Banking & Financial Services

Algeria’s banking sector is characterised by low intermediation and penetration rates, although both have increased dramatically in recent years thanks primarily to ample liquidity stemming from abundant hydrocarbons revenues. In light of the rapid decline in hydrocarbons receipts in late 2014, the authorities have accelerated implementation of planned reforms and announced new measures to empower the sector to finance broad-based economic development. In 2015 important steps were taken to integrate the very large informal economy into the formal financial system. Today Algeria’s banks are seeking new revenue streams as they adapt to the demands of an evolving macroeconomic climate. Algeria’s capital markets offer considerable potential in light of the size of the country’s economy, but have historically been fairly shallow. Few corporate stocks and bonds have traded on the market since it opened in 1998, and the last initial public offering (IPO) was in 2013. Trading has been comparatively light in recent years as investors await the listing of several state-owned companies to increase capitalisation and breathe life back in the markets. The insurance sector has grown more than five-fold since the 1990s, but it still remains small relative to the size of the economy. The market is characterised by low penetration and density of coverage, and is dominated by non-life coverage, representing some 93% of premiums, with automotive lines alone accounting for half the sector’s revenues. Better efforts to raise public awareness, coupled with expanding networks of sales channels, can help the industry navigate the expected risks and challenges precipitated by the drop in oil prices and state spending. This chapter contains interviews with Mohammed Laksaci, Governor, Bank of Algeria; Boualem Djebbar, President, Professional Association of Banks and Financial Institutions, and President, Economic Interest Group; Mohamed Krim, Banque de Developpement Local; and Brahim Djamel Kassali, President, Algerian Union of Insurance and Reinsurance Companies; as well as a viewpoint from Adel Si-Bouekaz, Managing Director, Nomad Capital.