Internet and mobile banking in Algeria are still in the early stages of development, but market observers see these technologies as having great potential to improve financial inclusion if the relevant legal, regulatory and logistical frameworks are put in place.
In October 2016, 11 banks and nine companies participated in the launch of Algeria’s first e-payment service. In addition to the six public banks, five private banks participated: Trust Bank, Natixis, Société Générale, Gulf Bank and Al Baraka. These were joined by a range of public and private firms, including Air Algérie, Algérie Télécom, Mobilis, Société des Eaux et de l’Assainissement d’Alger, Djezzy, Ooredoo and Amana Assurances. Anyone with an account at one of the participating banks could request that their bank card be set up to make electronic payments. By the end of December 2016 some 5000 e-payment transactions had been carried out and the service had accumulated around 930,000 subscribers.
Since the launch, the number of firms taking part has risen. Sonelgaz, the state-owned power company, signed partnerships with a number of participating banks in March 2017 to facilitate electronic payments, while others, including Naftal and Entreprise Métro d’Alger, also joined the system in 2017.
The next phase of development was the rollout of e-payment terminals across the country. In June 2017 the government announced that 50,000 terminals would be distributed through Algérie Poste by the end of September 2017. To further cooperation in this area, it was announced in May 2017 that a number of banks and industry associations would establish an e-banking entity named Filiale Interbancaire Monétique in June. The new addition joins the Société d’ Automatisation des Transactions Interbancaires et de Moné- tique, founded in 1995, and GIE Monétique, founded in 2014. The collaborative entity will be dedicated to the commercialisation and distribution of electronic payment terminals in businesses across the country.
With the formation of the new government in 2017, authorities set out detailed plans for the launch of a mobile payments system. Many factors will contribute to its success. “Mobile banking has the potential to greatly improve financial inclusion by increasing the proportion of the population that is ‘banked’, but there are three fundamental issues that need to be addressed for this to happen,” Rachid Sekak, senior consultant at BRS Consultants, told OBG. “First, there needs to be a mechanism for establishing the identity of people using the service; second, a protocol needs to be developed to ensure that financial institutions can access the telecoms networks; and lastly, more needs to be done to ensure data protection so consumers can have confidence in the system.”
With e-payments having been only recently introduced and mobile payments not expected until 2018 at the earliest, it is perhaps unsurprising that e-commerce has yet to take off. Nonetheless, some are already looking to tap this source of potential growth. Jumia (Africa Internet Group) of Nigeria became one of the first movers in Algerian e-commerce when it arrived in 2014, establishing its Kaymu platform as a domestic competitor to eBay. By 2016 business was starting to pick up, with 500,000 site visits per month and rising.
Still, regulation for the activity is lacking. “As yet, e-commerce does not have a dedicated legal framework, but this is set to change,” Sofiane Djebaili, commercial director at Al Salam Bank Algeria, told OBG. “Parliament is already debating the issue, and we hope to see an e-commerce law enacted sometime in 2018.”
Beyond regulatory initiatives, sustaining success in the more broad-based efforts to increase internet penetration will be critical to support the growing use of e-commerce. The continued roll out of e-payment services to businesses – including through the distribution of dedicated terminals – is a crucial building block for the introduction of mobile banking and the development of digital banking in Algeria overall.
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