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Eureka: A fireside chat on Algerian current affairs Eureka: A fireside chat on Algerian current affairs
by Akli Hadid
2018-04-14 09:53:25
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Go to any conference on Algeria and you will probably hear something about Presidential visits, Ministerial visits, and a reminder of those who fought the war of Independence with France. You will rarely hear about business creation or innovation, because the government does a lot of the investment. Nor will local talent be celebrated, not to mention business to business actions or business to politics actions.

This fireside chat won't be about Presidents, ministers or martyrs of the revolution. In this fireside chat I want to discuss things that have more to do with contemporary Algerian affairs, including the current economy, business and investment, tourism, exports, education and training, job creation, banking and finance, technologies and the internet, research and development and the media and arts.

The current economy

Up until recently the economy was about exporting oil and gas, and importing the rest. Import food, clothing, cars, household goods, technology, studies, everything else. Let's just say I'll put observations here rather than a careful and detailed study of the economy.

alger01_400_02A knowledge economy is one where you carefully study, communicate, produce and reach the consumer. This works for food processing, clothing lines, car manufacturing, household good manufacturing and all the rest. The good news is that Algeria has been setting up several factories and companies that produce goods and services, including household goods and technological services. The bad news is it's hard for such companies to keep up with the flow of knowledge and communication.

Let's say you want to set up a clothing line, brand of shampoo or a chocolate bar. You can't just get the raw materials and put the product together. You need to document yourself endlessly on fashion, chemicals, surveys, color psychology, innovation and new technologies, competitors etc. The need for knowledge is endless.

Now there are two barriers for the knowledge economy in Algeria. First, the language barrier. Algerians read French and Arabic, but a lot of the literature relevant to the knowledge economy is in English, Spanish, German, Russian, Turkish, Chinese, Japanese, Korean, you name it. Algeria lacks the kind of linguistic community that can help them get the knowledge information first hand. Second is the teaching, training and communicationn barrier. Just reaching the knowledge is not enough, you also need to train staff on how to make the product, analyze and synthesize the information you're getting from the knowledge economy, discuss it and adapt it to the local market.

Business and investment

I'd often ask my Algerian students: if you won the lottery, what would you do? A lot of them, especially men, said they would set up a business. In Algeria? No, they would say. Why not? Because Algerians lack professionalism, they would tell me. I did notice that the main barrier to business and investment is lack of professionalism of all things.

You need three layers to be able to attract investment and create a favorable business environment. First, you need a professional legal and support system. That is rules for doing business need to be clear and people doing business need to know exactly what they are doing. You have to give them the highest level of certainty. Second, you need professional infrastructure to help them carry out their business. You need professional banks, real estate markets, transportation and logistics markets, equipment markets, energy markets and so on. Finally, you need professional staff, the kind who is dedicated to their mission and who gets their tasks done efficiently.

Legal, logistical and human resource factors are becoming a problem everywhere, not just in Algeria. An increasing number of institutions having been changing laws without consultation, confusing both public servants and businesses themselves. Logistics markets have become speculative worldwide and it's hard to find the kind of logistics that work. Education systems worldwide have created a rigid class of human resources who, given the cost of life, are constantly thinking about the next big thing in their career and are not focusing on their present career.

Tourism

So simplify this section, I'll enumerate ten things Algria needs to do to attact more tourists. Long stories short, the country has interesting sites, has neglected tourism for decades, and now wants tourists to compensate for its lack of currency inflox.

1.      Take a map. Limit clearly touristic zones from non-touristic zones.

2.      Build hotels in the touristic zones.

3.      Build transportation routes from and to touristic zones.

4.      Establish currency exchange centers in the touristic zones.

5.      Set up restaurants, pubs and shops in the touristic zones.

6.      Organize different events and festivals in the touristic zones.

7.      Establish a calendar clearly explaining what period of the year what part of the country can be visited.

8.      Traiin staff to deal with tourists, including linguistic and social training.

9.      Coordinate emergency measures for tourists. Set up a tourism police and contacts with hospitals for emergencies.

10.  Advertise the destination and sign deals with tour operators.

I have the feeling things have not been done in clear order when it comes to touristic policy. The government is all “we need to bring tourists” but this is technically how you do it.

Exports

When it comes to exports, non-fossil fuel exports face tough competition from around the world and I'm afraid lack of experience might not play in favor of the Algerians. To be competitive in exports you will need the following:

1.      Currency devaluation to have a favorable balance when it comes to exports.

2.      A disciplined, hard-working industrial force that will accept low pay for long working hours.

3.      A surplus of any good that is to be exported. Note: I've noticed that exports have become a buzzword in Algeria and that many companies talk about exporting the minute they start production. Technically, you export the surplus.

4.      Quality products that match the demands of foreign consumers.

5.      Products that match the needs of foreign consumers.

6.      Loyal export partners who benefit from importing your products and reselling them in their local market.

7.      A clear legal framework and institutions that can act if there are export disputes.

8.      Logistical and transportation means to export products.

9.      Constantly meet the evolving demands of export partners.

10.  Trade surpluses that are too big can have negative impacts in the long run.

Right now what I've noticed is the minute someone sets up a business in Algeria, his or her mind is set on exports. Again you produce for the local market, then whatever surplus you have, you can export.

Education and training

Education and training is mainly marred by high turnover and lack of professional development opportunities for teachers and trainers. The government needs to set up a pool of teachers and trainers, encourage them to communicate and exchange ideas on teaching and encourage professional development meetings at schools which are virtually non-existant.

The main problem in Algeria and around the world is that you put teachers in the same room and ask them to exchange ideas, and within minutes they will be discussing lack of pay and dismal work conditions. So a broken windows theory applies here, when there's a broken window, fix it, keep the schools clean, neat and in order. I understand that some schools don't even have washrooms.

Extra-curricular education is virtually non-existant in Algeria as well, be it in institutes or on the internet. A lot of the education also focuses on testing and passing the university entrance examination, and not enough focus is put on reading books or learning skills. This is slowly picking up, but you should still note that extra-curricular activities are virtually non-esistant, be it sports clubs, music clubs, debate clubs or chess clubs. This can impact Algeria in the long run, with lack or recognizable figures in the world arena, and lack of creative thinkers at the workplace.

Job creation

Algerians have few opportunities to amass capital for investment, which leads to low investment rates, which leads to low job creation rates. Recently Algeria banned all those engaging in illegal trade including those selling items such as cigarettes, clothing or handbags in the streets. While esthetically it's a good thing as you don't have peddlers in the streets, the problem is that for many, that was the only way they could amass capital for future investment. You don't peddle cigarettes in the streets for the rest of your life. You do that until you have enough capital to start a more meaningful business.

The first barrier to job creation is lack of investment capital and opportunities, because it's not easy to amass capital for investment, be it by working, getting help from families, getting loans from banks and of course the absence of alternative financial sources. Another barrier to job creation is lack of business common sense. As they say, you start a business with an end in mind, that is you set up clear objectives as to where you want to see your business evolvinng. In Algeria a lot of times people set up businesses so people call them businessmen, not as much as because they have interesting products to sell. Being an entrepreneur is one thing, sales is a different thing.

The government has set up loan programs for young entrepreneurs but that hasn't been a great success specifically because of lack of business common sense. Peddling cigarettes in the street teaches you a lot more business common sense than getting government loans when people have zero experience in business. My advice to the government and its ANSEJ progrma (loan program for young entrepreneurs) is that one of the conditions for the loan be that entrepreneurs have at least one year of some kind of work experience. 

Banking and finance

In some cases, supply can meet demand. The supply of a good banking system can lead to more transactions and a growing economy. The banking system thus far is a bit archaic, you have all those queus and have to stand in line to transfer money or to withdraw money, have to provide all kinds of information to justify transactions. And the clerks are not always polite.

So you want to allow some kind of deregulation in the banking system. But then again the knowledge economy comes into play. Banking is a complex business that can easily collapse, and perhaps thus far the regulations aren't such a bad thing, although they are hurting the flow of money and investment.

Technologies and the internet

Two the the main barriers to technology transfer are the language barrier and the lack of creative content. A lot of the technology is available, not just in English, and waiting to be exploited. The problem is foreign policy and in Algeria is mainly Francee-centric and a lot of the immigrants or students who go abroad end up in France or Canada. This limits the understanding and availability or technology to France and Canada, when Algeria could benefit from technologies in other countries.

Creative content on technology exists, but it is marred with misunderstandings because of practical use of the technology. There's a difference between seeing and testing and using. I've noticed that some Algerians can be eager to acquire technology the minute they see it without trying to test it first and see if it matches market requirements.

Research and development

Because a lot of businesses are family-owned businesses, a lot of the research and development is donee secretively and findings are rarely shared. That is businesses see no point in sharing research and development findings with other businesses because that will not have an impact on shareholders.

Other than that this leaves little incentive for researchers to further research and development because they know their findings will remain confined in a box and won't go public. Researchers have a bit of an ego, and like it when other people find out about their findings in research and development.

Media and the arts

The best way to brand a country is through its media and its artistic scene. The global artistic scene right now has been focusing on music covers and adaptations of novels and comic books to movies, so the world is not experiencing its most creative phase. Algeria is no exception, as the music scene is no longer seeing creative talent and is seeing a lot of cover artists who are remastering past hits. The movie scene is almost non-existant and there is little incentive to produce movies, as there are few cinemas in the country. The art scene also lacks incentives for artists, and there are few galleries around the country.

As for the media cutting corners tends to be the norm and a lot of the media is speculative at best. This is no different from the rest of the world, although a lot of times the population is kept in the dark. Business news lacks, legal news lacks, social news lacks and the news is all about politicians and their relations with other politicians.


    
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