Africa > North Africa > Algeria > Formalising the retailing sector in Algeria

Algeria: Formalising the retailing sector in Algeria

2013/08/13

The government in Algeria is stepping up its efforts to boost commercial activity and bring unlicensed traders into the mainstream economy through a combination of legislative changes and investment in retail infrastructure.

The move forms part of a national drive to reduce the informal retail sector and capture a larger slice of consumption, which is growing on the back of easing inflation and the opening of new outlets.

A draft revision of the 2004 law regulating retail activity, known as Law No. 04-08, was submitted for parliamentary review in late June and proposes amendments aimed at facilitating the process for obtaining a commercial licence.

Under the proposals, new companies would be exempt from having to submit annual corporate accounts to the National Centre for the Commerce Register (Centre National du Registre Commercial) in their initial year. In addition, they would have annual fees tied to the corporate account submission waived for the initial two years of operations.

The changes would as well relieve the restrictions for prospective entrepreneurs with a criminal record looking to obtain a retail licence.

Officials believe young entrepreneurs, in particular, may be opting to set up in business informally, knowing their application would be turned down under the current law on the basis of completed infractions on their civil record. The expectation is the proposed amendments will generate additional jobs, particularly part Algeria’s youth, by bringing additional operators into the formal economy. Bans on licences will remain, however, for violations related to copyright infringement, counterfeiting and illegal international capital transfers.

The encouragement of entrepreneurship and small and medium-sized enterprises (SMEs) is part of the national’s larger efforts to reduce the unemployment rate, which stood at 9.7% as of the end of 2012. The government has as well established business counselling centres, strengthened credit guarantees and introduced additional financing mechanisms for smaller businesses.

SMEs have room for expansion in services industries and particularly in the retail sector, where non-licensed establishments are prevalent. While official data is limited, an estimated 40% of the people relies on informal shops, particularly outside urban areas.

According to local media reports, the Ministry of Commerce aims to cut informal retailing by 80% in 2013. Its clampdown has by presently led to a reported 300,000 licensing inspections in the initial half of 2013, with the seizure of merchandise valued at AD3bn (€29m).

At the same time, the national is working to attract operators into the formal economy by constructing 800 new retail facilities across the country. The majority are slated to be neighbourhood shops, or “marchés de proximité”, offering groceries and general consumer goods.

Reducing the volume of unlicensed commercial activity could help attract additional foreign investment into the sector. In 2009, French retailer Carrefour withdrew from a project to build a 140,000-sq-metre shopping centre in Algiers, citing widespread informal retailing and high import duties as reasons. Despite this setback, the local partner, Arcofina Holdings, went on to build the facility, Ardis Commercial Centre, which opened in July 2012.

While mall developers face diverse challenges, such as the availability of land in urban areas, other projects are under way, inclunding the construction of a €440m shopping centre in Oran, headed up by Société de Centres Commerciaux d’Algérie. The real estate company, which is 46% held by the Swiss investment management firm Valartis Group, as well led the recent development of the Bab Ezzouar in Algiers, the second-major mall in the Maghreb next the Morocco Mall in Casablanca.

Efforts to rein in the informal retail segment will sit well with industry players, although unlicensed vendors are likely to maintain a strong hold at the local level. Moreover, the government will as well be keenly aware of the fall-out it could face from removing the gain of self-employed vendors, operating in the informal economy with limited means. By offering opportunities for them to enter the formal sector, it will be hoping to achieve a balancing act that pays off in the longer term.

Related Articles
  • Nobel Laureate Joseph Stiglitz Calls For New Strategy

    2017/10/19 Joseph Stiglitz has advised African nations to adopt coordinated strategy encompassing agriculture, manufacturing, mining, and service sectors to attain same success delivered by the old manufacturing export-led strategy. Prof. Stiglitz, an economist and professor at Columbia University, New York, gave the advice at the Babacar Ndiaye lecture series introduced by African Export-Import Bank (Afreximbank) which debuted in Washington D.C.
  • Ecobank launches mVisa across 33 African Countries

    2017/10/19 Ecobank Scan+Pay with mVisa delivers instant, fasten cashless payment for goods and services by allowing customers to scan a QR code on a smartphone or enter a incomparable merchant identifying code into either a feature phone or smartphone Ecobank (https://Ecobank.com) has partnered with Visa to launch Ecobank Scan+Pay with mVisa solutions to their consumers. The strategic tie-up signals interoperability on a cross border level – and potentially huge gains – as it affords consumers with the ability to use their mobile phone to due access the funds in their bank accounts to pay person-to-merchant (P2M) or person-to-person (P2P).
  • ‘Betting on Africa to Feed the World’

    2017/10/17 The president of the African Development Bank, Akinwumi Adesina, will deliver the Norman Borlaug Lecture on Monday 16 October as part of the World Food Prize events taking place from October 16 to 20, 2017 in Des Moines, Iowa, USA. The Norman Borlaug Lecture under the title: “Betting on Africa to Feed the World”, will be held on World Food Day, October 16, in conjunction with the annual World Food Prize celebration.
  • World Teacher’s day: Gov’t urged to improve teachers’ productivity

    2017/10/16 Cameroonian teachers nationwide have exhorted the Cameroonian government to empower teachers with the requisite tools to be able to deliver their best in the present fast-paced world. While commemorating the 23rd edition of world teacher’s day today, the teachers noted that the theme for this year’s celebration, “Teaching in Freedom, Empowering Teachers,” reaffirms that peace and security are needed for the development of any country.
  • Africa's Economic Future Depends on Its Farms

    2017/10/16 At the same time as the economies of Nigeria and South Africa recently rebounded, it wasn't oil or minerals that did the trick. It was agriculture. Faster and additional sustainable agricultural increase is crucial not only to the continent's economy, but as well to its ability to feed and employ its surging people. Agriculture still accounts for a quarter of gross domestic product and as much as two-thirds of employment in sub-Saharan Africa. In fact, agricultural increase has the biggest impact on non-farm gain and reducing poverty.