Algeria’s startup scene: challenges and opportunities.

 

Algeria is the largest country in Africa by land area and the wealthiest in the region by GDP per capita. It also has abundant natural resources, especially oil and gas, which account for most of its exports and revenues. However, Algeria faces many challenges, such as political instability, economic stagnation, social unrest, and environmental degradation. These challenges have created a need for innovation and diversification in Algeria’s economy, and also an opportunity for its startup scene to emerge and grow.

According to Startupblink1, a global startup ecosystem map and research center, Algeria ranks 114th worldwide and 4th in Northern Africa in terms of its startup ecosystem. Algeria has six startups listed on Startuplist Africa2, a comprehensive database of African startups, covering sectors such as transportation, e-commerce, fintech, and packaging. Some of the most notable startups in Algeria are:

Yassir2: A ride-hailing app that operates in several Algerian cities and also offers food delivery and courier services. Yassir raised $6 million in a Series A round in 2020 and plans to expand to other African countries.

General Emballage2: A leading manufacturer of corrugated cardboard packaging in Algeria and North Africa. General Emballage has invested in modern technology and equipment to produce high-quality products for various industries.

Zawwali2: An online marketplace that connects buyers and sellers of second-hand goods in Algeria. Zawwali allows users to browse, buy, and sell items such as clothing, electronics, furniture, and books.

MoneyFellows3: A fintech platform that enables users to access interest-free loans and savings through digitalized rotating savings and credit associations (ROSCAs). MoneyFellows raised $31 million in a Series B round in 2022 and operates in Egypt, Kenya, Nigeria, and Algeria.

Algeria’s startup scene faces many challenges, such as the lack of a supportive regulatory framework, access to funding, skilled talent, mentorship, and infrastructure. However, there are also some positive developments that could foster a more conducive environment for entrepreneurship and innovation in Algeria. For example:

Algeria Venture & AIF3: A state-owned accelerator and an investment fund that have teamed up to launch a new $10 million VC fund that will support and finance startups at all stages in Algeria. The fund aims to boost the local startup ecosystem and attract more foreign investors.

Renewable energy sector4: Algeria has a huge potential for renewable energy development, given its abundant solar resources and geographic location. The government has set ambitious targets to increase the share of renewable energy in its electricity mix from 2% in 2018 to 27% by 2030. This could create opportunities for startups to offer innovative solutions for clean energy production, distribution, storage, and consumption.

Human capital development5: Algeria has made significant progress in improving its human development indicators over the past two decades, thanks to its redistributive social policies and investments in infrastructure. However, Algeria still needs to improve the quality of its education system and enhance its human capital index (HCI), which measures the productivity potential of future workers. The World Bank provides technical assistance and analytical services to Algeria in various areas related to human capital development, such as social protection, health, education, disaster risk management, and digital transformation.

Algeria’s startup scene is still nascent but has the potential to grow and contribute to the country’s economic diversification and social development. To achieve this potential, Algeria needs to overcome its political and economic challenges and create a more favorable ecosystem for entrepreneurship and innovation. The United States can play a role in supporting Algeria’s startup scene by providing technical assistance, capacity building, market access, and funding opportunities for Algerian entrepreneurs.