Financing Mechanisms in Support of the Creation of SMEs in Algeria (Part 2)
The Specificities of the ANSEJ Mechanism in Favour of VSE/SMEs in Algeria
Since its introduction in 1996, the regulatory instrument governing the operation of the “ANSEJ” mechanism (National Youth Employment Support Agency) has been revised several times; the last amendment dates back to 2018. The interest rate subsidy, a mechanism whereby a third-party organisation takes over a proportion of interest paid by a borrower, rose from 50% to 60% – 75% or 80% or even 100% in 2013 depending on the sector of activity. In 2015, the personal contribution was reduced from 5% and 10% to 1% and 2% depending on the amount of the investment and lease assistance was also added. It should be noted that payment of the subsidy is charged to a Special Account No. 302-087 "National Youth Employment Support Fund" and is made at the request of the credit institution. The National Youth Employment Support Fund is a public fund, with most of the revenue coming from the state budget.
In addition, in order to encourage banks to commit themselves to projects financing, a Mutual Guarantee Fund for risks/ Young Promoters Credits was created by Executive Decree. According to section 4 of the said Decree, this fund covers: "at the due diligence of the banks and financial institutions concerned, 70% of the principal and interest outstanding at the date the claim is declared". In addition to this measure, the members of this fund are any bank or financial institution that has financed projects approved by ANSEJ. The resources of the Fund are made up of:
- Initial equity allocation: ANSEJ capital contribution, public Treasury contribution, capital contribution from banks and financial institutions… etc.
- Contributions made to the fund by young promoters and participating banks and financial institutions.
- The proceeds from the financial investments of equity and contributions collected.
- Additional equity allocations, as needed, from initial capital participants and new banks.
The "ANSEJ" Mechanism in Figures:
Since its creation until the first half of 2018, the scheme has financed more than 370,000 projects and led to the creation of more than 890,000 jobs. Moreover, the trend in the number of projects financed has declined slightly from 2015, as shown in the table below:
As at 31/12/2017, four sectors alone accounted for 70% of the total projects financed. These include the Services, Agriculture, Handicraft
and Freight sectors. Proportionately, these sectors are the largest providers of employment.
The share of each sector in the total projects financed varied over time. Indeed, since establishment of the mechanism, certain sectors have been saturated and financing has thus been reduced, as in the case of passenger transport or car rental. Young promoters have been directed to other productive sectors, such as Agriculture, which is attracting more and more entrepreneurs. By contrast, sectors such as fishing, hydraulics, and industry are still struggling to be attractive.
The number of jobs created is broadly proportional to the number of projects financed by sector of activity. For example, the service, agriculture and handicraft sectors create more employment than, for example, the transport sector.
Gender analysis shows that women are more likely to be employed in the liberal professions (lawyers, doctors, etc.) and services, with more than half of the financing; while some industries are dominated exclusively by men (like freight transport). The femininity ratio remains relatively low (around 10%). According to an exploratory study on women’s access to the labour market in Algeria, it appears that Algerian women continue to face difficulties in accessing the labour market or even creating their own activity, because of several factors, including lack of mobility, socio-cultural environment or lack of information on their rights in the event of discrimination.
In conclusion, business creation support mechanisms in Algeria have improved the density of SMEs relative to the working-age population. However, compared to its immediate neighbours, Algeria creates fewer formal enterprises and thus has a much lower density. Beyond the positive results recorded, the effectiveness of these programmes is seen primarily through the sustainability of the companies created and their contribution to growth. As such, the Director-General of ANSEJ reported an average 10% mortality rate of micro-enterprises in January 2020. Moreover, the private sector’s share of GDP excluding hydrocarbons is estimated at 85%. The contribution of SMEs remains, according to some studies, relatively small. Indeed, a statistical study on the analysis of SMEs’ contribution to non-hydrocarbon growth in Algeria found that an increase in business creation (SMEs) of 1% would lead to an increase in non-hydrocarbon GDP of 0.39%, a yield that remains low compared to the assistance provided.It is also important to measure the impact of the strong involvement of public banks in these mechanisms, and the resulting risk to the quality of their debt portfolio in the event of payment defaults; especially since they can only draw on the guarantee funds after 18 months of non-payment. As a result, the mechanisms as currently designed make extensive use of public funds. In the longer term, this form of financing cannot be sustainable, especially in the current context of the Algerian economy marked by the fall in oil prices and the recessionary effects of the COVID-19 pandemic. The efforts made and the significant funds committed by the State in favour of the enterprise creation are certainly not negligible, but it is necessary to evaluate their effectiveness by monitoring the trend and sustainability of the SMEs created, and to explore possible ways of improving these SME support mechanisms.
 Executive Decree 13-253 of 2 July 2013 amending and supplementing Executive Decree No. 03-290 of 6 September 2003.
 Executive Decree No. 15-156 of 16 June 2015 amending and supplementing Executive Decree No. 03-290 of 6 September 2003 amended and supplemented.
 Executive Decree No. 98-200 of 9 June 1998. Amended and supplemented.
 Exploratory study of women’s access to the labour market in Algeria. PR Cherif Belmihoub, Soumaya Alilat. Friedrich- Ebert- Stiftung. December 2016:
 El Moudjahid Daily of 31/01/2020.
 Bouchikhi, Reda & Mira Karima, Rahmani & Larbi, Ghrissi. 2016. The contribution of SMEs to non-hydrocarbon economic growth in Algeria. المجلة المغاربية للاقتصاد و التسيير. 3. 157.-168. 10.12816.0032872.
About the author
Assia Mezieche is a PhD candidate in Economics at the University of Rouen, focusing on SMEs financial inclusion, holder of a Master’s degree specializing in economic policies in developing countries and a Higher Diploma in Banking Studies. Assia is also an analyst at the Bank of Algeria, which allowed her to capitalize on a deep knowledge of the financial system in place and its operating mechanisms. She is interested in the problems of financial inclusion, their connection with other objectives of the Central Bank, as well as the public policies to be implemented.