transition and the African Development Bank. This co-funding has allowed to launch in 2013/2014 the pilot phase of the
program. As described above, other donors / investors will be sought in order to provide additional seed capital to invest
into the ramp-up phase of Social Businesses in Tunisia.
16.2 To ensure that the Holistic Social Business Movement has a cross-sectorial buy-in, a Steering Committee on Social
Business in Tunisia has been established to ensure that the program addresses the unique economic and social needs of
the Tunisia. It is currently composed of government representatives (from MFPE and MDCI), private sector (including SME
financing institution, business consulting firm, ICT and engineering enterprises, and legal firm) and civil society organization.
For the ramp-up phase of the HSBM Program, members of the Steering Committee can be enlarged to include
representatives of the youth and women, MSMEs, business associations, chambers of commerce, and local government,
etc. The Steering Committee will provide insights into long-term strategies to support the awareness and promotion of
social business within their communities and will hold regular meetings to monitor and review program developments.
Members will provide support and guidance to the important decision-making for steering the Program activities.
16.3 In addition, as described in paragraph 14.14, a core technical assistance partnership will be established, which will be
led by the Social Business Incubator and engage other service providers and technical expertise network. This is a technical
partnership aimed at branding the Tunisia-based technical forces in the field of MSME development by engaging them
collaboratively in promotion of social businesses. Finally, partnership will be set up where necessary with other MSME
incubators and investment funds or financial institutions specialized in MSME financing, as well as other locally implanted
associations so as to be able to source potential Social Business entrepreneurs who need support and financing, seek
additional technical and financial resources and services to meet the specific demand.
17. Coordination with Country-led Mechanism/Donor Implemented Activities
17.1 The HSBM Program will put a special emphasis on alignment with the country-led mechanism and on fostering
synergy with donor implemented activities:
 The Project of Promoting Solidarity Enterprises (Projet de Promotion des Entreprises Solidaires, le Projet PES): The
GoT is carrying out the PES Project under the technical assistance provided by the AfDB with financial support from
the Multi-donor Trust Fund for Countries in Transition. The proposed HSBM Program is open to the Solidarity
Enterprises which have social and environmental objectives and thus are eligible for access to support for social
businesses, where applicable. As mentioned in paragraph 14.15 and 14.20, the GoT plans to co-finance the HSBM
Program by investing in 300 potential solidarity enterprises who aim to establish social businesses. This co-
16
financing amounts to about TND 24 million (equivalent to USD 15 million) spanning 2 years.

The Integrated Development Program (Programme de Développement Intégré, PDI): The GoT is implementing the
PDI to promote a dynamic of sustainable local development, strengthening employment in the regions, and
promote human development by improving the quality of life and protect the natural environment. The proposed
HSBM Program addresses the second and third issue, namely, strengthening employment in the regions and
promoting human development by improving livelihood and environment.

The convention between the GoT and Tunisian financial institutions on supporting the PDI Program: On September
25, 2013, the Commissioner General for Regional Development (CGDR) signed agreements with three public banks,
namely the Tunisian Solidarity Bank (BTS), the Bank of Financing Small and Medium Enterprises (BFPME) and
National Agricultural Bank (BNA), to establish the terms of cooperation to achieve the objectives of the PDI
Program in the creation of approximately 6,000 individual projects, nearly 25,000 jobs with 2,400 jobs for
graduates. The proposed HSBM Program, with an aim of establishing Social Business Investment Fund and building
an eco-system for social business, will emphasize on partnering with Tunisian financial institutions and other
investors in progressing towards private sector-led job creation and inclusive growth.

Joint Youth Employment Initiative (JYEI) for Africa: The AfDB has been partnering with the African Union (AU)
Commission, United Nations Economic Commission for Africa (UNECA) and International Labor Organization (ILO)
since the end of 2011 on the JYEI for Africa. The JYEI aims to improve knowledge product on African countries’
labor market, policy advice to African governments, and strengthen institutional capacity building and increase
investment operations in job creation. The proposed HSBM Program aligns with three pillars of the JYEI and
contributes especially strongly on capacity building and investment operations in job creation.

Souk At-Tanmia Partnership: Since July 2012, the AfDB has been implementing the Souk At-Tanmia (or,
“marketplace for development”) Partnership by coordinating other 19 partners. The success of the first edition of
the Partnership and the hopes raised by the initiative since its inception has created an unprecedented request
that it is imperative to sustain the growth of the 61 projects selected, 62% in disadvantaged areas, 54% held by
youth, 32 % of women and 31% unemployed. Different from the Souk At-Tanmia Partnership which provided small
grants (TND 10,000 – 30,000 per project), the HSBM Program avails financial instruments including equity and
credit. The proposed HSBM Program, by the combination of financial and technical assistance it provides, will
complement the Souk At-Tanmia Partnership to promote entrepreneurship and create sustainable jobs, especially
for those with significant social and environmental benefits. The HSBM Program is open to the enterprises under
the support by the Souk at-Tanmia Partnership based on its eligibility criteria, and can contribute to scaling up
those promising projects.

FAPA grant to BFPME: In February 2014, the AfDB, through its Fund for African Private Sector Assistance (FAPA),
provided a grant to BFPME to enhance its capacity in MSME appraisal and portfolio management. BFPME,
currently serving in the Steering Committee for the pilot HSBM Program, is thus expected to strengthen its
contribution to guiding the evolvement of social business development in Tunisia. The proposed HSBM Program
will seek the involvement of BFPME in the core technical assistance team for the ramp-up phase, and explore the
feasibility of engaging BFPME in serving the Social Business Investment Fund management.
17.2 In regard to all the above mentioned programs, the specificity of the HSBM Program is that it aims to develop
businesses targeted at the most vulnerable, and that it supports these businesses through a very thorough incubation with
multi-year accompanying of the businesses it incubates, as well as providing financing opportunities that are usually difficult
to obtain for such businesses. The HSBM Program complements other donors supported programmes / projects (as
summarized in box 1) in terms that it aims to build and pool localized technical and financial capacities and localize the
seed fund operations to be directed to generating social inclusion and environmental dividends in business development.
It also aims to shore up the government’s capacity in effectively implementing and managing private sector-led job creation
and entrepreneurship development initiatives and programmes, by engaging key stakeholders, especially private sector
players, in participating in and contributing to the fulfillment of these goals. It will be a firm step forward to explore a
17
modality of public-private partnership (PPP) in these fields, which will be a pioneer in Tunisia during its operationalization
of the PPP Law.
17.3 The spill-over effects from the Program will benefit other initiatives with complementary goals. Some initiatives have
been identified during the preparation of the Program and could collaborate in the implementation of some project
activities. This includes UNIDO’s initiative to undertake an operating study on opportunities to create green jobs for young
promoters in four governorates. The Program will consider the results of studies on the topic of green jobs, such as the
study on the development potential of green jobs in Tunisia, conducted by the Ministry of Environment and funded by the
UNDP, and the impact assessment on economic and social development of renewable energy in Tunisia, conducted by
National Agency for Energy Efficiency. In addition, the Program aims to work with NGOs (national and international) as well
as development associations in Tunisia promoting and operating in the field of green jobs and employment.
18. Institutional and Implementation Arrangements
 Implementation Schedule
18.1 The project will be implemented over a period of 2 years. Physical implementation is expected to start immediately
upon approval of the proposal and to span from August 4, 2014 to August 3, 2016. Annual work plans and procurement
plans will be provided by the implementing agency upon the launching of the Program.
 Institutional and Implementation Arrangements
18.2 A Project Implementation Unit (PIU) will be set up within the Ministry of Vocational Training and Employment (MFPE),
especially through its Department of Employment Promotion, which will perform majorly from the government side in
coordination and oversight of the HSBM Program. The AfDB, as the Implementing Support Agency (ISA), will support the PIU
through setting up a task team in implementing the Program, especially in procurement, monitoring disbursements and
utilization of funds, policy advice, supervision, alignment with social and environmental principles, and coordination with
private sector players, other potential investors and donors. The ramp-up phase of the HSBM Program, as proposed in the
present proposal, will be implemented jointly by the GoT and the AfDB based on the need of necessary continuity of the ongoing HSBM activities. Specifically, component 1 and 3 will be implemented by the GoT, while component 2 by the AfDB.
Note that the GoT plans to co-finance the HSBM Program by establishing 300 solidary enterprises which aim to build social
businesses. This GoT co-financed part will be implemented by the GoT with AfDB’s assistance under the joint framework
of the PES Project and HSBM Program.
18.3 The Steering Committee on Social Business will provide general oversight for the HSBM Program. The Steering
Committee will be led by the MFPE through the designated PIU to oversee the Program’s impact on poverty reduction and
inclusive growth through job creation and entrepreneurship development. The steering committee members will hold
quarterly meetings to brief the progress of the social business pipelines and projects and signal problems, if any, for the
GoT and ISA’s attention and action. The existing pilot HSBM Program’s Steering Committee will be a natural continuity,
while it is allowed with openness for renewal.
18.4 The Social Business Investment Fund will be established under the social business initiative coordinated between the
GoT and the AfDB and under the custodian by an established Tunisia-based financial institution which is familiar with
financing MSMEs in Tunisia. The Fund management team shall be selected along with the selection of custodian financial
institution. Fiduciary safeguards and financial risk management are the major tasks for the Fund management team.
18.5 The Social Business Incubator will be responsible for identifying: a) social business projects, b) conduct due diligence
and propose to the Social Business Investment Fund, c) support the social businesses with technical assistance (training and
coaching) in business development services, d) routinely supervise the social business pipeline and on-going projects on the
operational side, and e) build technical partnerships and lead the core technical assistance team.
18.6 The social business fund beneficiaries are expected to, in accordance with the agreed financial terms, pay back the
funds which will serve as a revolving funding for social business.
18
 Procurement
18.8 In line with the MENA Transition Fund Agreement, all procurement activities under the Program will comply with the
Rules and Procedures of the ISA (AfDB). The procurement activities under the project consist of: (1) consultancy services; (2)
training and workshops; and (3) goods.
18.9 Procurement of Services: The bulk of activities envisaged will be procured under consultancy services, either through
individual consultants or firms. In general, services will be procured through a competitive bidding process. For the services
under the GoT implemented component (component 3), the procurement will be in line with the Bank’s Rules and
Procedures for Use of Consultants, dated May 2008 and revised July 2012 or as updated from time to time. For those under
the AfDB implemented component (component 2), the procurement will align to the Procedures for Acquisition of
Consulting Services Funded by the Administrative or Capital Expenditure Budget of the Bank Group (2012 version).
18.11 Procurement of Goods for computers and office equipment will be through shopping.
18.12 Procurement for Training Activities: The assignments under component 1 are mainly capacity building activities,
which require trainings and workshops to be organized. These activities are facing government, social entrepreneurs,
financial institutions, service providers and other key stakeholders. As social business incubator, social business investment
fund, and the MSME development specialist in the PIU will perform the technical service part to provide the trainings, the
remaining costs are physical expenses, which will be procured through shopping.
19. Monitoring and Evaluation of Results:
19.1 Ensuring a diligent and solid monitoring and evaluation (M&E) of Social Businesses is pivotal to the long-term impact
of the Incubator and investment fund’s footprint in Tunisia. It is a guarantee of social impact and a requirement for the
reporting to investors and partners. The implementation progress of the Program will be monitored by the PIU on the Social
Business Incubator, the SBIF and the social business entrepreneurs, in addition to fielding of supervision missions as per
AfDB rules. The AfDB’s task team, led by the Task Leader, will provide overall guidance and close supervision of the Social
Business Incubator and the SBIF. Social Business Incubator will perform day-to-day management of the pipeline and ongoing social business projects, while the SBIF shall act on portfolio management. Monthly records of projects and portfolio
performances are required for them to form the corresponding quarterly reports, which will be submitted by them to the
PIU and the AfDB. To facilitate routine project management and overall M&E, an IT-based project management system will
be developed and installed in the Social Business Incubator and the PIU. Quarterly Progress Reports will be required from
the PIU, as well as annual external audit reports, as per the AfDB rules. By the completion of the Program, a program
completion report will be prepared to summarize the achievements of the Program, assess the outcomes and draw
experience and lessons learned.
19.2 As part of their loan agreement with the investment fund, the social business (SB) entrepreneurs are required to
report regularly on financial and social key performance indicators. To ensure that the SBs’ self-reporting is being carried
out diligently and honestly, the PIU, in joint with the social business incubator, are asked to periodically monitor the SBs. To
enhance SBs portfolio management, it is planned in the Program to develop an IT based management system.
19.3 M&E of the progress of Social Businesses is done with different time-horizons, based on standard reporting tools:
 Monthly: Key Performance Indicators (KPI) and Cash Flows of the past month. These can be kept with the Social
Business Incubator and the Social Business Incubation Fund, respectively.
 Quarterly: KPIs, Milestones and Financials of past quarter.
 Annual: KPIs and Financials of past year, self-assessment of business and management performance. This Selfassessment serves as input for the next year budget setting and financial planning for the next three years.
19.4 This reporting serves as the basis of the Social Business Incubator and the Social Business Investment Fund’s reporting
to the PIU, as submitted further to the AfDB.
D. PROJECT BUDGETING AND FINANCING
19
20. Project Financing (including ISA Direct Costs7)
Costs by Item (USD)
Component 1: Capacity building for key stakeholders (implemented by
the GoT)
1.1 Capacity building for government
Issue policy issues paper and guidelines of developing social businesses
Workshops on oversight of social business and coordination of
initiatives
1.2 Capacity building for other key stakeholders
Workshops with private sector, service providers, investors, etc.
Component 2: Support for social business incubation and investment
(implemented by the AfDB)
2.1 Support for social business incubation
Technical fees for contracting the Incubator team
Accounting, legal, fiscal advice
Provide training and coaching services to social business entrepreneurs
(including supervision and field visits)
Transport / accommodation and other incidental costs for field visits
Training / coaching expenses (training workshops, on-site guidance,
and engaging specific technical expertise)
Computers and equipment
Other operational expenses
2.2 Support for social business investment
Fund management costs to be paid to fund management team
Technical fees
Computers and equipment
Operational expenses for monitoring the portfolio (fiduciary tasks,
field visits)
Seed fund
Component 3: Program management (implemented by the GoT)
Hire consultants for the PIU
MSME development specialist
Monitoring and evaluation specialist
Financial management specialist
Procurement specialist
Computer and equipment
Develop IT-based project management system
External auditing
Program completion report
Staffing the PIU
MENA
Trust Fund
Country CoFinancing8
Total
15,000,000
16,675,000
15,000,000
16,000,000
50,000
30,000
20,000
10,000
20,000
20,000
1,675,000
430,000
200,000
60,000
140,000
40,000
100,000
15,000
15,000
1,245,000
245,000
200,000
15,000
30,000
1,000,000
675,000
420,000
120,000
120,000
100,000
80,000
15,000
200,000
30,000
10,000
in kind
7
ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project. Also see
Paragraph 47 of the Operations Manual.
8
Country co-financed activities are implemented by the GoT.
20
Sum of planned costs
Miscellaneous costs (2.5%)
Miscellaneous costs for the GoT implemented components (1 and 3)
Miscellaneous costs for the AfDB implemented component (2)
Total costs
2,400,000
60,000
18,125
41,875
2,460,000
15,000,000
17,460,000
21. Budget Breakdown of Indirect Costs Requested (USD)
Description
For grant preparation, administration and implementation support:
Staff time
Staff travel
Total Indirect Costs
Amount (USD)
80,000
20,000
100,000
21
E. Results Framework and Monitoring
Project Development Objective (PDO): Development of Social Business and the relevant capacities of key stakeholders in Tunisia
Cumulative Target Values**
PDO Level Results Indicators* Unit of Measure
Indicator One: # Social
Business Invested
Indicator Two: # People
(social business
entrepreneurs, private sector,
service providers,
government officials, etc.)
trained/coached or built
capacity in HSBM
Indicator Three: # Direct jobs
created / livelihoods
improved
Baseline
YR1
YR2
Number (by
MENA Trust
Fund)
4
14
24
Number (by
GoT cofinancing)
0
120
300
Number (by
MENA Trust
Fund)
40
100
170
Number (by
GoT cofinancing)
0
130
330
Number (by
MENA Trust
Fund)
25
175
325
Number (by
GoT cofinancing)
0
3000
7750
YR3
YR4
YR5
Frequency
Data Source/
Methodology
Yearly
Social Business
Investment
Fund
investment
report
Yearly
Number of
people that
have been
trained or
coached
Yearly
Number of
direct
beneficiaries
through SBs
portfolio
management.
Responsibility
for Data
Collection
Project
Implementing
Unit (PIU),
using reports
from the SBIF
and the MFPENFE9
PIU, using
reports from
the Incubator
and the SBIF
Description
(indicator
definition etc.)
Number of
businesses that
have received
investment from
the Social Business
Investment Fund
and from the NFE.
Number of people
trained or
coachedthrough
technical assistance
or capacity building
by the HSBM.
PIU
Number of direct
job created and
direct beneficiaries
from the
improvement of
livelihood of the
people employed by
or having
productive linkages
with the SBs
INTERMEDIATE RESULTS
Intermediate Result (Component One): Capacity building for key stakeholders in HSBM
Sub-component 1.1: Capacity building for government
9
NFE, National Fund for Employment, is the funder of the PES Project. It will be the resource of the GoT’s co-financing for the HSBM Program.
22
Intermediate Result indicator
One: Trained government
policy-making staff and
steering committee members
Number
2
12
22
Yearly
Number of
government
officials trained
PIU
Number of
government
officials trained on
social business and
relevant
international best
practices.
Issuance of the
Policy Issues Paper
Intermediate Result indicator
Two: Policy Issues Paper
Number
0
0
1
Yearly
Preparation
and issuance of
the Policy
Issues Paper
Intermediate Result indicator
Three: Guidelines on Social
Business Development
Number
0
0
1
Yearly
Preparation
and issuance of
the Guidelines
on Social
Business
Development
PIU, by
coordinating
other
ministries /
institutions in
the GoT
PIU, by
coordinating
MFPE and
AfDB
80
Yearly
Number of
other key
stakeholders
trained
PIU, by
coordinating
the Incubator
and the SBIF
Number of private
sector companies,
service providers,
technical expertise
groups, investor
representatives,
financial institutions
trained in
workshops
Number of
business plans
received by the
Incubator.
Number of SBs
that have
entered IP1
PIU, by using
Incubator’s
report
Number of business
plans received by
the Social Business
Incubator.
Preliminary
assessment
completed by Social
Issuance of the
Guidelines on Social
Business
Development
Sub-component 1.2: Capacity building for other key stakeholders
Intermediate Result indicator
One: # Private sector
companies, service providers,
technical expertise groups,
investor representatives, and
financial institutions trained
in workshops on supporting
social businesses
Number
20
50
Intermediate Result (Component Two): Support for social business incubation and investment
Sub-component 2.1: Support for social business incubation
Intermediate Result indicator
One: # Business plans
received
Number
68
268
568
Yearly
Intermediate Result indicator
Two: # Social Businesses
incubated
Number
(by MENA
Trust Fund)
5
20
35
Yearly
PIU, by using
Incubator’s
report
23
Number (by
GoT cofinancing)
Number (by
MENA Trust
Fund)
0
130
330
20
40
70
Number (by
GoT cofinancing)
0
150
350
Intermediate Result indicator
Four: # Technical partnership
established
Number
2
4
Intermediate Result indicator
Four: # Quarterly progress
and supervision report
produced
Number
NA
Intermediate Result indicator
Three: # Social Business
entrepreneurs trained and/or
coached
Business
Investment Fund.
Yearly
Number of SB
entrepreneurs,
private sector,
NGOs trained
and coached
PIU, by using
Incubator’s
report
7
Yearly
Number of
technical
partnerships
established
PIU,
coordinating
the Incubator
4
8
Yearly
Quarterly
progress and
supervision
report
produced
the Incubator
to submit to
the PIU
Number of key
stakeholders
trained and
coached, including
the SB
entrepreneurs,
private sector
players (enterprises
or investors), and
NGOs dedicated to
SB development.
Number of technical
partnerships
established
between the
Incubator and
service providers
and technical
expertise network
Quarterly progress
and supervision
report produced
Sub-component 2.2: Support for social Business investment
Intermediate Result indicator
One: Social Business
Investment Fund established
and operational
Fund
established
and
operational
See-fund
resource
available
Fund
structure
d with
fund
manage
ment
sought
Fund
establis
hed
and
operati
onal
Yearly
Social Business
Fund
structured,
established
and
operational
PIU and AfDB
Fund established
and operational
Intermediate Result indicator
Two: # Social Businesses
invested
Number (by
MENA Trust
Fund)
4
14
24
Yearly
Social Business
Investment
Fund report
PIU, by using
SBIF’s report
Number of social
businesses that
have received
24
Number (by
GoT cofinancing)
Number (by
MENA Trust
Fund)
0
120
300
25
175
325
Number (by
GoT cofinancing)
0
3500
7750
Intermediate Result indicator
Four: # Special financial
products designed and
applied for social business
Number
1
3
Intermediate Result indicator
Five: # Financial partnership
developed
Number
NA
Intermediate Result indicator
Six: Quarterly portfolio
management report
produced
Number
Intermediate Result indicator
Seven: Annual performance
report produced
Number
Intermediate Result indicator
Three: # Direct jobs created /
livelihoods improved
investment from
the Fund.
Yearly
Number of
direct
beneficiaries
through SBs
portfolio
management.
PIU
6
Yearly
Number of
different types
of financial
instruments
designed and
applied for
social business
PIU, by using
SBIF’s report
1
2
Yearly
Number of
financial
partnership
developed
PIU, by
coordinating
the SBIF
NA
4
8
Yearly
Quarterly
portfolio
management
report
produced
PIU, by
coordinating
the SBIF
Number of direct
job created and
direct beneficiaries
from the
improvement of
livelihood of the
people employed by
or having
productive linkages
with the SBs
Number of different
types of financial
instruments
designed and
applied for social
business (e.g.,
customized risk
management,
interest rate,
equity/lending, etc.)
Number of financial
partnership
established
between the SBIF
and other investors
and financial
institutions
Quarterly portfolio
management report
produced
NA
1
2
Yearly
Annual
performance
report
produced
PIU, by
coordinating
the SBIF
Annual
performance report
produced
25
Intermediate Result (Component Three):Program management
Intermediate Result indicator
One: Introduce IT-based
project management system
Number
0
0
1
Yearly
Intermediate Result indicator
Two: Quarterly M&E report
produced
Number
4
8
12
Intermediate Result indicator
Three: Annual auditing report
Number
0
1
2
Yearly
Intermediate Result indicator
Four: Program Completion
Report
Number
0
0
1
By the
completion
of the
Program
Quarterly
Design, setup
and utilization
of IT-based
project
management
system for the
PIU and the
Incubator
KPIs,
Milestones and
Financials of
past quarter
Financials
audited by an
external
auditor.
Project
Completion
Report
PIU
The M&E report on
the design,
installation and
functioning of the
IT-based project
management
system.
PIU
Produced for
quarters ending
March, June and
September.
Produced yearly for
activities to
December 31.
PIU
PIU
Produced to
summarize the
actual outputs of
the Program and
compare the actual
with the planned to
draw experience
and lessons.
26