Improving SMEs financing in Algeria (Consultant)

Result of ServiceThe consultant shall, within the relevant timeframe, provide to the ECA SRO-NA a report with the benchmark Work LocationAlgeria Expected duration1 Month Duties and ResponsibilitiesECA's mission is to deliver ideas and actions for an empowered and transformed Africa; informed by the 2030 Agenda and Agenda 2063. The mission will be guided by ECA's five new strategic directions which are: Advancing ECA's position as a premier knowledge institution that builds on its unique position and privilege to bring global solutions to the continent's problems and take local solution to the continent; Developing macroeconomic and structural policy options to accelerate economic diversification and job creation; Designing and implementing innovative financing models for infrastructure, and for human, physical and social assets for a transforming Africa; Contributing solutions to regional and trans-boundary challenges, with a focus on peace security and social inclusion as an important development nexus; Advocating Africa's position at the global level and developing regional responses as a contribution to global governance issues. The Sub-regional Office for North Africa of the ECA (ECA SRO-NA) is located in Rabat (Morocco), and serves seven member states: Algeria, Egypt, Libya, Mauritania, Morocco, Sudan, and Tunisia. The main objective is to contribute to the environment for accelerated and inclusive growth and sustainable development in North Africa through strengthened economic diversification, fiscal management, regional integration and a better recognition of migrant workers’ economic contributions. Its core functions are: Strengthening the capacity of member states in the sub-region to design and implement national policies and strategies for sustainable employment creation; Contributing to the implementation of sub-regional development priorities in line with the 2030 Agenda and Agenda 2063 with due consideration for youth and gender perspectives; Improving macroeconomic and fiscal policies, and to ensure sustainable growth; Providing relevant technical assistance to member states and to regional economic communities and intergovernmental organizations in building their capacities to sustain economic, social and political transformation, with a particular focus on employment, skills and balanced development, with the aim of ensuring inclusive growth, taking into consideration access to equal opportunities for women and young people. Background and rationale for support The ECA SRO-NA is implementing a study on climate change and employment in North Africa. Algeria aims to reach a GDP of $400 billion by 2027, a goal that requires a significant increase in investments, including scaling up existing SMEs and creating many new ones. Since the 1990s, the country has implemented reforms to enhance its investment climate, such as banking liberalization, fiscal adjustments, employment support programs, and the creation of credit guarantee mechanisms. Recent legislative changes—particularly the 2022 Investment Law and the 2023 Economic Land Law—seek to ease access to land and reduce bureaucratic barriers. In the SME sector, key initiatives include updating the 2017 SME Development Law, establishing financial tools like the SME Credit Guarantee Fund (FGAR-PME), and creating the SME and Innovation Development Agency (ADPME-PI). Tax reforms have aimed to boost investment and efficiency through tax exemptions and digitalization. The draft 2025 Finance Law continues this trajectory with measures to support economic activity. However, Algeria’s business environment remains below its potential. Structural constraints—legal, fiscal, financial, and infrastructural—persist, especially limited access to finance. Algerian SMEs face acute financing challenges. This study falls within the United Nations Sustainable Development Cooperation Framework established between the UNCT and Algeria. The study aims to analyze the obstacles to SME financing in Algeria, assess the effectiveness of current financial policies, and review past and existing initiatives. It will also evaluate innovative instruments that can meet the needs of SME markets in Algeria, given the current state of the financial system. Finally, it will propose targeted reforms to improve access to credit. The expected results of the study are to propose: • A clear diagnosis of SMEs financing challenges in Algeria • Data-driven policy recommendations to improve credit accessibility • A roadmap for legal, regulatory, and financial reforms Scope of the study Methodology and steps of the study 1. Research and data collection 1.1. Literature and policy review o Analyze existing studies, reports, and policy documents on SME financing in Algeria. o Review international best practices in SME finance reform. 1.2. Review of existing projects and initiatives o Identify and assess ongoing and past programs aimed at improving SME financing in Algeria. o Conduct interviews with project stakeholders and implementing agencies to determine lessons learned, successes, and limitations. o Develop a set of recommendations to facilitate SME access to financial services. 2. Data collection from financial institutions o Design and conduct structured interviews with commercial banks, microfinance institutions, and alternative lenders to assess SME lending practices (lending criteria, risk perception, interest rates, collateral requirements, and constraints to SME lending). o Collect data on the financial infrastructure, including credit bureaus, credit scoring systems, and risk-sharing mechanisms. 3. Surveys and case studies with SMEs o Design and conduct interviews with SMEs to understand:  Key obstacles to accessing credit  Bureaucratic and regulatory challenges  Use of alternative finance such as informal lending, microfinance, leasing, and venture capital  Financial literacy and business planning capacity o Conduct case studies of SMEs that succeeded or failed to obtain financing, to identify structural differences. 4. Diagnostics and gap analysis 4.1. Identify key constraints to SME financing o Synthesize research findings to identify:  Demand-side constraints, such as lack of creditworthiness, weak financial management, and informal business structures  Supply-side constraints, such as high collateral requirements, bank risk aversion, and underdeveloped financial instruments  Regulatory and institutional barriers such as weak creditor protection, ineffective credit assessments, and lack of reliable SME financial data 4.2. Assessment of current policies and financial sector gaps (where information is available) o Evaluate the effectiveness of current SME finance programs, credit guarantee systems, and government interventions o Identify regulatory bottlenecks and weaknesses in financial infrastructure affecting SME credit access 4.3. Comparative analysis with best practices in peer countries o Compare Algeria’s SME finance policies with those of countries that have successfully reformed SME credit access o Draw lessons from successful reforms 5. Development of reform proposals 5.1. Policy and regulatory reforms o Recommend legal and regulatory changes to improve SME credit access, including but not limited to:  Strengthening credit scoring systems and improving SME financial transparency  Reforming collateral requirements and risk-sharing mechanisms  Expanding credit guarantee schemes and SME-friendly banking regulations 5.2. Sectoral and institutional financial reforms o Propose measures to increase competition in the banking sector and incentivize SME lending o Develop a framework for alternative SME finance solutions, such as:  Venture capital, leasing, factoring, crowdfunding  Strengthening microfinance institutions and expanding non-bank financing o Create an SME development fund to provide preferential financing to high-growth SMEs 6. Capacity building and support mechanisms for SMEs o Identify capacity-building needs and support mechanisms for both SMEs and financial institutions 7. Reporting, advocacy, and implementation strategy o Draft a comprehensive report presenting research findings, reform proposals, and policy action plans o Develop summaries and briefing notes for policymakers, financial institutions, and development partners 8. Stakeholder engagement and policy validation o Organize a workshop gathering all stakeholders (SME associations, banks, and policymakers) to present and discuss the report’s findings and advocate for policy change. Scope and tasks of work for the international expert Under the overall guidance of the Director of ECA SRO-NA Office, and the direct supervision of the Economic Affairs Officer, the consultant will undertake the following tasks: • Conduct a benchmarking of international best practices related to points 3, 4, 5, and 6 outlined in the methodology. The benchmark should not be an academic literature review but rather an operational benchmark that can guide and support the work of the national experts that will conduct the study. It should be based on both the literature review and projects/methodologies on the improvement of SMEs financing in developing countries. Anticipated Deliverables and Implementation Schedule The following deliverables are expected from the consultant: • A report presenting the benchmark (with references) The plan and deadlines for the deliverables will be discussed and decided in consultation between the consultant and ECA SRO-NA. Qualifications/special skillsAdvanced university degree (master’s at least) in economics or related fields is required. A first-level university degree in combination with two years of qualifying experience may be accepted in lieu of the advanced university degree. A minimum of 5 years of experience in conducting studies/projects on SMEs financing is required Experience in developing countries is desirable Experience in policy recommendations is an advantage LanguagesEnglish and French are the working languages of the UN Secretariat. For this consultancy, Fluency in one of the UN Secretariat working languages is required. Additional InformationNot available. No FeeTHE UNITED NATIONS DOES NOT CHARGE A FEE AT ANY STAGE OF THE RECRUITMENT PROCESS (APPLICATION, INTERVIEW MEETING, PROCESSING, OR TRAINING). THE UNITED NATIONS DOES NOT CONCERN ITSELF WITH INFORMATION ON APPLICANTS’ BANK ACCOUNTS.