Algeria’s Banking Regulations Pose Challenges for Foreign Businesses

The Dominance of State-Owned Banks

Algeria’s banking sector remains heavily dominated by six state-owned banks, which control a staggering 95 percent of the commercial market. This oligopoly has made it challenging for foreign businesses to establish themselves in the country.

Key Players

• Citibank
• HSBC
• BNP Paribas
• Societe Generale

Banking Reform Halted by Government Caution

The collapse of Khalifa Bank in 2003 had a profound impact on government confidence in the private banking sector, leading to slow progress in banking reform. The privatization of state-owned bank Crédit Populaire d’Algérie (CPA) was put on hold indefinitely following the global financial crisis.

Challenges for Foreign Businesses

Despite efforts by the central bank to modernize the banking system, challenges persist for foreign businesses looking to invest in Algeria:

Outward Transfers

• Heavily restricted
• Complex domestic transfer system makes it difficult for companies to conduct transactions

Payment Methods

• While the central bank has introduced new systems allowing payments by check and credit card, adoption remains limited.

Cash-Based Society

• ATMs are available at select locations, including high-end hotels, but Algeria remains largely a cash-based society.

Additional Barriers to Investment

In 2010, the government retroactively banned commercial loans from shareholders abroad made after July 2009, further limiting foreign investment opportunities. The U.S. Commercial Service has advised businesses to exercise caution when navigating Algeria’s banking regulations and laws.

Resources for Businesses

• The U.S. Commercial Service provides expert guidance on doing business in Algeria and helps companies overcome the challenges posed by the country’s complex financial environment.
• Available with a network of offices across the United States and around the world.