Mark Horner

The SME Market in Algeria

What is a Small to Medium Enterprise in Algeria?

Small and medium-sized enterprises (SMEs) predominate among Algerian firms, forming the backbone of the private sector. At end-2016 Algeria’s 1m SMEs employed more than 2.5m people and engaged in some AD75bn ($622.1m) in bilateral trade. According to the Ministry of Industry, Algeria created an average of 60,000 SMEs per year in the 2012-15 period, and there is evidence that the pace of business creation is accelerating. There was a net increase of 88,100 SMEs in 2016 alone – up 9.4% on the 2015 figure – and a 7.2% rise in employment among SMEs. The government’s goal is to establish another 1m SMEs over the 2015-19 period.

Of the 1m SMEs in existence at the end of 2016, 56.3% were incorporated, while only a small minority of these – just 390 companies – were state-run. The remaining 43.7% were sole traders.

At 97.1%, the vast majority of Algeria’s SMEs are micro-enterprises, with less than 10 employees. There are only 3170 registered firms of medium size – those having between 50 and 249 employees – accounting for 0.31% of all SMEs. This “missing middle” phenomenon is shared with many other emerging markets, as is the issue of having a large informal economy.

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Africa/Algiers

Image: Photo by Tarek Fodil on Unsplash

How big is the SME Market in Algeria?

Small and medium-size enterprises play a hugely important role in the economy of Algeria. They outnumber large firms considerably, employ vast numbers of people and are entrepreneurial in nature, helping to shape innovation and support local communities.

Algeria has a population of over 42,228,429 people.

What help is available for SMEs in Algeria?

The government supports the SME sector in Algeria by investing in private sector companies through the Ministry of Industry and the National Investment Development Agency. While 2016 saw a 9.6% reduction to 7185 in the number of such investments, the amount invested increased by 24.8% to AD1.8trn ($14.9bn), and the number of jobs supported by these firms grew by 9.1% to 164,000.

In 2011 the authorities launched a national programme worth AD380bn ($3.2bn) to revamp the country’s SME sector, with a target of more than tripling the number of SMEs from just over 600,000 to approximately 2m by 2025. Although this programme benefitted more than 20,000 SMEs across multiple sectors, it was judged in many quarters to be falling short of its objectives. With this in mind, the government stepped up its efforts to stimulate the SME sector in 2017.

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The government supports the SME sector in Algeria by investing in private sector companies through the Ministry of Industry and the National Investment Development Agency. While 2016 saw a 9.6% reduction to 7185 in the number of such investments, the amount invested increased by 24.8% to AD1.8trn ($14.9bn), and the number of jobs supported by these firms grew by 9.1% to 164,000.

In 2011 the authorities launched a national programme worth AD380bn ($3.2bn) to revamp the country’s SME sector, with a target of more than tripling the number of SMEs from just over 600,000 to approximately 2m by 2025. Although this programme benefitted more than 20,000 SMEs across multiple sectors, it was judged in many quarters to be falling short of its objectives. With this in mind, the government stepped up its efforts to stimulate the SME sector in 2017.