Results of financing solutions for small businesses 3/3

Results of financing solutions for small businesses within the framework of  Ansej agency

    Through our study and analysis of the subject of microfinance financing in Algeria, a study on the effectiveness of the role of the National Agency for Youth Employment Support, with a field study on a sample of small businesses of microfinance funded under the National Youth Employment Support Agency, and on the basis of which we conclude with a number of:

1- Results

2- Recommendations

3- Solutions

And then answer the problematic question.

1 / The results of the small businesses financing study within the framework of L’Ansej agency :

    The first hypothesis has been proven, which is represented in the presence of many and diverse problems and difficulties encountered by small businesses that prevent their success, and the problem of finance appears as one of the most important obstacles that hinder development small businesses, despite the policies and sources of financing available, the problem of financing small businesses remains among the constraints of financing small businesses Financing needs;

    Where we found that small businesses, even if they need small capital and insignificant financial capacity, have a great need to access sources of finance and to obtain appropriate financing in terms of type, size and time during their life cycle, as are large businesses.

    Commercial banks, especially conservative banks, do not tend to finance small or new businesses because, in their view, they are more risky and lack experience among their owners, and the difficulty of preparing a study of feasibility ... etc., and biased in granting loans to large-businesses compared to small businesses for many reasons Among them, the low cost of the loan process, the availability of information and financial statements on the large businesses, and the availability of sufficient assets to secure loans, and in cases where loans are made to smaller businesses, they often require collateral that is unsuitable for these small businesses despite the existence of many methods of funding adapted to their privacy. These small businesses;

      The financing problem is reflected in the behavior of microfinance businesses in its economic environment, since many of them in their transactions are forced to borrow on the informal market for financing, with the consequent increase in the rate of interest and an increase in financing costs, which increases the chances of microfinance failure and reduces the rate of profitability of the activity compared to the equivalent that these small businesses would have earned if they had the appropriate financial resources;

     As for the second hypothesis, which is to consider that despite the role assigned to the National Agency for the support of youth employment, there is a manifest insufficiency in the effectiveness of the role of the agency in the funding of small businesses .

 The National Agency for Support and Employment of Youth as an application of a local funding policy for small businesses in Algeria We have proven this hypothesis because we have achieved the following results:

    As part of the expansion of the fabric of microcredit small businesses in Algeria, a group of agencies supporting the creation of these small businesses was created. This is the microcredit device and the support device for the creation of activities by the unemployed between (35) and (50) years old, created in December 2003, And the National Agency for Support to youth employment, which began operating in mid-1997, and banks were encouraged to support these schemes by creating funds to guarantee loans, and all of these measures to deal with the side effects of the program economic reform and structural adjustment by helping low-income homeowners to create new job opportunities And developing the queens of the world Free boredom for young people willing to invest;

     The agency of the National Agency for Support to Youth Employment draws attention because of its experience and the novelty of other agencies on the one hand and its availability for most of these institutions , and for having targeted the most important category in Algeria (the category of young people) on the other hand, while it is trying to set up a special device responsible for mobilizing resources and efforts for Development and microenterprise goals

     To support, finance, set up small businesses and expand the list, in particular for boost people's incomes and provide employment opportunities that help solve the unemployment problem, and the National Agency for Youth Employment Support achieves its goals by providing an integrated package of services, facilities and benefits through 53 branches in 48 states in addition to working to consolidate Spread the values ​​of self-employment for young people;

     With regard to the last hypothesis, which is that the problem of funding in small businesseshas also contributed to it by those who have funding needs on the one hand, and funding small businesses on the other hand, the variation in funding ratios at the geographic level and the large difference between the number of funding requests and the number of businesses funded at the branch level, due Mainly due to the funding decisions of banks and the degree of their representation at local level,

     And on the other hand to the interests of the agency. Its failure to carry out feasibility studies for the proposed projects has led to the acceptance of almost all the projects which meet the administrative conditions and neglect the economic side of them, which has doubled the number of requests for funding submitted, in addition to the responsibility of the project owners themselves (those seeking funding) not to suggest new project ideas in most cases. Where it depends on the tradition of the projects implemented.

    Small businesses in Algeria suffer from the financing problem, like other businesses in the private sector, from the difficulties created by the financial system in Algeria, such as the bureaucratic management of public banks, the centralization of lending decisions, the absence of specialized funding organizations ... etc.

2 / The recommendations of the small businesses financing study in the context of L’Ansej:

In order to give more benefits to our research and based on the above results, some of the recommendations that we believe should be made in the future can be summarized on two levels:

2-1 / At the general level affecting funding:

     The growth and development of small businesses requires the establishment of a healthy and healthy climate, from the pre-transition phase to the exploitation and expansion phase, by creating an economic environment which encourages young people For me, initiating the establishment of such small businesses and this economic environment must meet a set of conditions, the most important of which is the elimination of corruption which leads to renouncing the principle of equal opportunities and thus brings about young people to fear and to refrain from investing in small businesses, and to fight against the methods of mediation and favoritism which are now a condition of access of young people On loans.

     Conduct a full survey of mini-institutions in terms of their quality and the products that produce them and the actual production capacity, the quality of the raw materials used, etc. Its concentration in northern cities as the study shows.

    Eliminate legislative and administrative obstacles and find an appropriate legal framework for their work, whether related to the launch of the activity of these small businesses in terms of multiplicity of approvals and registration, obtaining licenses or after start-up activity, particularly in the areas of marketing.

    The need to set up a specialized financial businesses or a specialized bank to finance small businesses similar to certain countries, and to work to extend the establishment of guarantee organizations for loans granted to small businesses, in particular operating loans , and to support the marketing capacity and development of these small businesses, by creating a specialized information center, responsible for collecting Updating databases on small businesses which contribute to the commercial process and stimulate exports;

    Provide information on how to take advantage of the exceptions and exemptions contained in international and regional agreements; and fight against the dumping of the local market with imported products which compete with the products of small businesses while reducing costs, customs duties on imports of these small businesses from raw materials and simplifying export procedures and import and attention to quality.

    The determination of a certain number of components must be found in young people who wish to create small businesses, which will ensure their survival and their development such as personal traits and characteristics such as seriousness, responsibility, creativity, creativity, communication, leadership personality, management skills and technical expertise in the field of his choice, These elements can be provided by working on two axes, one of which in the long term , by developing an educational system guaranteeing the technical and administrative qualification of young people during the educational stages, and the other in the short term through targeted media programs, by preparing training and administrative rehabilitation programs in order to provide them with various data. , providing referral channels and providing administrative and accounting services for young people.

2-2 / At the level of the National Youth Employment Support Agency (ANSEJ):

2-2-1 / In the area of ​​technical and economic study of the project, to finance small businesses within the framework of L’Ansej:

    Precision and realism must be taken into account when preparing feasibility studies for projects proposed by young people invested, at agency level, and this can be achieved by providing experts specializing in feasibility studies in branches of the agency, where they study investment opportunities that can be exploited locally and guide young people towards more effective projects;

    Take advantage of universities and university research laboratories to undertake feasibility studies on the investment opportunities to be exploited; the need for coordination between the interests of the agency and the bank in studying projects to avoid duplication and save time, and to save the agency from qualifying projects that the bank does not finance for economic or organizational reasons.

    In the area of ​​financing, simplify the procedures for obtaining the loan by reviewing the current procedures for obtaining the loan and eliminating unnecessary ones;

    Examine the required documents and exclude unnecessary ones;

 Create a liaison office at the agency's headquarters to deal with problems related to loan granting procedures and liaise with the authorities concerned to facilitate them;

     Activate a mechanism to accompany young entrepreneurs to banks in order to facilitate the reception process, bring together points of view and reduce the obstacles and negative behaviors they may face before submitting their files to the bank;

Review the current conditions for granting loans in light of the problems encountered by the owners of small businesses and work to modify these conditions to facilitate the beneficiaries.,

    This must be taken into account when determining the period for deferring the type of activity and the timetable for obtaining income; not ask for additional guarantees outside the agreement which brings together the agency, the banks and the loan guarantee fund;

   Allow room to negotiate loan terms and avoid adopting some form of bank approval.

Determine the loan amount in proportion to the size of the project and the type of activity and work to reschedule the payments of the defaulting beneficiaries after examining their situation and their financial capacities;

     Reduce the young person's personal contribution to the project or rely on the leasing formula to finance projects that generally do not require advances;

Diversification of approved funding methods, in particular Islamic funding formulas, since the organization aims to reach large groups of society, it is therefore necessary to take into account that the funding method corresponds to the dominant values ​​in the local community;

    Study the possibility of unilaterally funding the agency for mini-businesses and facilitate the process for micro-businesses to obtain funding for the operating cycle, whether by the agency or the bank.