$100bn in bank profits, but SMEs still beg for loans
The problem isn’t just Algerian. At AFIS 2026, bankers and central bank governors will debate how to redirect trillions in African savings into factories, farms, and infrastructure. But for Algerian SMEs, the gap between bank profits and real investment is a daily crisis. “We see banks with liquidity but no appetite for risk,” says Karim B., a food-processing entrepreneur in Constantine. His latest loan application was rejected after six months—despite his company’s 20% annual growth. “They’d rather lend to state-owned firms with guaranteed returns,” he adds.
Islamic finance could fill the gap—but Algeria isn’t playing
“Algerian SMEs could benefit from sukuk (Islamic bonds) or murabaha (cost-plus financing), but local banks don’t structure these products,” explains Dr. Leïla Hadjadj, an Islamic finance expert at the University of Algiers. The IsDB’s $2.56 billion is indicative—meaning projects must be approved case by case. For now, Algerian SMEs are shut out. “The system favors large-scale projects over small businesses,” she says. Meanwhile, competitors like Morocco and Tunisia are fast-tracking Islamic finance deals, leaving Algeria behind.
Leasing firms like BH Leasing prove it’s possible—here’s how
“Leasing is a game-changer for equipment-heavy sectors like manufacturing and logistics,” says Sami T., CEO of a textile SME in Oran. His company secured a 5-year leasing deal for new machinery after traditional banks denied him a loan. “The bank saw risk; BH Leasing saw an asset,” he explains. Yet leasing remains niche. “Only 15% of Algerian SMEs use leasing,” estimates Amel Bouhlel, head of the Algerian Leasing Association. The bottleneck? Limited product offerings and high collateral demands.
What Algerian entrepreneurs can do now
1. Diversify financing sources
– Crowdfunding platforms like Wamda (UAE-based) or Kickstarter are gaining traction among Algerian diaspora-backed startups.
– Venture debt (debt financing for high-growth startups) is rare in Algeria but could be explored via regional funds like Partech Africa.
2. Leverage Islamic finance—even if banks won’t
– Some Algerian SMEs bypass banks by partnering with international Islamic finance institutions directly. For example, Al Baraka Banking Group (Morocco) has expanded into Algeria and could be a bridge.
– Sukuk (Islamic bonds) are an option for larger firms, though issuance costs remain high.
3. Push for policy changes
– The Algerian government’s 2026-2030 economic plan includes SME support, but implementation is slow. Entrepreneurs should lobby for:
– Simpler collateral rules (many SMEs lack land titles).
– Guarantee funds (like France’s Bpifrance) to reduce bank risk.
– Tax breaks for leasing and venture capital.
The diaspora’s untapped leverage
“If the government made it easier for diaspora investors to fund SMEs—say, through green cards for angel investors—we could unlock billions,” M. argues. For now, many Algerian expats invest in Morocco or Tunisia instead.
Sources
Source: The Africa Report
Source: African Manager
Source: Middle East Monitor
Key takeaway for entrepreneurs
Algeria’s banks are flush with cash, but SMEs must combine leasing, Islamic finance, and diaspora networks to access it. Policy reforms—like easier collateral rules and diaspora investment incentives—could unlock billions. For now, the message is clear: if you can’t get a loan, build your own financing pipeline.
Sources
💡 Starting a business in Algeria? GlobalStart guides you step by step: procedures, real costs, company forms (SARL, EURL, SPA) and CNRC registration.