A state of affairs: Digital transformation in Algeria and its links with Africa

The development and generalization of ICT have experienced significant growth in recent years in our country. It is undeniable that all the figures, both those published by ARPCE[1] and MPT[2] at the end of 2022 and those published by international organizations at the beginning of this year, have a generally positive trend in favor of our country.

We currently have a higher number of internet connections with a penetration rate exceeding 70%, accompanied by a constantly improving speed from year to year. Mobile teledensity is over 107%, and Algeria is ranked in the top 30 globally as displaying the "lowest cost of mobile internet consumption in Africa"[3] with a rate of $0.48 USD per GB.

Algeria has made significant progress in this field. Investments have increased, and basic infrastructure such as telecommunications networks and internet access have improved, notably with the acceleration of the installation of FTTH, whose number of subscribers has increased by nearly 40% by the end of January 2023, reaching over 520,000 subscribers.

However, we still have efforts to improve our positioning in fixed internet speed. Despite progress compared to 2022, the average speed of 10.82 Mbps places us 148th in the world[4], losing one place. Knowing that the African average is 7.45 Mbps, our potential is undoubtedly enormous and visible every day, but our development rate remains very average compared to other countries with comparable opportunities to ours.

There are many challenges to overcome in order to generalize the use of ICTs throughout Algerian society. Digital literacy levels and skills for simple computer use remain mediocre to low in certain regions of the country, limiting the ability of institutions, businesses, and citizens to use these technologies effectively.

Digitization of the economy in strategic sectors has gained importance in recent years.

This has been made possible thanks to a proactive policy carried out directly by at least three ministerial departments and indirectly by all others. Digitization is the simplest of the current means at our disposal that allows companies and strategic sectors, or not, to become more efficient, gain competitiveness, and better meet the needs and expectations of citizens and consumers.

In strategic sectors, digitization can offer a number of advantages, such as improving operational efficiency by automating processes, accelerating information transmission, and improving collaboration and communication between employees and different departments within and between companies. It can also lead to the development of new avenues for wealth creation and job creation by helping companies develop new products and services using technologies such as data analysis and artificial intelligence.

Additionally, it can improve customer service quality by providing faster and more effective communication between companies and their clients and investing in new communication channels offered by social networks. Finally, it can increase competitiveness by allowing companies to differentiate themselves from their competitors and offer more innovative products and services, particularly by investing in research and development.

E-commerce and online or mobile payments are a very important lever to promote. In terms of the use of electronic payment terminals (TPE) and virtual payment terminals (TVPs, which are used by web merchants remotely), their use is still quite limited in Algeria. Companies that accept credit card payments tend to focus on large cities such as Algiers, Oran, and Constantine, while small and medium-sized enterprises are less likely to offer electronic payment options.

According to figures from the Gie Monétique[5], about 99% of mobile payment transactions are made for the benefit of the telecommunications sector on Algeria Post's payment platforms and those of fixed and mobile operators.

However, there are signs that this could change in the future. The Algerian government has adopted a series of measures to encourage the development of e-commerce and online payment, including providing tax incentives and supporting the creation of e-commerce platforms based on Law 15-05 of May 10, 2018.

In addition, Algerian consumers are beginning to increasingly adopt electronic payment technologies. According to a report published at the end of 2020 by McKinsey & Company, approximately 16% of retail transactions in Algeria were made online. This is partly due to the COVID-19 pandemic, which has pushed consumers to turn to online shopping.

The digitization of the economy can offer many benefits for all sectors, especially those classified as strategic, such as energy, health, transportation, and defense. It is important to apply an effective digitization strategy that takes into account the specificities of each sector without dispersing and remaining focused on the set objectives. To achieve these objectives, a collective movement with a mutualization of human and material resources is necessary to make the most of the advantages of digitization, which is more indispensable than ever.

The need to retain at all costs our young talents who are candidates for departure

The emigration of skills is a global phenomenon that can be difficult to control. In our country, it is a fact that most computer engineers trained by Algerian universities and higher education institutions leave for foreign countries. This is becoming a real hemorrhage. There are measures that the government can take to mitigate its negative effects. Here are some of them:

Creating attractive employment opportunities, such as the creation of innovative and technological companies that offer well-paying jobs and interesting career prospects for graduates in computer science and other fields. To do this, a favorable environment for entrepreneurship, investment, and innovation needs to be created.

Encouraging collaboration between universities and businesses, as they need to work together to develop training programs tailored to the needs of the labor market, offer internships and collaborative research projects to students, and encourage collaborations between graduates and companies.

Strengthening ties with emigrated graduates, by implementing programs to maintain links with graduates who have left the country. These programs may include professional networks, networking events, grants for collaborative projects, etc.

Improving working and living conditions to attract and retain talent. This may include tax benefits for companies creating jobs in the country, affordable housing, quality transportation and healthcare infrastructure, etc.

Encouraging research and development in the fields of computer science, cybersecurity, artificial intelligence, and other emerging technologies. This can help create well-paying jobs and stimulate innovation.

Strengthening digital infrastructure by investing in better digital infrastructure to improve connectivity, access to high-speed internet, and access to digital tools for professionals.

It is important to create a favorable environment for innovation, entrepreneurship, and job creation to retain skills in our country. This will require a comprehensive approach, involving both the government, businesses, and higher education institutions.

The expectations of the measures announced by the government for the development of the startup movement

The initiatives recently announced by the government to accelerate the digital transformation of the economy, particularly by stimulating key sectors such as finance, health, agriculture, and education to promote innovation and digital literacy, are indeed crucial. The financial sector, for example, has made significant progress with the introduction of new digital financial services and the adoption of its uses and tools. Online payments have exploded with a 95% increase in transactions in 2022, generating over 16 billion Algerian dinars in revenue, a 3200% increase compared to before the Covid pandemic. The use of payment terminals (POS) has doubled to 47,500 installed throughout the country, with transactions exceeding 21 billion Algerian dinars, a 71% increase compared to before the Covid pandemic. Mobile payment, which is currently intra-bank[6] and available to customers of a few banks, officially started in November 2022, with over 7 million transactions and revenue of more than 6.5 billion Algerian dinars in just four months of 2022.

The Baridimob application of Algeria Post has been downloaded more than 1.8 million times, and the number of operations carried out through this application in 2022 was 23.8 million, compared to only 9.4 million in 2021 and just 1 million in 2020. To keep up with the evolution of global financial systems and the appropriate conditions required for digitalization in the country, a reform of the law on currency and credit is currently being studied in the National People's Assembly (APN). This text should take into account the transformations that have occurred in the banking ecosystem, including authorizations for investment banks, digital or neo-banks, payment service providers (PSPs), independent intermediaries, and the opening of exchange bureaus, to name just a few of the most innovative measures to help modernize the country's financial system.

This reform should allow the creation of a new competitive ecosystem for all Algerian companies and start-ups. The announcement in December 2022 by the Prime Minister of the adoption of a Central Bank Digital Currency (CBDC)[7], the Algerian digital dinar, should promote digital finance. The healthcare sector is also benefiting from digitization, with the first implementation of teleconsultation and telemedicine systems to improve access to healthcare for rural and isolated populations. Agriculture has also benefited from digitization, with the use of technologies such as drones and automated irrigation systems, promoting precision agriculture to improve productivity and crop quality.

Moreover, the digitization of education in Algeria has led to the development of new approaches to online learning and has strengthened access to education for rural populations and people with disabilities. The distribution of technological tools such as tablets to schools is commendable. However, to ensure the success of this approach, quality content is essential. Promoting its development should be an absolute priority to nurture, evolve, and generalize this process of digitization of the Algerian education system.

However, there are still many challenges to overcome for wider adoption and much more effective use of existing technologies in these sectors. This requires concerted action by the government and the private sector to increase and capitalize on investments in basic infrastructure, democratize access by promoting competition, develop digital skills, and promote the adoption of digital technologies by all segments of society.

Cooperation in ICT between African countries

Cooperation with African countries in the field of ICT is promising and can be quickly and very beneficial for all involved parties. African governments recognize the importance of cooperation to strengthen ICT capacity on the continent and stimulate economic development.

Many African countries have signed cooperation agreements to share their knowledge and expertise in ICT, as well as to encourage trade and investment with Algeria. There are also many initiatives in favor of ICT cooperation between African countries, such as joint training programs, collaborative research and development projects, and public-private partnerships.

Through skills exchange, our country can share its expertise and experience in higher education, software development, cybersecurity, or network management with other African countries. In turn, they can share their own expertise in ICT and digital technologies with Algeria. This would strengthen the skills of professionals and students in Africa and create links between communities in different countries, as was the case in the past where Algerian universities were the first choice for students from newly independent African countries.

African countries can also share their data in areas such as health, education, agriculture, or energy. This would help to better understand the challenges facing different African countries and find collaborative solutions in perfect South-South synergy. Projects that emerge could be funded by African or international institutions.

There are several initiatives aimed at promoting digital cooperation between African countries and Algeria. Here are some of them:

The United Nations Development Programme (UNDP) works with African governments to strengthen ICT capacity to promote economic and social development.

Alliance for the Internet in Africa: This alliance aims to develop ICT infrastructure on the African continent and promote the use of these technologies for development.

The African Union has developed the Strategy for Information Society in Africa, which aims to strengthen cooperation between African countries in ICT and promote the use of digital technologies.

Digital Development Initiative for Africa: This initiative, launched by the African Union, aims to develop digital skills in Africa and increase the use of ICT for economic and social development.

Partnerships for Digital Development in Africa: Many technology companies and international organizations are working in partnership with African governments to develop ICT infrastructure and digital skills in Africa.

The fiber optic linkage program between Algiers and Abuja aims to strengthen economic and technological ties between Algeria and Nigeria. Fiber optic offers high bandwidth and greater reliability for communication compared to more traditional technologies.

In addition, this project can help strengthen relations between the countries it passes through, by allowing better connectivity and greater collaboration in economic and technological aspects. It can also contribute to local economic development by offering a more robust communication infrastructure and facilitating the establishment of technology-based businesses along its route. This is an important step towards digital cooperation between Algeria and the rest of Africa, which could have a positive impact on all countries in the sub-region and could easily be extended to Pretoria, South Africa, another BRICS country.

However, there are still many challenges to overcome to ensure effective and sustainable cooperation between different African countries.

The Alger-Abuja fiber optic backbone: Cooperation in ICT between African countries looks promising, with many initiatives to strengthen ICT capacity and stimulate economic development on the continent.

The advantages that Algeria has over other countries in the region in this field

Algeria has made significant progress in the field of ICT in recent years, but there are still many challenges to overcome to catch up with other countries in the region. However, Algeria has several advantages over other countries in the region. One of the main advantages is the well-developed ICT infrastructure: Algeria has a well-developed infrastructure, with a wide range of quality telecom services and internet connectivity, making it an attractive country for investment in the ICT sector.

Moreover, Algeria has a large potential market with a population of over 46 million, making it an attractive market for any company. The country has a qualified workforce, with many trained and experienced professionals in the fields of IT, telecommunications, and digital technologies.

The Algerian government has adopted an ambitious development strategy aimed at strengthening the country's ICT capabilities and encouraging innovation and investment in this field. Finally, Algeria is well positioned to develop ICT partnerships with neighboring countries and to strengthen technological cooperation in the region, which can stimulate economic development throughout the region.

Algeria should continue to invest heavily in ICT. Our country has many assets in the field, such as a young and dynamic population, a large potential market, and a growing interest in digital technologies. However, to become a regional leader in this field, Algeria will need to invest heavily in telecommunications infrastructure and online services, encourage innovation and creativity, and promote the use of ICT in all sectors of the economy.

Algeria has many advantages in ICT compared to other countries in the region. We could have a technological ecosystem where innovation centers, start-up incubators, and competitiveness hubs would make our country even more attractive for investment and partnerships in this field.

The establishment of an African fund dedicated to financing startups

The establishment of an African fund dedicated to financing startups is an interesting and ambitious initiative, but its feasibility depends on several key factors, such as the available financial resources, coordination between African countries, and the political will to support entrepreneurship. It could potentially, in the long term, have a positive impact on the economic development of the continent.

Firstly, it is important to note that financing startups is a major challenge in Africa, due to the lack of available funding, excessive regulation, and low investment culture. The establishment of an African fund dedicated to financing startups could indeed help overcome some of these obstacles by providing affordable funding and encouraging investment in African startups.

However, feasibility depends on several key factors:

Initial funding: It is important to have sufficient initial funding to launch and manage this fund. This funding could come from various sources, such as African governments, international institutions, private banks, and institutional investors.

In addition, the establishment of an African fund dedicated to financing startups requires close coordination between different African countries to ensure effective use of available resources and to foster the emergence of a strong and integrated African startup ecosystem.

Strong governance structure: It is also important to have a strong governance structure for this fund, with clear rules and procedures in place for investments and fund management.

The venture capital market must be sufficiently developed in the countries that will be involved so that the fund can make profitable and sustainable investments in startups.

The feasibility of establishing an African fund dedicated to financing startups depends on several of these key factors, and it is important to carefully consider these factors before making a decision on the implementation of this project.

To make it feasible, it is essential to mobilize significant financial resources, coordinate efforts between different African countries, and foster an environment conducive to innovation and investment. The establishment of an African fund dedicated to financing startups is a commendable and ambitious initiative that would certainly contribute to stimulating entrepreneurship in Africa, which should ultimately benefit Algeria.

[1]Authority for Postal and Electronic Communications Regulation

[2]The Ministry of Post and Telecommunications has replaced the MPTTN (Ministry of Post, Telecommunications, and Digital Technologies) with some of its responsibilities being entrusted to two new ministries, the Ministry of Statistics and Digitization and the Ministry of Startups, Knowledge Economy, and Micro-Enterprise.

[3]Worldwide mobile data pricing 2022. https://www.cable.co.uk/mobiles/worldwide-data-pricing/

[4]Okla Speedtest on January 4, 2023. https://www.speedtest.net/global-index

[5]https://giemonetique.dz/qui-sommes-nous/activite-paiement-sur-internet

[6]Intra-banking: transactions between customers of the same bank. Currently BNA and Essalem offer this service. BEA, CPA, and BDL are expected to follow within 3 to 4 months.

[7]“A digital currency for Algeria?". CARE January 2023 https://care.dz/en/espace-presse/une-monnaie-numerique-pour-lalgerie-art617