Interview: Boualem Djebbar
How can banks increase engagement with small and medium-sized enterprises (SMEs)?
BOUALEM DJEBBAR: SMEs represent a large component of our economy and, as a result, remain at the heart of the strategy for many banks. They retain a significant role as job creators, for example.
The government has therefore sought to increase banking penetration in this particular customer segment and banks have followed suit. Central to this strategy is improving the uptake of bank borrowing by SMEs by providing more attractive interest rates and sponsoring the establishment of dedicated SME funds, both of which improve the ability of SMEs to access financing.
What is being done to improve participation in the formal financial system?
DJEBBAR: Increasing financial inclusion is an important priority for Algeria, as can be seen from the efforts of the banks and the government to improve access to finance on the retail side, whether through savings and current accounts, credit card usage or e-banking initiatives.
An increasing volume of bank resources have been dedicated to helping further this, including improving deposit collections, which have seen significant growth. The voluntary fiscal compliance programme which was rolled out by the government in 2015 should help this further, by offering new depositors advantageous terms to use the formal banking sector. In return for the payment of a flat 7% tax on a deposited sum, the authorities have agreed to waive any subsequent investigations or taxes on those assets. This involved a lot of coordination and collaboration between the authorities, including the tax administration and the banks – at both the regional and national level – but it offers significant promise in terms of improving formal savings by SMEs and households.
Increasing distribution methods for other financial services can also help more broadly promote financial inclusion. With insurance, for example, penetration is still limited but the potential is there. Bancassurance is in its early stages in Algeria but experiments in this segment conducted by the various banks have shown promising results. The potential for increasing activity here remains especially high in personal insurance and housing.
What role can microcredit play in promoting financial inclusion?
DJEBBAR: Microcredit financing has had a major impact on business activity in Algeria. It has helped to create or expand hundreds of thousands of small businesses in the country, which by some counts has contributed up to 1m additional jobs. Banks are responsible for the vast majority of the microcredit lending in the country, accounting for an estimated 70% of all microcredit loans. This has also helped more broadly in bringing the resources of the large banks to the aid of smaller businesses and households, in turn improving their financial literacy and increasing financial inclusion.
What is the importance of financial literacy?
DJEBBAR: Certainly, financial inclusion is not simply a question of providing a customer with access to an account. A comprehensive measurement of financial literacy includes advising and orienting the new customer by providing them with an explanation of all of the different product and service offerings, and the ways in which they can be used. This is important these days, given that customers can interact with their banks through a wide variety of different channels such as ATMs, e-banking and call centres. However, if they are well-advised and truly financially literate, the customer no longer really needs to physically return to their bank.
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