EU to enhance the competitiveness of Algerian SMEs

The program to support SMEs and information & communications technology management (PME II) aims to strengthen private small and medium-sized Algerian businesses with a view to improve their performance and consolidate their market share.

Bassma Karrasha - Algeria, Eurojar

The program "Support to SMEs and information & communications technology management" (PME II) is co-funded by the European Union (40 million Euros) and the Algerian government (4 million Euros). It has been developed on the basis of the previous program "PME I" that, between 2005 and 2008, helped strengthening the competitiveness of more than 450 enterprises and financed the introduction of the first credit's guarantees for SMEs in Algeria.

As for all EU cooperation programs, PME II aims to support and complement the existing national initiatives in the field of private sector development, namely the "National upgrading program for SMEs" implemented under the supervision of the Algerian Ministry of Small & Medium Enterprises and Crafts, the "National upgrading program for industrial enterprises" managed by the Ministry of Industry and Investment Promotion and "e-Algeria 2013", developed under the direction of the Ministry of Post & Telecommunications.

The leaders of the program are the Algerian Ministry of Small & Medium Enterprises and Crafts and the European Commission. Nevertheless, is to be noted that the Ministry of Industry and the Ministry of Post & Telecommunications also play an important role in the coordination of PME II activities.

In an interview with Eurojar correspondent, Paolo Castrataro, team leader of the project's technical assistance, explained that this year PME II will provide direct support to around 100 SMEs selected on the basis of set of defined criteria and active in five chosen sectors: food and beverages, mechanics, construction materials, chemicals as well as electrical / electronics.

He pointed out that the EU insisted on the selection of well established enterprises able to take a sustainable advantage from the support offered by the program. Thus, the enterprise’s turnover should be 100 million of Dinars minimum (1 million euro) - 50% of which must result from a transformation industrial activity - and the SME should employ a minimum of 20 employees - of which at least 3 executives.

According to Castrataro, the intervention proposed by the experts is based on a global approach tailored on the specific needs of each SME. In fact, this "pilot actions" aim to accompany the modernization of different fields, such as the economic, financial, production ones as well as the development of human capital and the use of ICTs within SMEs.

Global approach
Paolo Castrataro also underlined that, although the program focuses mainly on SMEs, it also provides support to national ministries, quality institutions and sectoral organizations/associations. In fact, PME II extends its support to the environment of each enterprise, as the latter would not be able to develop its activities and compete in export markets, if its environment is not prepared for such development.

As for the quality control, during the next months, 20 Algerian laboratories will be accompanied in the process of ISO certification which will give them the ability to issue certificates directly without having to rely on international labs. Not to mention that this development will enable enterprises to save money and time, to better control the market, to enhance their competitiveness and to secure an equitable development. Among the organizations who will benefit of the program we can find the national office of normalization (IANOR), the office in charge of accreditation (ALGERAC) or the one responsible for legal metrology (ONML).

In addition, the program has also launched three business plans for the establishment of three sectoral technical industrial centers (CTI) whose role will be to carry out researches and analysis with a view of monitoring the market and strengthen the Algerian private sector. Castrataro also explained that the preparation of these business plans will require substantial support of the Algerian government who has the final responsibility for the establishment of those centers.

On a more general level, the program, in agreement with the different national institutions, has developed an agenda of capacity building and training sessions. For example, concerning the National Agency for the Development of SMEs (ANDPME), the objective is to endorse its institutional reform, by simplifying administrative procedures, creating media programs addressed to institutions, establishing an online (Internet) application system, training its top executives to use modern methods of work, as well as strengthening ties with professional organizations.

Currently, the project team is conducting an evaluative study on Algerian SMEs that would lead to the establishment of a valuable data base enabling the private consultants to focus their activities on the real existing needs of SMEs.

Caravan for SME
As for the supports offered to the Ministry of Small & Medium Enterprises and Crafts, Mr. Abdeldjallil Kassoussi, national project director, said that PME II is helping to launch the “Caravan for SMEs” whose aim will be to establish direct contact with SMEs in the many Algerian provinces to inform them on the possibilities offered by the national private sector support program.

Today, the 430,000 SMEs active in Algeria contribute to 70% of national non-hydrocarbon GDP and employ more than 1.4 million people; aware of the important role that SMEs play, one of the main government objectives for the next five years will be to help the creation of 200,000 new SMEs.

Nevertheless, the SME sector is still facing several problems, as for example the access to funding in response of which, a few years ago, the government, with the support of PME I, created the "SME Credit Guarantee Fund" (FGAR) with a budget of 30 billion Dinars (300 million Euros), and the "Risk Capital Fund" of 3.5 billion Dinars (35 million Euros).

The development of small businesses in Algeria has still a long road to go, nevertheless, the initiatives taken by the government, and supported by the European Union, will surely offer to the sector the opportunity to move forward.