Algeria's quest for greater digitisation and financial inclusion

Algeria lags behind other Arab countries in terms of banking digitisation and citizens' use of banking services in a digital way, something that deepens the existing shadow economy.

The Algerian state is seeking incentives to expand e-payments and the widespread use of digital banking services, and is making efforts to accelerate the digitisation of commercial transactions and achieve greater financial inclusion.

Analysts have highlighted the efforts of Algeria's financial authorities to mainstream banking digitisation and electronic payments as one of the important drivers for expanding financial inclusion and supporting cashless commerce, although the Algerian system is also criticised for being slow to implement this transformation, as noted by media outlets such as Al Arab. 

The objective is clear: to increase the efficiency and transparency of commercial and banking transactions through a greater implementation of digitalisation in society. 

For months, the authorities have been looking for tools to further integrate the use of technology in financial transactions in the local market, in an attempt to help them narrow the circle of the shadow economy and accelerate the digital transition. 

The International Telecommunication Union ranks Algeria 88th out of 169 countries in the 2023 ICT Development Index. Algeria moved up places compared to 2022, but the government still has work to do to make digitalisation more widespread in various sectors, including finance and banking. 

In this regard, Algeria's Minister of Finance, Laaziz Fayed, chaired a coordination meeting in the presence of the Governor of the Central Bank, Salah Eddine Taleb, to discuss proposals for incentive measures to develop e-payment methods in the country and to increase the financial inclusion of citizens. 

The meeting focused on two main axes related to ‘studying proposals for incentive measures and monitoring the degree of implementation of the institutional roadmap for the development of e-payment’, the Algerian Ministry of Finance said in an official statement. 

‘The rapid and effective treatment of this issue is of particular importance in light of the national priorities set by the President of the Republic,’ Laaziz Fayed said, according to Algeria's official news agency. At the same time, he stressed the need to improve cooperation between all parties involved in order to achieve the objectives.

During the discussions, participants highlighted the importance of combining the availability of electronic payment methods and their effective use, stressing that this balance is necessary to achieve the goal of financial inclusion on a large scale and to ensure that all citizens can access these modern and secure services. 

The aim of greater financial inclusion is to make it easier for more businesses and citizens to access and use banking services under good market conditions and in an advanced, digital way to meet their needs, and this is what Algeria is seeking to do to catch up with its more advanced neighbours in this respect. 

The challenge is also to further develop a sector such as banking, one of the tasks pending, as in other sectors, in order to avoid being so dependent on the main economic engine of the North African country, which is the energy sector, mainly natural gas and oil. 

In this line, the general commissioner of the Professional Association of Banks and Financial Institutions, Rachid Belaid, revealed that work is being done to popularise immediate and deferred payment among banks and financial institutions in order to encourage merchants to adopt electronic payment and for it to be more widely used by consumers.

Rachid Belaid indicated that ‘a project related to instant payment is being implemented, which allows payment to arrive at the same time from the customer's account to the merchant's account’.

According to a recent ICEX study, the most widespread means of payment in Algeria is cash and the overall banking penetration rate is less than 50%. Moreover, according to this institution, only financial establishments and banks authorised by the Central Bank of Algeria and Algérie Poste can facilitate online payments, and they must be registered in the country.