Is Algeria ready for entrepreneurship?
Two weeks ago I had the opportunity to go to Algeria to assess the state of entrepreneurship there as well as make recommendations as to what to do to improve the country’s startup and innovation ecosystem. I was offered this chance through my role as Embedded Entrepreneur for Project Olympus, one of our Carnegie Mellon University initiatives for encouraging and supporting entrepreneurship. My visit was sponsored by the Commercial Law Development Program (CLDP), a division of the US Department of Commerce that helps achieve foreign policy goals in developing and post-conflict countries through commercial legal reforms.
Most Americans don’t really know where Algeria is. I have corrected my own geographical ignorance now. Algeria is the largest country on the African continent and in the Arab world. Its southern part includes a significant part of the Sahara desert. Algeria is part of the Maghreb, the countries of Northern Africa. And if you stand in Algiers and look north, you can just about see Majorca, the largest of the Balearic Islands (ok, just kidding, but it is just due south of Spain on the Mediterranean). It’s a two-hour flight to Algiers from Paris; a 45-minute flight from Marseille.
Of course, we in the US are not alone in being geographically challenged. Coming from Pittsburgh I should have known to bring a map of the US. However, I got very good at drawing them on the fly, noting California, Oregon and Washington on the West Coast; Florida, DC, NYC, and Boston on the East Coast; and including Philadelphia, Pittsburgh, Detroit and Chicago. Some of them asked and I duly noted where Silicon Valley started and stopped.
Algiers is a big bustling city that looks like Paris with a Moorish touch. The old part of the city, the Casbah, was where the Algerians finally defeated the French after 132 long years of occupation (in 1962). Sort of like our own war of independence, the Algerians won their freedom through knowing the streets and alleyways of the Casbah, attacking by surprise, and being impossible to find or trap. The French couldn’t defeat the wily Algerian guerrillas on their own turf!
French is still the language of the country. It was fun and exhausting but I had worked hard to get my French back up to speed. I had lived in Paris for three years, about a hundred years ago I joked to everyone. I was a bit out of practice, and my vocabulary didn’t include such modern words as “computer” or “Internet” – imagine, how embarrassing to be that old! But I ramped up and graciously accepted their surprise and delight as they realized my French was more than passable. My wonderful translator went home after a day and a half: “Vous n’avez pas de besoin,” he reprimanded me! And the Arabic that they spoke was uniquely interlaced with Frenchisms; I called it “Frarabic.”
It’s kind of funny, but I could tell that Algeria is a startup country. Only 50 years old since independence, they are trying to figure out how to grow and prosper. The country has the oil and gas richness that means that there is little poverty and a thriving middle class. Since independence, Algeria has been largely politically socialist. This shows. They don’t have the entrepreneurial hunger, the drive to initiate the hunt (for customers), the eat what you kill (succeed over the competition) mentality.
Why Algeria? The country is highly strategic to the US. The first country to recognize the US, Algeria has long battled terrorism and is considered a friend and ally of America. Algeria did not participate in the recent uprisings that constitute the Arab spring. In fact, Algeria had its own version of struggles over a 10-year period from 1992 to 2002. Those that I met there were adamant that Algeria would never be led by an Islamic extreme government. Thus, Algeria has been and remains a very important focal point for America, hence the CLDP’s interest in encouraging innovation and entrepreneurship.
It was very interesting to be in an Arab country on the day when Egypt declared that the winner of the Presidential election is the Muslim Brotherhood. I was extremely interested in finding out more about the role of women in Algeria. It had been with some trepidation that I voyaged there, not being sure of how open the Algerians would be to a western woman dressed and acting in a very western way! My fears were put at rest by the excitement and delight I witnessed when people realized that I was from the US. They explained to me how, in Algeria, women comprise one third of government officials (this is mandated by the President), and women are generally very well respected. I observed that the majority of women on the streets of Algiers were in traditional dress (without the full-face burqa) but there were many who wore western dress with heads uncovered. BTW, I have NEVER seen so much blatant wearing of precious jewelry, particularly diamonds, as on the plane from Paris to Algiers on the Air Algeria plane. Talk about bling!
Entrepreneurship in Algeria. In a scene that was déjà vu for me, having been to Portugal four times last year on a similar mission for CMU (see my previous blog post about Portugal and entrepreneurship plus you can search for other New Venturist posts featuring Portuguese entrepreneurs), I noted that Algeria suffers from a similar fate: they have 80% of the entrepreneurial puzzle pieces, but lack a critical 20%.
I met with several pre-startup entrepreneurs, and a few of their mentors and coaches at the impressive ANPT Sidi Abdellah incubator, located just outside of Algiers (ANPT stands for an agency in charge of improving information technology entrepreneurship). I saw energy, passion, commitment, and intelligence among the young entrepreneurs, and witnessed dedication among the coaches. What was missing, and this is the same as what I found in Portugal, was the savoir faire of HOW to do entrepreneurship. Let me cite some examples:
- Algeria has money, the desire, and lots of highly trained young potential entrepreneurs. What they lack is an entrepreneurial culture. While they have infrastructure to support entrepreneurship through the physical incubators, they lack the more important infrastructure of mentorship, capital and customers. They do not know how to be market driven.
- The incubator space at Sidi Abdellah was impressive, probably more than $100M of infrastructure impressive. But I found it sterile and lacking in warmth and humanity. Where were the couches and chairs housing entrepreneurs deep in discussion? Where were the gathering places where coffee cups and pizza boxes abound? Instead I found lovely marble common areas, more suited to a fancy downtown law firm than a startup incubator.
- Sidi Abdellah represents the entrepreneurial hope of Algeria. Yet, it seemed to be in the middle of nowhere! The unpaved road to it is shared with sheep and goats! Of course, this is what you get when a country has money: a new city that can be built from the ground up. The site has plans for hotels, research buildings, a university (yes a new one). But for now, there are only two functional buildings and a whole lot of empty space!
- The entrepreneurs don’t understand customer development – the process of finding customers and understanding their needs in order to create a solution that people or businesses will buy. The government is often considered the first customer. That’s fine for Algeria, assuming that’s the beginning and end of a business but it’s not scalable.
- Credit cards are not common in Algeria. So, there is little ecommerce, few online transactions. Wow. While this presents opportunities for future online payment schemes and transaction sites, it also presents a huge obstacle.
- Market and competitive research – understanding your customer, their needs, and your differentiators – is not strong. This needs serious development to instill an entrepreneurial mentality among the up and coming newventurists of Algeria!
Conclusions. In spite of these shortcomings, I found that the timing is perfect to encourage entrepreneurship in Algeria. The need to stimulate innovation and entrepreneurship has national push from the highest levels of the government. They have the money and the commitment. They have an educated young populace who, like youth all over the world, have heard about entrepreneurs making it big, making a big difference. Why not them? Why not Algeria?