Financial Services
From The Report: Algeria 2016
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While it has grown more than five-fold since the 1990s, Algeria’s insurance industry remains small relative to the size of the economy, with low penetration and density ratios. The sector sees more than half of its profits from automotive coverage, though the life segment has grown swiftly in recent years. Improvements to automotive claims processing and determined efforts to resolve the claims backlog should help rehabilitate the insurance sector’s image somewhat in 2017, and relieve it of a long-standing financial burden. This will allow insurers to focus on expanding promising assistance and SME-tailored products, as well as products across the life segment. This chapter contains interviews with Mohamed Loukal, Governor, Bank of Algeria; Adnan Ahmed Yousif, President and CEO, Al Baraka Banking Group; Yazid Benmouhoub, General Manager, Algiers Stock Market; Mohammed Khelfaoui, Managing Director, Tell Markets; and Mokhtar Naouri, CEO, CASH Insurance.
Articles from this Chapter
Moving forward: The sector is ready to tackle new economic challenges
Ebb and flow: New measures are in place to enhance liquidity managementOBGplus
Although the Algerian financial sector’s coverage rates remain healthy – particularly by emerging market standards – the dramatic drop in hydrocarbons receipts since 2014 has brought a swift end to more than a decade of abundant liquidity. As broad money growth contracted to near zero in 2015, banks saw their liquid assets fall to 27.2% of total assets, down from 38% in 2014, according to the IMF’s 2016 Article IV consultation. This shift resulted primarily from an 11.9% expansion…
Up to bat: Macroeconomic challenges may allow the central bank to take greater controlOBGplus
If an end to the era of abundant liquidity in Algeria’s financial sector presents risks, it also has one important advantage: contracting liquidity can restore the Bank of Algeria’s (BoA) capacity to steer the economy via the classic levers of monetary policy. These tools, essentially unused during 15 years of excess liquidity, are now re-emerging for the first time since 2001 – the last year when banks used the rediscount window. Following years of expansion, the money supply stabilised at…
Facing external shocks: Mohamed Loukal, Governor, Bank of Algeria (BoA), on rebuilding resilienceOBGplus
Viewpoint: Mohamed Loukal The drastic oil price decline as of mid-2014 had a considerable impact on Algeria’s domestic and external balances, reflected in record current and fiscal deficits and, consequently, in the significant erosion of fiscal savings and reserves. Subsequently, the shock leaked to the banking sector, through sustained liquidity contraction. To face the situation, the government has adopted a new strategy, aimed at anchoring sustained, high, job-creating and inclusive growth. The…
Growing space: Adnan Ahmed Yousif, President and CEO, Al Baraka Banking Group, on deepening the role of Islamic financeOBGplus
Interview:Adnan Ahmed Yousif What can be done to improve the harmonisation of religious standards and regulations among countries on sharia-compliant products? ADNAN AHMED YOUSIF: The Accounting and Auditing Organisation for Islamic Financial Institutions has been publishing standards for sharia-compliant financial institutions since 1993 and thus plays a vital role in harmonising financial and accounting standards applied by such banks. The standards it issues are mandatory for Islamic financial…
On the go: Lower oil prices have led to renewed urgency to improve the country’s exchangesOBGplus
For nearly two decades Algeria’s securities markets have remained in a nascent state of development, with relatively few investors or listed securities. But as authorities look to alleviate pressure on state finances and generate new sources of capital and investment opportunities for public and private enterprises alike, the country’s under-sized capital markets appear a promising option. In March 2016 Prime Minister Abdelmalek Sellal spoke of the need to “awaken” Algeria’s securities…
Private equity: A challenging start to a promising journeyOBGplus
The opportunity to invest in Algeria is greater than any time before. This unprecedented historical opportunity is, as per experts’ analysis, rooted in two main reasons. The first is the economic transition that Algeria has to undergo and the second is the country’s exceptional exponential demographic growth. The Algerian government has explicitly declared its intention to lessen its long-lasting dependence on oil and gas revenues, and has loudly stated its adoption of severe austerity measures,…
Biopharm: PharmaceuticalsOBGplus
Biopharm is a pharmaceutical company founded in early 1990. In October 1991 the company began operations with the production of generic drugs. To diversify and develop its business Biopharm started to gradually adapt its organisational structure by creating five subsidiary companies. Besides the industrial production of drugs, which remains the core activity of the initial company, Biopharm SPA, in 2003 the group launched its first subsidiary, Human Health Information, to promote its products and provide medical information. The company developed its distribution network to pharmacies through Biopure in 2012 and wholesale distribution of pharmaceuticals…
SAIDAL: PharmaceuticalsOBGplus
SAIDAL was created after the acquisition of several factories located in the Algiers suburbs and the complete restructuring of the Central Pharmacy of Algeria in April 1982. Six years later the antibiotic complex located in Medea, designed by the National Company of Chemical Industries, was allocated to SAIDAL. Following the implementation of economic reforms after the 1988 October Riots, SAIDAL changed its status to a public company, with management autonomy and a centralised decision-making system. In 1993 changes were made to the statute of the company, allowing it to participate in any business transaction related to the corporate purpose…
SAIDAL: PharmaceuticalsOBGplus
SAIDAL was created after the acquisition of several factories located in the Algiers suburbs and the complete restructuring of the Central Pharmacy of Algeria in April 1982. Six years later the antibiotic complex located in Medea, designed by the National Company of Chemical Industries, was allocated to SAIDAL. Following the implementation of economic reforms after the 1988 October Riots, SAIDAL changed its status to a public company, with management autonomy and a centralised decision-making system. In 1993 changes were made to the statute of the company, allowing it to participate in any business transaction related to the corporate purpose…
Alliance Assurances: InsuranceOBGplus
Alliance Assurances was established in December 2004 by a consortium of Algerian investors with an initial capital of AD500m (€4.1m). However, Alliance Assurances only started effective operations in 2006. In 2007 revenue increased by 178% compared to the previous year. The sharp rise in revenue was due to the launch of a commercial development programme, which led to the creation of Algeria Touring Assistance. With an optimised communication policy Alliance reached second position in the Algerian market in 2008. In 2009 Alliance Assurance created its subsidiary Orafina, which is dedicated to the development of enterprise resource planning…
Alliance Assurances: InsuranceOBGplus
Alliance Assurances was established in December 2004 by a consortium of Algerian investors with an initial capital of AD500m (€4.1m). However, Alliance Assurances only started effective operations in 2006. In 2007 revenue increased by 178% compared to the previous year. The sharp rise in revenue was due to the launch of a commercial development programme, which led to the creation of Algeria Touring Assistance. With an optimised communication policy Alliance reached second position in the Algerian market in 2008. In 2009 Alliance Assurance created its subsidiary Orafina, which is dedicated to the development of enterprise resource planning…
NCA Rouiba: Food processingOBGplus
Nouvelle Conserverie Algerienne (New Algerian Canning, NCA) was founded in 1966 in the wake of the Algerian revolution as a food processing and canning company. The company’s initial product lines included jams, tomato paste as well as chilli paste in the form of harissa. Nearly two decades after beginning operation, NCA launched a new fruit juice business line under the iconic name of Rouiba which has since become part of the company name — NCA Rouiba. A mere 20 years later and NCA Rouiba is expanding its product range again and going into ultra-high-temperature milk. A year later in 2005 NCA Rouiba agreed to open its capital to investor…
EGH El Aurassi: HospitalityOBGplus
The Entreprise de Gestion Hôtelière El Aurassi (EGH El Aurassi) is a hotel management firm, with its headquarters in the capital city of Algiers. The Hôtel El Aurassi is the flagship hotel of the firm and one of four hotels in the EGH El Aurassi portfolio. The other three hotels in the management company’s portfolio include Hôtel Rym in Beni Abess, Hôtel El Boustene in Menea and Hôtel El Mehri in Ourgela. All three of these hotels are located in the south of Algeria. The four hotels were placed under the same management group, EHG El Aurassi, in 2010 following a decision made by the government. Hôtel EL Aurassi is a five-star hotel,…
EGH El Aurassi: HospitalityOBGplus
The Entreprise de Gestion Hôtelière El Aurassi (EGH El Aurassi) is a hotel management firm, with its headquarters in the capital city of Algiers. The Hôtel El Aurassi is the flagship hotel of the firm and one of four hotels in the EGH El Aurassi portfolio. The other three hotels in the management company’s portfolio include Hôtel Rym in Beni Abess, Hôtel El Boustene in Menea and Hôtel El Mehri in Ourgela. All three of these hotels are located in the south of Algeria. The four hotels were placed under the same management group, EHG El Aurassi, in 2010 following a decision made by the government. Hôtel EL Aurassi is a five-star hotel,…
Positioned to grow: Yazid Benmouhoub, General Manager, Algiers Stock Market, on the expansion of domestic capital marketsOBGplus
Interview:Yazid Benmouhoub How would you assess the outlook for Algeria’s financial markets over the medium term? YAZID BENMOUHOUB: With respect to the mid- and long-term development outlook, it is important to consider the recent foundations of the stock market’s development, notably the modernising programme that was launched in 2011. This programme was concluded in 2013 and provided an assessment and a number of recommendations. Since its conclusion we have been following those policy…
Future benefits: Mohammed Khelfaoui, Managing Director, Tell Markets, on the benefits of evolving the capital marketOBGplus
Interview:Mohammed Khelfaoui What are the prospects for the development of the capital market in the short and medium term? MOHAMMED KHELFAOUI: The main obstacle to the development of the Algerian capital market is its size. The market is too small to be attractive and create momentum, and it is too small to be profitable for its stakeholders. As such, its size and the activity it generates does not justify investment in IT tools, personnel, communications and market intermediaries. Furthermore,…
Encouraging coverage: Improved regulation and services should help the sector expandOBGplus
While it has grown more than five-fold since the 1990s, Algeria’s insurance industry remains small relative to the size of the economy, with low penetration and density ratios – a common feature seen in emerging and frontier market insurance markets. The sector, which was partitioned into life and non-life segments in 2011, still sees more than half of its profits from automotive coverage, though the life segment has grown swiftly in recent years. Today, under pressure to stay profitable amid…
New paths to growth: Mokhtar Naouri, CEO, CASH Insurance, on key markets and strategies for growthOBGplus
Interview:Mokhtar Naouri What has been the impact of reduced oil revenues on the insurance sector? MOKHTAR NAOURI: There has been a slowdown with respect to insurance projects that are linked to the oil and construction sectors. This slowdown started in 2015 and is clearly continuing through to 2016. Due to restrictions on automobile imports there has been a notable decrease in numbers of newly insured vehicles. At the same time, a decrease in volumes of new insurable goods and equipment…
