Algeria’s commercial banks are tightening lending to small and medium-sized enterprises (SMEs), according to a recent report by The Banker magazine. The publication, which cited unnamed senior executives within Algeria’s banking sector, warned that the squeeze is likely to persist as lenders prioritize risk management over growth. For entrepreneurs across sectors from tech startups in Algiers to agribusiness cooperatives in Oran, the tightening could not come at a worse time: domestic demand is sluggish, inflation remains above 9%, and foreign currency controls continue to paralyze import-dependent businesses.
The move follows a broader policy shift under President Abdelmadjid Tebboune’s government to curb credit growth and reduce exposure to non-performing loans. In 2024, the Bank of Algeria, the central bank, instructed commercial lenders to cap their SME loan portfolios at 15% of total assets—a sharp drop from 23% in 2021. “We have been asked to be more selective,” said a senior risk officer at Banque Extérieure d’Algérie (BEA) who spoke on condition of anonymity. “That means fewer loans to new ventures, especially those without government contracts or hard collateral.”
The impact is already visible in sectors that rely heavily on short-term credit. The Algerian Chamber of Crafts and Small Trades (CACM) reports a 22% fall in micro-loan disbursements in the first half of 2025 compared to the same period last year. Metalwork workshops in Rouiba and textile workshops in Tlemcen, which historically depended on 12-month working capital lines from local banks, are now turning to family networks or rotating savings groups to bridge funding gaps. “We used to get 5 million dinars within two weeks,” said Kamel Belkacem, owner of a small metal fabrication firm in Boumerdès. “Now it takes two months—and the interest rate is 10.5%, up from 8.2%.”
The squeeze is compounded by the continued freeze on foreign currency allocations by the Bank of Algeria, which has left many importers unable to secure dollars to pay for raw materials. According to the Ministry of Industry and Pharmaceutical Production, 40% of SMEs in the pharmaceutical sector have had at least one production line halted in the past six months due to missing inputs like active pharmaceutical ingredients. “We applied for a $200,000 forex allocation in January,” said Farida Hamidi, co-founder of PharmaLab Algiers. “We’re still waiting.”
Entrepreneurs in the tech sector, which has been the darling of Algeria’s startup ecosystem, are also feeling the pinch. Despite President Tebboune’s repeated pledges to support digital transformation, venture debt remains scarce. Algeria’s first tech-focused fund, Algeria Venture Capital (AVC), has paused new investments after its anchor lender, Caisse Nationale d’Épargne et de Prévoyance (CNEP), withdrew its participation due to tighter capital adequacy rules. “We had three term sheets on the table in late 2024,” said AVC managing partner Yacine Benallal. “All collapsed when the banks refused to syndicate the loans.”
The diaspora, a critical source of early-stage capital for Algerian SMEs, is also being affected. Algerian law now requires all inward remittances over $1,000 to be channeled through the banking system, but many entrepreneurs report that banks are delaying or rejecting transfers from Europe and North America, citing “compliance concerns.” Rachid Messaoudi, who runs a digital marketing agency in Paris and sends monthly remittances to his brother’s construction firm in Sétif, said his last transfer of €3,500 took 11 days to clear and incurred a 3.2% fee. “Before, it was two days and 1.5%,” he said.
In response, some entrepreneurs are turning to alternative financing channels. Leasing companies like Algeria Leasing Corporation have seen demand surge, with new contracts rising 35% in the first quarter of 2025. “We’re financing machinery, vehicles, even IT equipment,” said the company’s CEO, Amina Guenifi. “Banks won’t touch it, but leasing doesn’t require forex approval.” Trade credit from suppliers in Morocco and Tunisia has also become a lifeline for import-heavy businesses, though margins are squeezed by higher cross-border transaction costs.
The government has acknowledged the credit crunch but offered little immediate relief. In a rare public statement this month, Finance Minister Laaziz Faid said the central bank was “monitoring the situation closely” and would “take appropriate measures.” But no new credit guarantees or loan guarantee schemes have been announced since the cut in SME portfolio limits.
For now, Algerian entrepreneurs are adapting—slowly. Some are downsizing, others are pivoting to domestic markets, and a few are exploring partnerships with state-owned enterprises to access working capital. But the message from the banks is clear: lending to SMEs is no longer a priority.
Key takeaway for entrepreneurs: Credit is tightening, especially for new ventures without state contracts or collateral. Non-bank financing like leasing or diaspora remittances via alternative channels is becoming essential. Expect delays in forex allocations and longer approval times for all forms of external funding.
💡 Starting a business in Algeria? GlobalStart guides you step by step: procedures, real costs, company forms (SARL, EURL, SPA) and CNRC registration.