On the sun-drenched shores of the Mediterranean, Algeria, a giant of the African continent, presents a perplexing picture. This North African powerhouse, enriched by its vast oil and gas reserves, boasts a formidable economy, consistently ranking among the top three on the continent. Its citizens enjoy a comparatively high standard of living, and a youthful, increasingly educated populace appears poised to embrace the digital age. Yet, when one casts an eye towards the dynamic and rapidly expanding world of African tech startups, Algeria’s presence is conspicuously muted. While innovation hubs buzz with activity in Nigeria, South Africa, and even smaller economies like Senegal, Algeria’s entrepreneurial engine sputters, leaving international investors and local dreamers alike pondering the same question: Why is this nation, brimming with economic might and human capital, struggling to ignite its startup scene?
The disconnect was palpable at a recent online forum, where the energy of local entrepreneurs mingled with the measured tones of legal experts, all gathered to dissect the intricate landscape of Algerian investment. Among them was Kamel Haddar, the energetic CEO of Temtem, a rising star in Algeria’s nascent digital sphere. His company’s reward app, “TemtemOne,” has swiftly captured the attention of nearly two million users by gamifying everyday grocery shopping, a clear indicator of Algeria’s untapped digital appetite.
“Algeria is a goldmine waiting to be fully explored,” Haddar declared with an infectious enthusiasm. He readily pointed to the nation’s undeniable strengths: its position as the third-largest economy in Africa, a leading Human Development Index score in North Africa, and a rapidly increasing digital landscape fueled by a significant and growing base of internet and mobile users. Haddar drew compelling comparisons with neighboring Morocco and Egypt, emphasizing Algeria’s robust purchasing power as fertile ground for innovative tech products and services. He also highlighted the relative stability of the Algerian Dinar, a crucial reassurance for international investors often wary of currency fluctuations in other African markets. Perhaps most significantly, Algeria’s impressive annual output of nearly two million engineers presents a deep reservoir of technical talent, seemingly ready to power both local and international ventures.
Yet, the crux of the matter lies in the persistent challenge of bridging the chasm between this impressive foundation and the creation of a thriving startup ecosystem capable of attracting significant venture capital. Haddar acknowledged a lingering misconception among international investors, who often benchmark Algeria against more established startup hubs and find it wanting. While strides are being made to place Algeria on the global investment map, more concerted efforts are needed to showcase its unique advantages and dispel outdated perceptions.
One promising area of progress, highlighted by Haddar, is the accelerating adoption of digital payments. The recent introduction of mobile payment services by several Algerian banks marks a pivotal moment for the nation’s FinTech sector. The increasing prevalence of point-of-sale (POS) terminals and the growing volume of electronic transactions, including peer-to-peer transfers, signal a significant shift in consumer behavior and a growing demand for digital solutions. Despite this encouraging trend, regulatory frameworks for Payment Service Providers still present hurdles. Haddar expressed optimism that ongoing collaborations between the Bank of Algeria and the Ministries of Startups and Finance to finalize these regulations will provide a much-needed catalyst for the FinTech industry.
Beyond FinTech, Haddar identified a range of sectors ripe for disruption and innovation, including education, the expansive food industry, IT and data services, vocational training, and notably, the offshoring sector. He argued that Algeria presents a compelling proposition for companies seeking to outsource operations, citing its significantly lower labor costs compared to neighbors like Tunisia and Morocco, its convenient alignment with European time zones, and its readily available pool of skilled tech graduates. This potent combination could position Algeria as a serious contender in the global outsourcing market.
Adding another crucial layer to the discussion was Foued Bourabiat, a partner at the law firm ADNA, specializing in guiding international investors through the intricacies of the African market. Bourabiat acknowledged the prevailing perception that Algeria lags in attracting foreign investment but argued that the reality on the ground is often more nuanced than headlines suggest. He emphasized that Algeria’s legal framework does, in fact, permit the repatriation of profits in foreign currency, a fundamental concern for any international investor. The recent investment law of 2022 explicitly guarantees this right.
However, Bourabiat pointed to the practical challenges that often deter or delay potential investments. ‘The importance of meticulously navigating Algeria’s bureaucratic processes, particularly concerning the intricate documentation required for injecting foreign currency and subsequently repatriating profits cannot be overemphasized,’’ Bourabiat said. He strongly advised engaging experienced legal counsel and partnering with international banks well-versed in Algerian regulations. Key documents like the “Formule 104” from the Central Bank, detailed Swift Messages, and the “Attestation de Virement Irrévocable” are essential for ensuring smooth transactions. A lack of awareness or improper handling of these documents can lead to significant delays, which are often misinterpreted as systemic blockages or a lack of willingness to facilitate foreign investment.
Bourabiat also highlighted the relative stability of the Algerian Dinar, at least at the official exchange rate, as a significant advantage for investors compared to markets with more volatile currencies. Furthermore, he pointed to the potential for leveraging bilateral investment treaties between Algeria and various European and other nations, which can provide an additional layer of legal protection for investments.
Interestingly, Bourabiat noted that the challenges are often more acutely felt by mid-sized companies or those from countries with limited historical investment ties with Algeria, who may lack the necessary local knowledge and established networks. Large multinational corporations, with their experienced advisors and long-standing relationships, generally navigate the system more effectively. This suggests that a lack of readily available information and guidance for smaller or newer investors might be a contributing factor to the perceived difficulty of investing in Algeria.
Recognizing the need to diversify its economy beyond its reliance on hydrocarbons, the Algerian government has recently signaled a renewed focus on fostering innovation. In February, the state-owned telecommunications giant, Algérie Télécom, announced the launch of a 1.5 billion Algerian dinar (roughly $11 million) investment fund specifically aimed at nurturing AI startups, cybersecurity firms, and robotics ventures. This initiative, unveiled by the Minister of Post and Telecommunications Sid Ali Zerrouki, underscores the government’s ambition for AI to contribute 7% to Algeria’s GDP by 2027.
This ambition is further evidenced by the establishment of three major universities dedicated to artificial intelligence, robotics, and mathematics, alongside the deployment of business incubators and “Scale Center” training hubs designed to equip young entrepreneurs with the necessary skills. The creation of the Ministry of the Knowledge Economy, Startups, and Micro-Enterprises in 2020, and the subsequent rise of its officials within the government ranks, further highlights the growing political will to support entrepreneurship. Key policies like the Algerian Startup Fund (ASF) and a national startup labeling framework are also in place.
Despite these encouraging steps, significant hurdles remain. Structural issues such as limited access to online payment systems, bureaucratic bottlenecks, and underdeveloped digital infrastructure continue to stifle the scalability of Algerian startups, particularly outside major urban centers like Algiers, Oran, and Constantine. While over 750 startups have been officially labeled under the national framework, much of this growth remains geographically concentrated.
Algeria undoubtedly possesses the fundamental economic strengths, a youthful and increasingly tech-savvy population, and a growing government focus to become a significant player in Africa’s burgeoning startup ecosystem. The challenge now lies in translating its impressive pool of engineers and its latent digital appetite into a vibrant and attractive startup landscape. Bridging the gap between its economic might and its entrepreneurial promise will require a concerted effort from Algerian entrepreneurs, proactive policymakers willing to streamline regulations and improve infrastructure, and international investors ready to look beyond outdated perceptions and recognize the immense opportunities that this North African giant has to offer. Unlocking Algeria’s true innovative power could not only reshape the continent’s tech startup landscape but also finally align its substantial economic credentials with its untapped entrepreneurial potential.
Download the full transcript of the heated discussions HERE.