Algeria—Africa’s largest country and its fourth-largest economy1—has been hit hard by the COVID-19 pandemic, which exposed vulnerabilities in the state’s economic resilience, healthcare infrastructure and political stability. Following a five-year slowdown, the Algerian economy plunged by 5.5% in 2020 amidst containment measures and a drop in hydrocarbon production.2 Summer 2021 brought another wave of infections, with case numbers surging from 500 to 1,500 a day, and the health system was close to buckling under the strain.3 Political instability, societal unrest, corruption and a wildfire crisis have lent further uncertainty to the emerging market’s future.
Digitalization will be key in helping Algeria to reach development goals, drive economic diversification, promote financial inclusion and modernize the banking and financial sector. Fifty-seven percent of Algerian adults—and 71% of women—do not have access to a transaction account, and a mere 16% of adults, and 11% of women, use digital payments.4 The banking and financial sector relies on dated technological infrastructure,5 and fintech innovation could revolutionize its services—making them faster, cheaper, more accessible and easier to use.
Although Algeria’s fintech ecosystem is in its early stages of growth, there is reason for optimism. The Digital Intelligence Index (DII), developed by Mastercard and Tufts University’s Fletcher School, ranks Algeria relatively high for digital evolution momentum. The new presidential administration has been particularly progressive in its digital transformation efforts. President Abdelmadjid Tebboune took office in December 2019, and in January 2020, Yacine El-Mahdi Oualid was appointed as the country’s first Minister of Startups. In October 2020, the government launched the country’s first Fund for Startups; the 2020 Finance Law introduced tax incentives for startups in innovative and emerging technologies; and a September 2020 executive decree established a national committee for the classification of startups, innovative projects and incubators.6 Recent improvements to national digital infrastructure and a government push to promote digital skills in education will be especially crucial in spearheading innovation.
This year’s digital agenda focuses on an artificial intelligence strategy and a fintech regulatory sandbox. Regulators must also ensure that its national data protection framework, signed into law June 2018, is fully enacted and enforced. The National Authority for the Protection of Personal Data has not yet been established.7 Meanwhile, cybersecurity remains a key challenge. A 2021 study by Comparitech ranked Algeria the world’s fifth-least cybersecure state.
Financial Regulatory Authorities
The Bank of Algeria is the central bank of Algeria.
The Securities and Investments Organization and Monitoring Commission (COSOB) regulates and oversees the securities market.
Policy, Laws and Regulations
Fintech Regulatory Sandbox, 30 September 2021
The Securities and Investments Organization and Monitoring Commission launched Algeria’s first fintech regulatory sandbox, dubbed the “GIE-Algeria FinLab.” The Minister of Startups, Yacine El-Mahdi Oualid, stated that the sandbox aims to “enable start-ups and project leaders in the fintech sector to develop their solutions to modernize banking and insurance services, while moving towards financial inclusion.”8 Oualid is particularly keen to spur on developments in blockchain and artificial intelligence.
Artificial Intelligence Strategy, 18 January 2021
Algeria launched a National Strategy on Research and Innovation in Artificial Intelligence 2020-2030, which aims to harness AI in socioeconomic development and bolster digital skills in AI. Minister of Higher Education and Scientific Research Abdelbaki Benziane stated that the strategy aims to strengthen the knowledge economy by empowering students, and that universities and businesses should more readily partner in promoting innovation and education.9
1. “African countries with the highest Gross Domestic Product (GDP) in 2021.” Statista, September 2021. https://www.statista.com/statistics/1120999/gdp-of-african-countries-by-country/
2. “The World Bank in Algeria.” The World Bank, 14 June 2021. https://www.worldbank.org/en/country/algeria/overview#1
3. Hamdi, Rania. “Algeria’s health system is on the brink of implosion, as coronavirus wave hits.” The Africa Report, 04 August 2021. https://www.theafricareport.com/114474/algerias-health-system-is-on-the-brink-of-implosion-as-coronavirus-wave-hits/
4. Delort, Dorothee and Isabelle Poupaert. “How digital financial services can provide a path toward economic recovery in Algeria.” World Bank Blogs, 22 February 2021. https://blogs.worldbank.org/arabvoices/how-digital-financial-services-can-provide-path-toward-economic-recovery-algeria
5. “Fintech Development in Algeria Lags Behind MENA Counterparts.” Fintechnews Africa, 02 June 2021. https://fintechnews.africa/39426/fintech-algeria/fintech-development-in-algeria-lags-behind-mena-counterparts/
6. “Algeria Officially Launches Its First Ever Fund For Startups, Sets Up Committee For Labelling Startups.” Afrikan Heroes, 03 October 2020. https://afrikanheroes.com/2020/10/03/algeria-officially-launches-its-first-ever-fund-for-startups-sets-up-committee-for-labelling-startups/
7. “DATA PROTECTION AND CYBERSECURITY LAWS IN ALGERIA.” CMS, 05 March 2021. https://cms.law/en/int/expert-guides/cms-expert-guide-to-data-protection-and-cyber-security-laws/algeria
8. « La Cosob lance le premier FinLab en Algérie. » Algerie Eco, 30 September 2021. https://www.algerie-eco.com/2021/09/30/la-cosob-lance-le-premier-finlab-en-algerie/
9. « Présentation de la stratégie nationale de l’intelligence artificielle 2020-2030. » Algérie Presse Service, 18 January 2021. https://www.aps.dz/sante-science-technologie/116102-enseignement-superieur-presentation-de-la-strategie-nationale-de-l-intelligence-artificielle-2020-2030
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Last updated: November 2021