small businesses

Support for small businesses, between opinions and facts in Algeria

1 / Study and analysis of the sample:

Through this research, we seek to study the effectiveness of microfinance support, and to distinguish between opinions and realities, and between divergent views, highlighting the problem with which research means, then the possibility of coming up with certain proposals which are useful for increasing the efficiency of microfinance financing.
This study mainly attempts to assess the role of the National Agency to support the employment of young people in the financing and development of small businesses, and represents an attempt to identify the most important problems of financing small businesses. in Algeria, and to propose results and some suggestions to solve these problems. We ask the main question of this document as follows: How effective is the role of the National Agency in supporting the employment of young people in the face of the funding difficulties encountered by small businesses?

To solve the problem, we made the following assumptions:

-1 Notwithstanding the policies and sources of financing available, the problem of financing small businesses remains a constraint on financing needs;
-2 Despite the role assigned to the National Agency for Youth Employment Support, there is a marked insufficiency in the effectiveness of the agency's role in the financing of small businesses;
-3 Proprietary financiers on the one hand and financial institutions on the other have also contributed to this gap.

Definition of the study framework:

We have decided to abandon the study on the beneficiaries of microfinance institutions funded by the agency, by selecting a random and deliberate sample of 162 people, among the small businesses participating or present at the fourth national exhibition of small businesses. .

  Different definitions of small businesses:

Not agreeing on a unified definition of small businesses may not be a problem, but rather generally reflects the different environments, economic conditions and needs associated with the motivation behind their creation, and also explains the section on the dynamics and mobility of this type of institution.
Studies on small businesses have shown that there are over fifty definitions, and many countries do not have a unified official definition for this type of institution, while other countries have many different definitions.
     Given the different sizes of the institutions, it was not unanimously agreed to define a unified term which corresponds to the characteristic of the size or the size of the institution, apart from the fact that several terms are used in many foreign and arabic writings, due to their presence in the legislation "micro-entreprise" but in Algeria it is called an Applicable expression, which is the term that we will use in this study and considering this term.
      The term microenterprises is a broad term that includes activities ranging from a self-employed worker to a small organization employing a certain number of workers each. This definition is not limited to private sector institutions, their owners, business owners and employees, but it sometimes includes cooperatives and family or family production groups.
     And defining the concept of mini-companies requires removing some overlap between this concept and the concept of mini-projects. The word "project" means "the question is ready to study and decide that the company is still at the study and planning stage and will be implemented if its economic feasibility is proven." As for knowing whether the organization is already working, producing and buying its products, it is in this case that the term mini enterprise can be used, which is meant here in this study.
     The small businesses differ from each other, because some of them are solidarity enterprises, workshops or family or craft businesses, and these institutions are confused in favor of their future development plans, each sector of which has its characteristics, its problems and its needs, and the following table shows the differences between these terms.

1- Reasons and objectives for the creation of small businesses:

Interest in small businesses in particular and small and medium-sized enterprises in general has increased, which means that there are many problems with which large institutions cannot cope or find solutions, in addition to the conviction governments and individuals right now on the importance of establishing this type of institution and the roles that can be played. In it in various areas of economic and social development.

2.1 Reasons for creating small businesses:

- There are many motivations for interest in microfinance institutions in developed and developing countries, and these motivations stem mainly from the roles that these institutions play in many areas of development related to a number of aspects such as production over 8 generations, income and employment opportunities;
- increased capital accumulation and mobilization of national savings;
- Create and refine the technical and managerial skills necessary to advance industrialization, achieve a better regional balance for development;
- Contribute to sub-industries and feed large companies;
 provide a significant dependence on innovation, creativity and technological discrimination.

This is due to some economists the reasons for the increase in the number of small businesses in the world for the following reasons:

- The increase in the volume of services due to the information and communication revolution, which has favored the development of service-oriented small businesses;
- Increased innovation in modern services in national and international markets;
- Increased population growth, which has led to the inability of the state to meet all the demands of the labor market, especially after an increase in the tendency to a market economy;
- an increase in the activity of private companies after the tendency in many countries to privatize public institutions.
- Positive attitude towards encouraging micro-enterprises in different economies;
- Globalization has increased global business opportunities;
- Electronic commerce has facilitated the process of business creation and exports at lower cost compared to traditional commerce.
- And you can add certain factors that are mainly due to social reasons, such as the continuation of the family institution or the heritage of the institution Improving the social situation, or the desire to belong to a certain category, such as the category of businessmen and business owners, and the main motive in developed countries to create small businesses is to maximize profits for their owners.

 2.2 The objectives of small businesses:

The creation of micro-enterprises aims to achieve several objectives, in particular:

- The promotion of individual and collective entrepreneurship, using economic activities of goods or services which did not previously exist, as well as the revival of activities abandoned for any reason whatsoever;
- Create new job opportunities directly and this is for the creators of institutions, or indirectly by using them for other people, and thanks to the creation of job opportunities, the rapid response to social demands in the field of work can be obtained.
- Reinstatement of redundant workers from their jobs due to the bankruptcy of certain institutions, or due to the reduction in the volume of jobs in them due to restructuring or privatization, which favors the possibility of offsetting some of the lost activities.
- Recover all the unprogrammed and unimportant production chapters available to the major institutions in order to refocus their energies on the original activity;
- It can be an effective tool for setting up activities in remote areas, which makes it an important tool for valuing and promoting local wealth, and one of the means of integration and integration between regions ;
- It can be a link in the economic fabric through all of the relationships it maintains with the rest of the surrounding institutions and in interaction with it and which share the same inputs;
- Allow many groups in society to have good investment ideas but not have the financial and administrative capacity to transform these ideas into realistic projects;
- It constitutes one of the sources of income for its innovators and users, and it is also an additional source to develop the financial return of the State through various deductions and taxes;
It is one of the means of integrating the informal and family sector.

 3- Field study: study of the funding role of the National Agency to support youth employment:

In collecting information and data on small businesses in Algeria, we relied on the social survey method for a sample of these institutions, using the questionnaire form which passed through severals steps to prepare it and adjust it to its final form.

3.1 Study sample:

The sample included microfinance institutions funded under the National Agency to support youth employment through tripartite funding, since this mode of funding is clearly a gap in the funding of these institutions, compared bilateral funding. A random sample of 162 people was used in participating small businesses, or whose owners attended the fourth national exhibition of the mini-establishment, organized by the National Agency to support youth employment at the Palais des Expositions - Algiers.

3.3 Presentation and description of the study sample and the characteristics of the micro-enterprises located there:

3.3.1 Description of the study sample: Before entering into the analysis of the results, we first know the study sample that was studied.

1- Depending on the date of funding by the agency:

Distribute the individuals in the sample according to the date of funding by the agency.
     The majority of the small businesses in the sample were funded before January 2004, which means that they were funded in the first device of the National Agency for Youth Employment (before the modification in the texts organizing the agency ). On the other hand, we find the sample financed within the framework of the new apparatus of the National agency for the employment of the young people, that is to say after the amendment which started Indeed from January 3, 2004, the latter in which numerous incentive measures have been taken concerning the agency apparatus (increasing the level of authorized investment, reducing the personal contribution, allowing the expansion of the activity ... etc). On the other hand, the highest percentage of individuals in the sample falls into the 25-30 age group (bin Pric) 47.53%.
- The majority of beneficiaries within the framework of the National Agency for the support to the employment of young people come from age groups below 30 years, especially between 25-29 years, and this is due to the fact that the group the agency's target is limited in terms of age between 19 and 40, in addition to a performance requirement or exemption from national service.
- For the first age group, this period generally includes training and studies, which contributed relatively to the decrease in the members of this group compared to the second category. Perhaps the large difference in the ratio between the age groups under 30 and the older groups is explained by the tendency of the older to settle preferably at work in exchange for 'a salary and a reluctance to risk, which is to some extent one of the conditions for self-employment.

2 Distribution of institutions according to the bank of the lender:

The table shows that the Bank for Agriculture and Rural Development is the head of the banks which finance the institutions included in the sample of (48.77%), followed by the National Bank of Algeria at (36.42 %), and the rest of the banks have smaller proportions, the last being the Algerian external bank by not financing it for any small institution. And the presence of a large variation in the funding ratios between these banks for these institutions, although they are all public banks, may be due to the difference in the spread of their banking networks at the local level, and to the vision of their managers.

3 Distribution of respondents by business sector:

     Table n ° (04) Distribution of respondents according to the sector of activity It appears from the table that the service sector is more polarized for youth projects within the framework of the agency, where its percentage in the sample studied is estimated at approximately (46.3%), followed by the industrial sector ((25.9%) and the sector's preference may be due Services, in particular in the transport sector, on the one hand, the presence of significant opportunities for investment in this area, particularly after the dissolution of many public transport institutions, and their activities in the transport sector have been reduced.

    On the other hand, the simplicity of the qualification required at agency level to establish an institution in the field of transport, because it only requires a driving license, because these results show us relatively young people in the industrial sector .

3.3.2 Profiles of the small businesses within the framework of the study:

The results revealed many characteristics that distinguish small businesses in the study sample in terms of number of workers, size of investment and legal form, in what is considered to reflect the criteria for definition that distinguish the institutions mentioned from the others.

-1 Distribution of individuals in the sample according to the size of the initial investment:

Table n ° (05) Distribution of individuals in the sample according to the size of the initial investment
According to the table, more than two thirds of the individuals in the sample have less than 3 million DZD projects, on the other hand, only 45 beneficiaries exceed the amount of investment in their projects without this amount and 10 million DZD.
It seems that the most important category of institutions in terms of the amount invested is between (1 and 2 million DZD), due to the small percentage of the young man's personal contribution to this level of investment between (5% - 10%) and that the amount available At this level, it gives a relatively greater investment margin compared to the first level.
- Less than one million dinars (and there is a relative decrease in the number of establishments whose investment exceeds the amount of 4 million DZD) 23 establishments, which may be due, on the one hand, to the strong personal contribution of the young person to this level of investment, and also given that this level of investment has enabled him. It was only after January 2004 in the new machine for the employment of young people.

2 Distribution of small businesses by number of workers:

Table No. (6)
With regard to the number of workers, it appears that around two thirds of the companies included in the sample employ less than 10 people. The overlap between the concept of micro and small and medium-sized enterprises is difficult, as the micro-enterprise model with fewer than 10 workers prevails.

3 Distribution of the institutions in the sample according to the legal form:

Table n ° (7) Distribution of sample institutions according to legal form
    The previous table shows that most of the individuals in the sample prefer to adopt the legal form "natural person", perhaps due to the simplicity of the procedures for issuing and obtaining licenses in connection with the adoption of this form. of the institution in relation to the legal procedures for creating a company or an institution, and when examining the second option, "legal entity" We note that among the (64) institutions which adopt the legal form, a " legal person ”(81.25%) is made up of businesses, the majority of which were created before the approval of the new youth employment agency (January 2004 of 78.85%), and this may be due to the dominant belief when The device was launched with the requirement of a collective legal form, as it was The first program for the employment of young people requires cooperatives in addition to the relative increase in the contribution, which reduces a person's ability to provide it without the need for partners in the project, before applying the new scheme for youth employment.