Interview: Mohamed Krim
What strategies is the banking sector employing to encourage the growth of small and medium-sized enterprises (SMEs) in Algeria?
MOHAMED KRIM: The government has established favourable conditions for the development of SMEs, notably through financial incentives. Nevertheless, banks’ relationships with SMEs should no longer be limited to just financial relations. Instead, there should be an increased role for financial institutions to act as guides for companies by offering banking services and products that best meet their respective needs.
Algerian banks are developing a series of initiatives in remote banking and digital banking, which will help deepen the relationships between banks and SMEs. Managing transfers, settlement and collection of bills by direct debit or internet payment are important tools in reducing delays and lowering costs, thus improving the productivity of SMEs. High-value-added services such as consulting and financial engineering are also interesting niches that banks are striving to develop for their SME clients.
How can banks persuade informal operators to enter the formal sector?
KRIM: The informal sector is part of Algeria’s economic landscape. Those persons engaged in the informal sector must inevitably contribute to national economic development, and it is therefore important that we in the government to envisage their gradual integration into the formal sphere.
Banks can be a good way to further build trust by responding to the needs of entrepreneurs who work in the informal sector and by offering alternative products best suited to their needs, thus encouraging them to join the formal sector. These alternative products are congruent with the prudential rules to which banks are subject. By developing relations between these operators and the banking sector, we can thoroughly transform the economy in Algeria.
What role should banks play in the development of young entrepreneurs?
KRIM: Financing programmes to boost youth employment come within the framework of financial inclusion, which seeks sustainable job creation and professional development for young entrepreneurs.
It is a triangular financing framework, shared between the personal contribution of the young entrepreneur, an interest-free loan from the National Support Agency for Youth Employment and a bank loan. This arrangement allows for interest-free loans up to 70% of project costs. As a result of programmes such as this, a significant number of micro-enterprises have arisen within the SME segment.
How can banks in Algeria contribute to increasing financial inclusion across all sectors?
KRIM: Through the Association of Banks and Financial Institutions, banks in Algeria may provide financial education for citizens that will benefit the whole of society to a great extent. This knowledge will strengthen their capacity for well-informed decision-making related to managing their personal finances in everyday life. This approach is likely to reduce financial exclusion by encouraging customers to save and avoid over-indebtedness, which helps to increase the general welfare of a country. Financial education is not just a matter for banks; it also be supported by all actors of civil society.
What measures to must put in place to promote cashless payments?
KRIM: Methods of payment are at the heart of a bank’s trades. They are crucial in building and developing a quality relationship with their customers. Through our work with Groupement d’Intérêt Èconomique a number of measures have been taken in relation to the technical, regulatory and marketing aspects needed to develop e-payments in Algeria.
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