Algeria: Bogged down by petrobucks
Growing oil and gas revenue has given less impetus to the creation of a more advanced private sector.
What we lack most, say Algerians, is technological capacity. This was hardly helped, as far as the banks are concerned, with the calling off of the privatization of the third-biggest bank, Crédit Populaire d’Algérie, at the end of 2007.
Because of the scandal surrounding the 2003 collapse of Khalifa Bank, there are no longer any indigenous privately owned banks in Algeria. State banks control 90% of banking assets. But they hardly ever lend to the foreign banks in Algeria. State corporates are also discouraged from using the foreign banks.
Finance minister Karim Djoudi tells Euromoney that Algerian state banks are extremely liquid: the average loan-to-deposit ratio is about 60%. The government has progressively increased their capital in recent years. Djoudi says their return on equity last year was 25%, up from 3% in 2003. Banque Extérieure d’Algérie has benefited especially from the rise in the international oil price.
In a world credit crisis, foreign investors may find it convenient that public-private partnerships are encouraged to find financing in Algeria with the state banks.