Is Algeria ready to join the entrepreneurial race?

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When I shared my plans of heading to Algeria to meet startups on Twitter I received puzzled responses, like one man who couldn’t believe someone would be interested in his country’s startups (or that they even existed at all).

It is true that Algerians are developing an entrepreneurial ecosystem quite late compared to its neighbors. And it is hard to think of an Algerian startup or web-based company, successful or not. According to Yasmine Bouchène, an Algerian journalist specialized in startups and founder of media site AlHubeco, the only company that resembles a startup in Algeria is Ouedkniss, a classifieds website, and the only mobile services are media apps.

Yet, despite the slow implementation of 3G and a expensive and hard to get broadband Internet, an increasing number of Algerians are using the internet, especially dating websites, classifieds platforms, and online media (of varying quality), and some Algerians are now working on interesting startup projects.

So, where does this lack of innovation motivation come from, and what can we do to help overcome the challenges?

The economy in general is lagging behind

The civil war, whose outbreak in 1991 signaled the beginning of a dark period in Algeria’s history, impacted production, infrastructure, and consumption, slowing the country’s economic development to a crawl from which the country is just now emerging. Also, Algeria is led by an ageing elite, which does not help innovation. During my trip to Oran and Algiers, the country appeared to me in a bad state, almost abandoned at some time. Downtown Algiers, though, looks as good as ever.

Reflecting these challenges, Algerians have been slow in adopting the internet. Currently only 14 percent of the country’s inhabitants are connected; this figure has climbed to 51 percent and 39.1 percent respectively in neighboring countries Morocco and Tunisia. That being said, 14 percent of the Algerian population represents six million web users, as some local entrepreneurs reminded me, and sub-Saharan African entrepreneurs are doing fine despite their own less-than-ideal economical situations. The main problem must be somewhere else.

A lack of funding

Launching a web startup takes time and money, two things that are not easy to come by in Algeria. Like in much of the region, banks are not much help, but unlike other regional countries, Algeria is lacking something else: aid from national and international organization supporting entrepreneurship.

To launch their startups, entrepreneurs have to work on their startups in addition to their normal jobs, slowing down their capacity to launch their startup in good time. I’ve been saddened to see entrepreneurs, like Mustapha Lakhdari, founder of Goutra, a connected device that aims to help individuals reduce their water consumption, stuck in beta after two years of work. The inability to move quickly put startups at risk of losing their technological advantage.

A few aid programs exist, like the ANSEJ (the National Agency for Supporting Youth Employment) which funds companies by allowing non-remunerated loans, and taking on part of the bank interests on loans contracted from private banks. But these programs aren’t enough to make a significant difference.

A problem of monetization

Monetizing through advertising is, for now, nearly impossible, says Naïma Abbes, who works for an online advertising agency, and Yasmine Bouchène. The problem does not come from a lack of users to click on ads, but rather a lack of education on the part of companies, they agree. For Naïma, the companies who communicate online are not properly targeting their campaigns.

But there’s hope: Yasmine notes that more and more companies are accepting to advertise on her own niche website.  

Algerian startups shouldn’t expect either to monetize through online payment either; no Algerian e-commerce site exists to date. Algerians cannot accustom themselves to online payment via foreign websites either, as they are only allowed to spend 15,000 DZD per year in foreign currency (a mere US$190).

Some websites are trying to participate in e-commerce via cash on delivery. For the most part, these sites need serious rethinking in terms of design and user experience, a few are doing it right, like Superetti, an ambitious online supermarket.

Communication difficulties

I didn’t have to go to Algeria to witness one of its biggest problems: selling ideas. The few pitches I’ve received online have not been convincing, and the interviews I’ve done on Skype or face-to-face were also difficult. It’s one thing to be humble, and another to whisper and be reticent to speak about your product.

From the viewpoint of Abdellah Mallek, an Algiers-based entrepreneur who also writes for Wamda, Algerians suffer because they’re not taught how to communicate during their studies. To fix this, the entrepreneur wants to create a mentoring network. (More on that soon.)  

Communication challenges are also a hindrance within the entrepreneur community. Most of this small group of highly motivated young Algerians know each other, but don’t talk about what matters, like failure and tips, continues Mallek, who blames this on a culture of secrecy and shame associated with failure.

Things are changing

Luckily, mentalities are slowly changing, thanks to the younger generation. A few years ago, some information and communications technology (ICT) students decided to organize Startup Weekends, TEDx, and other similar events, explained Chouaib Attoui, the founder of Otaku Events. These events have highlighted the motivation of the younger generation, introducing the concept of sponsoring, and forcing the government to see ICT’s potential.

Since then, events – student-led and otherwise – have sprung up, says Mallek, explaining how Fikra, for example, pushed Algerians to think differently. Other events, like Algérie2.0, are supporting entrepreneurship through competitions. Mallek notes that more and more events are organized in rural environments, targeting people who are unfamiliar with the internet. But if these events are being held with a lot of fanfare and success, he laments that not enough people are actually building companies after participating.

Those events have also woken up the government. They’re now offering their help to entrepreneurs in Algiers, and in the rest of the country. In 2009, the government launched an incubator within the Sidi Abdellah Cyberparc. The project was launched relatively early and got an important budget – as you can see from its amazing building – the Incubateur, as it is known, has met mixed success, mostly due to its inconvenient localization, 40 minutes from downtown Algiers, with no access via public transportation.

On the bright side, some entrepreneurs, like Mohamed Lotfi Moukneche, an Algerian who came back to Algeria from France to start ELCS, believe that working in the middle of the countryside is good for inspiration, while others, like Mallek, highlight the Incubateur’s capacity to gather information on projects supporting entrepreneurship. Other incubators, within universities all around the country, are set to open soon.

Despite all odds, there are several reasons to believe Algerians will begin to express their talents more entrepreneurially in the coming years.

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