Chapter 6. Algeria

The foundations of SME policy: definitions, statistics and institutions

One of the main steps Algeria has taken over the past few years has been the issuance of the SME Law 1702 of 2017, which formally establishes four important aspects of SME policy making: 1) an official definition of micro, small and medium-sized enterprises; 2) the mechanisms designed to support SMEs; 3) measures to promote sub-contracting (sous-traitance) by SMEs as a means of promoting industrial development and import substitution; and 4) the development of a system of economic information of SMEs (SME Observatory). 1

Concerning the establishment of an official SME definition, the SME Law builds on a number of principles and international practices, notably the following (see Table 6.1):

  1. The identification of SMEs as business entities producing goods and services regardless of their status (limited liability, incorporated, individual entrepreneur, etc.);

  2. The combination of employment and financial criteria to better identify and target SMEs operating in different economic activities or sectors; and

  3. The inclusion of SME independence criteria (e.g. an SME should not be more than 25% owned by another entity or more than 49% owned by a private equity firm).

The adoption of the SME Law 1702 makes Algeria the only MED economy with a fully-fledged SME definition officially enshrined in legislation.

Table 6.1. SME definition





Employment criterion

1-9 employees

10-49 employees

50-250 employees

Financial criterion

Annual turnover

< DZD 40 m

Annual turnover

< DZD 400 m

Annual turnover

< DZD 4 bn

Year-end statement

< DZD 20 m

Year-end statement

< DZD 200 m

Year-end statement

<DZD 1 bn

Source: SME Law 1702 of 2017.

Chapter 3 of the SME Law 1702 also lays the foundation for establishing a System of SME Economic Information under the responsibility of the National Agency for SME Development (ANDPME) to serve as a planning and decision-making tool. This system (in principle an SME Observatory) would consolidate information from several statistical and administrative sources, namely the National Statistics Office (ONS), the business registry, the National Social Security Institute (CNAS), the Institute for Social Security for the Self-Employed and Independent Professionals (CASNOS), the tax administration, the customs administration, the chamber of commerce and industry, and the association of banks and financial establishments. If implemented successfully, such a system would provide timely and complete information on private enterprises at a low cost and with a lower burden on firms than the enterprise or establishment censuses undertaken in most countries.

This would increase the already good availability in Algeria of SME data, which are published regularly (about twice per year) in the statistical bulletins of the Ministry of Industry and Mines2 and include total SME population, SME entries and exits, employment, and exports and imports. They also comprise information on SMEs broken down by economic activity and territorial distribution. The data is obtained from official sources such as the National Social Security Institute (CNAS) and its equivalent for self-employed and independent professionals (CASNOS).

The wider economic agenda in which SME policy is framed remains almost unchanged. The SME Policy Index 2014 noted that the overall economic policy framework was set by the Five Year Economic Plan (2010-2014), which placed private sector development as one of the country’s key priorities (together with public investment in infrastructure, housing and social services), with the aim of reducing reliance on the hydrocarbon sector and diversifying the country’s economic structure.

The 2015-2019 Economic Development Plan continues to place a high priority on economic diversification through private sector development. As part of the Plan, the Governmental Policy on the Domain of Industry and Mines mentions SME development as a priority, notably through the development of basic industries and “downstream SMEs” and import substitution.3 This, combined with the consultations carried out for the purposes of this interim assessment, point to a strong orientation of SME policy towards the development of the industrial sector. Furthermore, it is surprising that other economic policy areas under the 2015-2019 Economic Development Plan barely mention the role of SMEs in sectors such as commerce; agriculture and fisheries; energy; tourism and handcrafts.4

In terms of the institutional framework and co-ordination for SME policy, the Ministry of Industry and Mines continues to be the main institution in charge of enterprise development policy, with the ANDPME and the National Agency for Investment Development (ANDI) under its umbrella. Other pertinent authorities in this area are the National Agency for the Support of Youth Employment (ANSEJ), the Credit Guarantee Fund for SMEs (FGAR) and the “SME Facilitation Centres” and business incubators across the country.5

The SME Policy Index 2014 noted that policy co-ordination between the various institutions was a major issue due to the lack of a comprehensive medium-term SME development strategy supported by short-term action plans. In this regard, the SME Law designates the ANDPME as the leading institution in charge of the SME policy agenda for enterprise creation, growth and survival. The Law establishes local authorities as the initiators of SME support, notably in terms of accessing land and immovable property. According to the consultations for this interim assessment, in order for the ANDPME to be more agile in its policy mandate the SME agency will need to gain autonomy – becoming a “public establishment of specific character” – and will have a board of directors that includes representation from the private sector (a model that is already applied in several countries in the region, including Morocco and Jordan).

The SME Law also notes that the “Algerian SME development policy should be based on consultation and co-ordination among relevant public and private actors and on appropriate studies leading to programmes, measures and support structures.” It also foresees the creation of a public-private consultation body, the National Consultation Council for SME Development (CNC), which should be formed by organisations and professional associations representing SMEs. The CNC was officially launched in November 2017. (See Chapter 1, section 4, for more on public-private dialogue.)

Importantly, the SME Law puts into place a special fund to finance the actions and support stated in the text as well as the operations of the ANDPME: the National Fund for Upgrading SMEs, Supporting Investment and Promoting Industrial Competitiveness.6 According to the Finance Law (loi des finances) 2018 and to the consultations, the Fund is to be financed by a new tax on industrial land designed to raise of DZD 395 million (about EUR 2.8 million).

The SME Law sets the legal framework for a more complete and coherent SME policy in Algeria. Nonetheless, the implementation of a concrete SME strategy and action plans with detailed activities, responsibilities, budgets and monitoring and evaluation (M&E) mechanisms is still missing. According to the consultations conducted for this interim assessment, an SME strategy is being developed in the context of the Project for the Support of SME Development (PAD-PME) supported by the African Development Bank (AfDB).7 The project also supports the reorganisation of the ANDPME, capacity building for the Agency, and the establishment of the SME information system (the SME Observatory).

On public-private dialogue, the broad economic issues continue to be tackled by the Tripartite Council (la Tripartite) formed by the government, the General Union of Algerian Workers (UGTA) and many private sector associations. More precisely, on SME policy the most important recent development is the creation of aforementioned CNC, which represents several business organisations in various economic sectors. According to the consultations for this assessment, the CNC is working with the EU Technical Assistance and Information Exchange instrument (TAIEX) to develop an action plan between the CNC and the ANDPME. During the launch of the CNC in November 2017 the Algerian authorities revealed a road map for developing the SME Strategy. 8

For further action: Through the SME Law and the initial implementation of some of its actions, Algeria has made an important step towards the adoption of a more comprehensive and coherent SME policy. The SME Law, albeit brief, is a complete document that stipulates how the most important aspects of SME should be conducted. Its full implementation, including the execution of an SME strategy, is now essential to put words into action. Furthermore, the creation of the CNC is expected to provide a formal consultation mechanism allowing SMEs and entrepreneurs to contribute to policy making; that said, its success will be highly influenced by the degree to which the CNC is representative of the SME and entrepreneur population.

In contrast, as earlier noted in the SME Policy Index 2014, structural factors – including the difficult regulatory and business environment and the lack of economic diversification and openness – create important distortions for SME and entrepreneurship development. In addition, although SME policy is seen as an important instrument for industrial policy and economic diversification, not much is said about the role of SMEs in services and non-industrial sectors. Hence, the Algerian authorities also could extend their vision on the role of SMEs for the whole economy and consider the measures necessary to support the promotion of entrepreneurship and SMEs outside industrial activities.

Improving business environments for SMEs and entrepreneurs

The SME Policy Index 2014 noted that Algeria was stepping up efforts for regulatory reform and administrative simplification. It mentioned in particular the creation of a number of inter-ministerial working groups designed to improve the business environment, including the Tripartite Council formed by the government, the General Union of Algerian Workers (UGTA) and many private sector associations (see Chapter 1, section 4). However, the lack of a clear regulatory strategy and mandates for administrative simplification were hampering these efforts. Furthermore, there were neither pilot nor formal efforts to introduce regulatory impact analysis (RIA) or the SME test.

This interim assessment finds no significant progress in this area. Indeed, according to the consultations, the government is lifting constraints that hinder strong and sustained growth through the improvement of the business environment and investment in terms of procedures, deadlines and costs, as well as through the implementation of improved business promotion policies. The consultations also point to the fact that the SME Law 1702 aims at encouraging the creation and competitiveness of SMEs and the role that is given to local authorities in this regard. However, as noted above, although the SME Law provides the legal basis for improving the business and regulatory environment for SMEs, its approval does not automatically translate into results. At the end of the day, Algeria continues to have the most complicated business environment of all the MED economies, according to Doing Business.

According to this interim assessment, Algeria has no plans to introduce formal mechanisms for RIA (ex-ante and ex-post) and therefore no indications of an SME test. This endeavour, though, could be undertaken in the context of the recently created CNC mentioned earlier.

In terms of efforts to facilitate the creation of new enterprises, the SME Policy Index 2014 called for Algeria to introduce a single identification number to better exploit the synergies between the different institutions involved in the registration process. The introduction of such a number is being contemplated in the establishment of a System of SME Economic Information mandated by the SME Law 1702 under the responsibility of the ANDPME. Under this system, the relevant agencies and institutions will be required to provide the various types of information they have on SMEs. Those agencies are the ONS, the National Centre of the Commercial Register (CNCR), the CNAS, CASNOS, the tax office, the customs administration, the Chamber of Commerce and Industry, and banks associations and financial establishments.

The SME Policy Index 2014 also noted the existence of an online business registration system – although the platform was only accessible to notaries who, on behalf of their clients, could use the CNRC web portal to reserve a company name, upload summaries of articles of incorporation, and publish the registration in the Official Bulletin of Legal Announcements. Entrepreneurs could only download business creation forms from the CNRC and ANDI websites.

One of the main actions reported by this interim assessment is the creation in May 2017 of an electronic portal devoted to enterprise creation which is hosted, administered and maintained by the ANDPME.9 The portal provides important information regarding the creation of a firm either as a natural person or a legal person. The platform is accessible to the public, although it is still necessary to choose a notary registered in the CNRC to carry out necessary formalities – such as transferring the information and the documents necessary to the relevant agencies, namely the CNRC, the tax register and the social security (CNAS-CASNOS). By the end of the third quarter of fiscal year 2018 (March 2018), about 80 enterprises had been created through the portal and 276 notaries had been trained to use the portal. The hurdles for a further deployment of the initiative though are the lack of recognition of electronic signatures and e-payments.

The SME Policy Index 2014 also noted the measures that were taken to reinforce the role of the one-stop shops managed by the ANDI throughout the country’s 48 Wilayas, or governorates. However, the one-stop shops had only limited decision-making capacity and acted mainly as single initial contact points. In this regard, the ANDI reports in this interim assessment that the one-stop shops were reorganised following the adoption of the 2016 Investment Law 16-09, with the introduction of the notion of “centres” charged with investment promotion and facilitation. What these reforms mean in terms of facilitating enterprise creation, though, is not clear. There is no evidence that investment promotion and facilitation activities are explicitly linked to the facilitation of the creation of new firms across the country.

As in 2014, the framework governing bankruptcy continues to be the Code of Commerce (Order 75-79) of 1975. According to Doing Business 2018, Algeria continues to have a relatively effective bankruptcy system featuring relatively speedy resolution (1.3 years, faster than the OECD average) and a cost of 7% of estate (also below average OECD costs). However, the recovery rate is 50 cents per dollar, below the 71 cents in the OECD. The SME Policy Index 2014 indicated that Algerian courts were not generally trained in matters related to the reorganisation of enterprises and therefore often opt for liquidation, which can lead to the closure of businesses that could have survived bankruptcy. Therefore, the recommendation was that Algeria could benefit from capacity-building programmes for judges dealing with insolvency. To this end, the Ministry of Justice notes that there have been training programmes to strengthen judges’ insolvency skills since 2000. These programmes focus on general business, business law, bankruptcy, international commercial arbitrage, etc. According to the consultations, about 25 magistrates undergo training, in addition to other training courses abroad in partnership with countries such as France and Belgium. The total number of judges benefiting from this training since 2012 is 800 according to the consultations. However, there is no evidence of concrete results for this programme – for example, whether the training has resulted in fewer liquidations and business exits and more business restructurings.

For further action: There is ample space for Algeria to continue improving its business environment, particularly since the country is ranked last in the region in terms of Doing Business (166) and second last in terms of starting a business (145). Algeria could take the opportunity of the creation of the CNC as a multipartite platform for the creation of a formal RIA system and/or an SME test. Furthermore, in order to expand business creation through the new electronic portal, the authorities could work to establish a system of electronic payments and the recognition of digital signatures so that entrepreneurs do not have to rely only on physical procedures. Finally, the effectiveness of the training system for judges dealing with enterprises in difficulty could better tracked. Indeed, although Algeria ranks second in the MED region on this aspect of Doing Business, it still ranks 71st globally.

Fostering access to finance

The legal and regulatory framework for access to finance has remained mostly unchanged over the past few years. A recent reform is the modernisation, in September 2015, of the Credit Registry (Centrale de risques) to include information about households and consumer credit. The Credit Registry, which is over 20 years old, is now better placed to manage risks to the financial system and to help households avoid over-indebtedness, hence contributing to the expansion of consumer credit. However, the provisions of the decree leading to this reform10 apply to loans not exceeding 60 months, meaning that longer-term loans (which could be funding productive investments by entrepreneurs or small firms) are not included in the Credit Registry. Furthermore, according to the consultations for this interim assessment, the Credit Registry includes only loans above MAD 2 million (nearly EUR 189 000). This relatively high figure would result in the exclusion of several entrepreneurs and micro firms with access to smaller loans.

In addition, no efforts have been made either to create a credit bureau or to improve the register of moveable assets. This indicates that progress on access to credit information remains limited compared to the rest of the region.

Concerning the availability of sources of finance, the SME Policy Index 2014 noted that credit guarantee schemes were sponsored by public institutions, state banks and international donors, and no private market existed for these vehicles. This interim assessment found no reforms in this area. The main players are still the public actors, the Credit Guarantee Fund for SMEs (FGAR) and the Fund of Guarantees for Credit Investment (CGGI).

Similarly, equity investments for SMEs continue to be dominated by public vehicles. The most salient is the Wilayas (governorates) Investment Fund, which is funded by public sources and is focused on supporting youth entrepreneurship across the country. This vehicle finances up to 49% of the investment required by the venture and has a total envelope of DZD 48 billion, or DZD 1 billion per Wilaya (about EUR 7 242 000). The Fund is managed by three public financial institutions (Finalep, Sofinance and El Djazair Istithmar) and two public banks (BEA and BNA). The Fund provides venture capital (capital de risque) for new firms, growth capital and business restructuring to ensure the survival of firms and the jobs they sustain.

For further action: This interim assessment indicates limited progress on financing SMEs and entrepreneurs. Algeria does not have yet plans to create a credit bureau or a registry of moveable assets and the state continues to have a dominant role in the provision of financing through credit guarantees or through direct funding. Furthermore, although the consultations for this assessment point to a number of decrees and legal provisions designed to facilitate access to finance, there is no evidence of the implementation or impact of these provisions. Algeria could therefore take a series of measures to foster the participation of private actors in the SME financing market, including through the establishment of credit bureaus and credit rating agencies, credit guarantee schemes, and venture capital and business angels. It could also better track the impact of legal provisions on the actual access to finance by SMEs and entrepreneurs.

Nurturing entrepreneurship and SME growth

There have been no significant changes in the provision of business development services (BDS) in Algeria since the SME Policy Index 2014. The main actor in the BDS market continues to be the Ministry of Industry and Mines through its a flagship support scheme, the National Upgrading Programme (Programme de mise à niveau), which has been implemented by the ANDPME since 2010. The programme provides technical training and assistance for SME competitiveness, including supporting tangible and intangible investments on standardisation, quality certification, intellectual and industrial property, ICT, special equipment, etc. The SME Policy Index 2014 and the website of the National Upgrading Programme note that the objective to attain was 20 000 beneficiary firms during the period 2010-2014. According to the consultations for this assessment, however, there are just over 5 300 beneficiary firms, and there is no evidence of any impact on the competitiveness of these firms. Furthermore, the second programme mentioned by the SME Policy Index 2014 (the SME Support Programme or PME II), which focused on promoting the use of ICT in SMEs with growth potential, is no longer operational.

Access to public procurement for SMEs, on the other hand, continues to be a relatively positive policy area. Decree 15-247 of 16 September 2015, which regulates public procurement, reserves a quota of 20% of this market for SMEs. The decree also states that a company which has been awarded a public procurement contract can subcontract up to 40% of it to other firms, giving SMEs a chance to participate indirectly in this important market. However, there are no figures on the impact of this decree on SME development. There is no e-procurement system either.

In terms of SME internationalisation, several platforms that disseminate information on foreign markets continue to operate, including the Algerian Company of Export Guarantees (CAGEX), the Algerian Agency for the Promotion of Foreign Trade (ALGEX), the Office of Promotion of Foreign Trade (PROMEX), and the Algerian Chamber of Commerce and Industry (CACI). Furthermore, according to ALGEX, a National Export Promotion Strategy is being developed with the participation of various ministries and the co-ordination of a committee in order to eliminate logistical, administrative and technical barriers to international trade.11 Nonetheless, there is no clear link between the strategy and the direct promotion of SME exports and several of the sectors identified as a priority are rather capital intensive or dominated by large firms (chemical industry, pharmaceutical industry, construction materials, electronics, etc.).

For further action: This interim assessment finds that although most of the mechanisms and initiatives for SME growth identified by the SME Policy Index 2014 continue to operate, there are no new initiatives. Algeria could therefore increase its efforts to expand the market for business development services beyond the initiatives provided by public institutions and in particular the National Upgrading Programme. Indeed, there is no evidence on the role of private sector providers of business development services. Furthermore, no progress is evident with regard to the promotion of SME internationalisation, and Algeria is not yet part of the Europe Enterprise Network (EEN). Finally, the authorities could track and publish facts and figures on the impact of measures to promote SME access to public procurement and could also work towards the establishment of e-procurement.

Investing in entrepreneurial human capital

In terms of entrepreneurial learning in upper-secondary education, the government’s Action Plan12 refers to the introduction to “entrepreneurial know-how” in general education through students’ project development and company visits. For vocational training, the action plan aims to train young people to better prepare them for the professional world and for the creation of a business. A framework agreement was signed in 2014 between the Ministry of Professional Education and Training and 14 ministerial departments as well as social partners. The Institut National de la Formation et de l’Enseignement Professionnels developed a training module on “the roadmap for entrepreneurs” targeted at schools.

Ten years after the reform of the education system in 2008, entrepreneurial learning as a key competence is still not sufficiently integrated into secondary education programs (general and vocational). Nevertheless, vocational training has made more progress in this area thanks to a gradual strengthening of the partnership between vocational schools and businesses and the establishment of a legal framework for apprenticeship.

The policy dialogue at the national level on the integration of entrepreneurial spirit is at an initial stage, and it has not yet resulted in a concrete action plan. It would be relevant to create a multidisciplinary working group including the various stakeholders (relevant ministries, organisations of employers, entrepreneurs, teachers, civil society) and identify a leader.

Several actions have taken place to promote women entrepreneurship since 2013. The Government Plan 2017 aims to support women entrepreneurs, especially in rural areas. The 2014 Charter of Working Women recognises the importance of awareness campaigns and support programmes, including training. The Ministry of National Solidarity, Family and Women’s Affairs is preparing an action plan on women entrepreneurship.

Training programmes for women are available also at the regional level, as are awareness campaigns like the Caravan to the Wilayas. But the offer is often scattered and focuses on the start-up phase. The National Microcredit Agency (ANGEM) and ANSEJ support self-employed women and women entrepreneurs. Several training modules have been developed in the context of the Women for Growth project supported by the International Labour Organisation (ILO): “Manage Your Business Better (GERME) and Get Ahead”.

In the context of the new SME law, training for the internationalisation of SMEs should have an important role. The offer of training programmes is scattered and information about it fragmented. The Algerian Chamber of Commerce and Industry and AlGEX provide courses and support companies’ participation in international fairs. But the content of the training programmes is not sufficiently tailored to SMEs, which would benefit more from capacity building regarding procedures, packaging, risks, rules of origin, etc.

For further action: Entrepreneurship as a key competence should be better integrated into secondary schools. Awareness raising campaigns directed at teachers and school directors could help, as could more partnerships between schools and local companies. Systemic actions to support women entrepreneurship training could build on the policy documents that have been developed, which should become an opportunity to provide a more cohesive offer and develop modules that support businesses beyond the start-up phase. Training programmes to support SME internationalisation could be improved by undertaking a mapping of needs and focusing on sectors with high export potential, such as the agro-food sector. Institutions that deliver these types of training would also benefit from capacity building to upscale their offer.

The way forward

The establishment of the SME Law and the implementation of some of its actions constitute an important but initial step for Algeria to increase policy co-ordination and efficiency, as recommended by the SME Policy Index 2014. Unfortunately, beyond the SME Law and the establishment of the CNC, this interim assessment finds no substantial progress in the policy areas analysed. In this view, the actions recommended by this report are as follows:

  • Developing a comprehensive and multi-annual SME strategy, including measures to address structural factors and distortions preventing the development of the private sector. The strategy could take a wider perspective beyond a narrow focus on industrial activities; this is particularly relevant given the comparative advantages of SMEs in sectors such as tourism, trade and services, as well as innovative activities.

  • Using the CNC as a platform for improving the business environment and, in particular, establishing an RIA mechanism and the SME test.

  • Fostering greater private sector participation in financing SMEs and entrepreneurs. This includes a number of actions, ranging from the establishment of one or more credit bureaus (and related services such as credit ratings) to the creation of a registry of moveable assets and the introduction of tools and sources of finance (credit guarantees, venture capital funds, business angel networks, etc.).

  • Fostering greater private sector participation in the provision of business development services, which are so far dominated by a few schemes and public actors.

  • Further facilitating SME access to public procurement and to international markets, and better tracking the impact of existing laws and measures in these areas.

  • Create a multidisciplinary working group (including the different ministries concerned, organisations of employers, entrepreneurs, teachers, civil society) to promote entrepreneurship as a key competence.

  • Develop an action plan to implement the Government Plan 2017 in favour of women entrepreneurs.

  • Identify sectors with high export potential such as the agro-food and design specific training offers.


← 1. Official Journal of the Algerian Republic No 02, 11 February 2017;

← 2. Algerian National Statistics Office,, and “Bulletins d’information statistique de la PME” (SME Bulletins),

← 3. Algerian Prime Minister’s website, economic development section in particular “Politique gouvernementale dans le domaine industrie et des mines” (2015), ces/front/files/pdf/politiques/

← 4. Algerian Prime Minister’s Website, Politiques Publiques,

← 5.

← 6. Compte d’affectation spéciale n° 302-124 intitulé “Fonds national de mise à niveau des PME, d’appui à l’investissement et de promotion de la compétitivité industrielle.”

← 7.

← 8. Algérie Presse Service (4 December 2017), “Industrie : un plan d’action pour le développement de la PME pour 2018”,; and S. Vidzraku (6 December 2017), “Algérie: le government dévoile les axes de son plan d’action pour le développement des PME”, La Tribune Afrique,

← 9. Le portail Algérien de creation d’entreprise en ligne,

← 10. Published in the Official Gazette No 24 of 13 May 2015.

← 11. L’Agence Nationale de Promotion du Commerce Extérieur (1 February 2018), “La stratégie nationale exportations – SNE: la 2ème consultation les 29 et 30 janvier 2018 au siège d’algex”,

← 12. Gouvernement Algérien (2017), Plan d’action du gouvernement de la mise en œuvre du programme du président de la République, Service du premier Ministre,

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