Small and medium-sized enterprises (SMEs) predominate among Algerian firms, forming the backbone of the private sector. At end-2016 Algeria’s 1m SMEs employed more than 2.5m people and engaged in some AD75bn ($622.1m) in bilateral trade. According to the Ministry of Industry, Algeria created an average of 60,000 SMEs per year in the 2012-15 period, and there is evidence that the pace of business creation is accelerating. There was a net increase of 88,100 SMEs in 2016 alone – up 9.4% on the 2015 figure – and a 7.2% rise in employment among SMEs. The government’s goal is to establish another 1m SMEs over the 2015-19 period.

Of the 1m SMEs in existence at the end of 2016, 56.3% were incorporated, while only a small minority of these – just 390 companies – were state-run. The remaining 43.7% were sole traders.

At 97.1%, the vast majority of Algeria’s SMEs are micro-enterprises, with less than 10 employees. There are only 3170 registered firms of medium size – those having between 50 and 249 employees – accounting for 0.31% of all SMEs. This “missing middle” phenomenon is shared with many other emerging markets, as is the issue of having a large informal economy.