Algeria’s startup culture: from the ground and up
Lack of e-payment systems, sluggish bureaucracy, and scarce access to financing are some of the issues faced by an aspiring Algerian entrepreneur.
“I think that many young people, mostly students, have a lot of ideas that respond to the market needs and have big chances to succeed, but the difficult part is execution, sometimes coming from the ecosystems,” says Nassima Berrayah, CEO of Eblink, a company offering web solutions and training for Algerian entrepreneurs.
Algeria’s administrative slowness of releasing funds paralyzes many startups and hinders their development. According to a survey by ANPT Cyberparc, an Algerian IT development agency, more than 70 percent of startups abandon their efforts during the early stage when trying to raise money.
“This is certainly due to the rigidity and length of the [early stage process],” explains Nabil Belmir, director of ANPT.
The business development and registration process of a startup in Algeria used to take up to three years with no help from an incubator, explains Belmir.
“This led us to rethink our process by making it more flexible and faster. Today, [the process] allows the entrepreneur to set up their startup in four to five months,” he said.
Recently, ANPT established follow-up mechanisms to track the startup’s growth and constantly identify its needs, then tries to provide support accordingly.
However, this kind of support is only the beginning, as Algeria only established incubators two years ago.
According to Babs Carryer, director at the University of Pittsburgh’s Innovation Institute, Algeria lacks the more important infrastructure to the growth of entrepreneurship: mentorship.
“I really believe in mentorship programs because I personally saw their impact on aspiring entrepreneur’s lives,” Berrayah said. Belmir concurs. Organizing events that create a positive synergy among entrepreneurs, such as workshops or meetups for feedback, provides startups with increased visibility and, hence, confidence and improvement.
State and social hindrances
But the government’s omnipresence in almost all sectors, often considered a startup’s first customer, and the overall lack of faith in local startups by the general public, damages the confidence acquired in the safe environment of an incubator.
Gotta Love Algeria (GLA) was initially an NGO focused on promoting Algerian tourism nationally and abroad through digital and social platforms.
“We started as an NGO because for some reason [nonprofits] have more credibility than a startup,” said Zakaria Guedjali, founder of GLA.
“That worked at the beginning but has limited us because our efforts weren't being rewarded as salaries, as for NGOs in Algeria, [making profit as an NGO] would be illegal.”
Founded in 2015, GLA will re-launch as a for-profit business in March 2017 as an advertising and digital communications company with six full-time employees and over 20 freelance journalists and photographers.
But starting as an NGO rather than a startup was crucial to get the business going and acquire credibility by potential investors and the public. “Dependency on the government for services is something Algeria suffers a lot from,” Guedjali adds. GLA wanted to be an example to change that.
Another obstacle is the nearly nonexistent e-commerce industry, leaving massive limitations on platforms that require online transactions. However, the gap leaves room for fintech and Big Data ideas to blossom.
Last December, several online payment tools such as the Edahabia Card were launched by the Algerian Post as an electronic payment solution. The solution enables an exponential development of e-commerce in Algeria.
“With the emergence of e-payment, 2017 will be the boom year for e-commerce and the technological entrepreneurship in Algeria,” according to Belmir.
There have also been a few improvements regarding women’s inclusiveness in the entrepreneurial scene. Eblink, for instance, launched “eBlink in Pink”, a program for women entrepreneurs in the MENA region. Under the slogan “Let's Grow your Business”, eBlink helps these women grow their business using new technologies.
Historically, Algeria has always been reliant on energy as the key economic driver, so creating a favorable ecosystem for entrepreneurship has taken a backseat for years. “The ecosystem is weak at the moment compared to neighboring countries, but I believe that going forward, we will see a strong push for improvement, because the country has no option but to evolve if it is going to sustain a healthy social economic balance,” says Marouan Aoudia, director of The Address coworking space in Algiers.
Despite a few shortcomings, Algerian entrepreneurs stay as positive as they can. “We are fortunate that Algeria is an important market that hasn’t been fully served yet. This gives the chance to local entrepreneurs to find plenty of opportunities for viable business projects,” Aoudia adds.
Now more than ever, it seems like the perfect time to encourage entrepreneurship in the country. Algeria is arguably one of the most stable countries in the region with an exponential growth in the number of university graduates each year playing a key role in increasing the number of startups.
The rising number of educated youth getting involved in startups also allows for more awareness among investors, companies and the government on the startup culture. The need to stimulate innovation is stronger and “right now Algeria is like a blank page,” says Guedjali.
“It's hungry in every field: the fact that it has nothing - little infrastructure or services - is helping to build the best atmosphere for startups”.
Feature image via Wikimedia Commons