Microfinance in Algeria - Opportunities and Challenges (Final Report)

Paper
Date Published: 
Jan 2006
Author: 
Reille, X., Lyman, T., Clerc, A., Attia, H., Benissad, H. & Lheriau, L.
Publisher: 

An overview of the Algerian financial sector and opportunities for microfinance development

This report outlines the findings by the authors about policy obstacles to the development of Algeria's financial sector. The findings are:

  • Algeria has the means to implement ambitious economic and social policies;
  • It has a rapidly changing financial sector with an emerging consumer credit market and a series of legal, financial and technological reforms;
  • The economic and political climate is favorable to extending access to retail banking services and to the development of microfinance;
  • Banking regulation does not raise any obstacles, but the regulatory environment needs improving;
  • Microfinance could be developed by the creation of: finance companies, a bank that specializes in microfinance, a network of banking transaction intermediaries and cooperatives;
  • International investors are interested in supporting microfinance in Algeria.

The report identifies credit regulations and anti-money laundering laws as the problem areas in the development of microfinance in Algeria. It recommends:

  • Greater Government involvement in strengthening the financial sector.
  • The use of the following five institutional models to develop microfinance in the country:
    • Finance companies with a microfinance lending policy;
    • A partnership between Algerie Post and one or more finance companies;
    • A retail bank for low-income customers;
    • A cell-phone architecture;
    • Cooperative financial networks.
  • Regulatory changes in the areas of: anti-money laundering regulation, prudential and accounting standards and taxation.
Type: 
Paper
Country: 
Algeria