Historically, Algeria has not had a robust private sector. However, over the past decade, the government has been keen to enhance its small and medium enterprise (SME) base, with some success. Algeria’s Ministry of Small to Middle-Sized Enterprises is specifically designated to help entrepreneurs start businesses, and the country has put an emphasis on promoting entrepreneurship as a means to grow job employment. Since 2004, 1.5 million new jobs have been created through SMEs alone. There are currently over 90,000 SMEs operating in the country, contributing up to 70% of non-hydrocarbon GDP.
The main player in Algeria’s SME sector is the National Agency for SME Development. In 2012, the Agency launched a new program with the goal of upgrading SMEs in the country. However, the mission fell short of its expected goals: with an enormous budget of US$ 4.3 bn, the Agency was expected to upgrade around 20,000 SMEs by the end of 2014. Instead, only 4,000 SMEs joined the program. This failure is unfortunately a common occurrence in Algeria, where despite government interest in the sector, the business and financial environment fail to adequately support SMEs.
There are serious complications at the government level that have hindered the growth of SMEs, including corruption and a convoluted bureaucratic system. Indeed the government has not done much to facilitate bureaucratic procedures for SMEs. SMEs face serious difficulties in developing administrative and operational procedures to deal with the requirements of government regulations, such as costly and timely procedures to obtain licenses and permits, register property, and move collateral. The Algerian government must make a more substantial effort in improving the business climate overall, and the private sector in particular.