Interview : Amara Charaf-Eddine
How can innovation help to boost high-potential manufacturing segments?
AMARA CHARAF-EDDINE: The growth of production and the creation of long-term jobs are at the base of the national growth model. This strategy targets a significant rise in production, giving priority to those segments, such as agriculture, fisheries, ICT and tourism, that produce tradable goods and services.
In my opinion the sources of innovation are of two types. The first is the realisation of partnerships and strategic alliances with leading companies in their segment. The second is the bridging of industries and research centres through the establishment of clusters. A consortium of companies is more capable than single firms of mobilising funds dedicated to applied research and the production of prototypes that can be duplicated during the industrial phase. However, some innovations, particularly in ICT, are the work of start-ups or innovative entrepreneurs. Even if the company does not find an immediate need in its sphere of production, it is crucial that it provide support during product development, or that it help through injecting private equity.
To what extent can public companies support innovation and youth entrepreneurship?
CHARAF-EDDINE: Incubators could complement the function of those clusters that are dedicated to innovation based on industrial needs and the responses elaborated by teams of researchers, and the authorities have already subscribed to the process of creating incubators for publicly supervised projects. As such, it is left to a given firm to get closer to these structures and to agree on their contributions to young entrepreneurs. For instance, a public company could propose subcontracts that help to integrate these entrepreneurs into the value chain.
It is essential to provide project promoters with services that enable them to embark under the best conditions in carrying out market research, building business plans, identifying the content of investment, defining their commercial policy and keeping accounting records, and these are the kinds of assistance that any young entrepreneur would need from these firms.
On another level, consortia of public companies could support project holders by buying capital stakes in the creation or development phases of a nascent firm. In some cases it will be a matter of reframing the projects with a view to both their immediate and eventual success, as well as engaging a contribution to Algeria’s attractiveness and socio-economic development. Incubators should help to create ecosystems for the development of viable enterprises in the long term.
How could partnerships between the Algerian private sector and international firms be encouraged?
CHARAF-EDDINE: Algeria is attractive as a business site because of its market size, its low costs of production – with respect to labour, supply and distribution, operations and energy – and a range of investment incentives. However, partnerships also depend on a technology-product-market triptych, meaning that a project’s viability relies on a market’s dynamism, the foreign partner’s technological contribution and the expected success of a sales network.
Improvements to encourage partnerships include diffusing information and economic data on the market and its players; facilitating access to bank loans; reinvigorating funds for small and medium-sized enterprises; and bolstering human capital to meet the demand for skilled labour. These must be done with the help of sectoral organisations and institutions as a means to encourage partners to develop industry-specific training centres, as in the vehicle industry in Oran or textiles in Relizane. We could also encourage the reorganisation of the tax system and the modernisation of the commercial code to adapt its contents to the new realities of the global economy.
Read More from OBG
