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Innovation, technology and knowledge transfer

Article - June 27, 2012
Partnerships with companies overseas are particularly sought after by Algeria’s business community, as the ideal foreign partner can not only bring outside experience to a joint venture and help upgrade local operations, but also make a significant contribution to a company’s management and marketing functions
The common denominator in all of this is human resources development, which forms a key foundation of these international connections. Ensuring that the local workforce is trained and can set a course for future generations to follow is recognised by both the private sector and the government as crucial.

The need for training to be co-ordinated and managed at the right level, whether in the public or private sector, is also universally understood. In the past, the government found that, once trained, state employees often left to work abroad or for a private company, leaving behind a pool of untrained workers. Algeria understandably wishes to avoid a repeat of such an outcome. 

For the CEO and General Manager of the World Trade Centre Algeria, Ahmed Tibaoui, the solution for improving the business climate and avoiding a brain drain is “education, education, education: we need to do what they have done in China, to attract internationally-recognised business schools to Algeria, by offering them tax exemptions and other incentives. A comprehensive reform of education is the key for a successful future.”

The country overall has a young, energetic and qualified workforce. Although there is a need for further training, Algerians’ capabilities are fully recognised by the state-owned electrical goods group SGP INDELEC, whose President Ahmed Fettouhi acknowledges human development as being central to the company’s ambitions for modernisation and expansion. In short, he says the basic human resources are available in Algeria.

“What we are expecting from a partnership is a global transfer of know-how, and it has to cover all the aspects of the know-how: the production, the management and the marketing. And the common element in all this, and this is what I find important, is the human aspect. It is the training of people,” says Mr Fettouhi.

What we are expecting from a partnership is a global transfer of know-how.

Ahmed Fettouhi,
President of SGP INDELEC

INDELEC is one of many Algerian companies looking for partners with a deep understanding of the sectors to which they bring their expertise, not only in terms of material, but also in terms of product development potential.

The group wants its partners to assist in new product development and in launching new research and development (R&D) centres. The group seeks both to innovate, as there is a demand for new products on the Algerian market, and also to become more competitive within the substantial local market of 3 million people.

While other Algerian companies may harbour ambitions to increase exports, INDELEC’s focus is home-based, and the planned R&D centres will assist in the development of specific solutions and products adapted to the local market in order to respect local traditions.

“If I am putting in place a profitable R&D centre, I am going to sell products that have nothing to do with the European needs, that’s for sure, because I am targeting a specific market sector that has no relation to Europeans, because Algerian consumers have different habits, different traditions,” says Mr Fettouhi.

For instance, a new market for smaller refrigerators for use in offices or outside the home is developing in Algeria. INDELEC’s subsidiary ENIEM, the leader in the manufacture of refrigerators in Algeria, is not set up to produce these smaller fridges. Finding a partner would enable ENIEM and INDELEC to tap into this kind of niche market and meet this growing demand.

Ultimately the idea behind the search for relevant international partners for each of INDELEC’s core activities is to create a group of smaller entities, organised around the parent company, but targeting new markets and new consumers and therefore increasing profit and turnover.

Reda Hamiani, Director of the Business Leaders Forum, adds: “The business instinct, we have it here, as you have it in the whole Mediterranean area. Our problem is that our educational system is quite unsuited to the needs of our economy: in Algeria, there is very little middle management, nor do we train them; we have no business schools or universities teaching management, marketing, or simple commercial skills. We have no intermediate diplomas, we have either people without any training, or over-qualified people (doctors, engineers, scientific researchers, etc.) but nothing in between. Our students need to learn what is a market, how to calculate a price, how to export goods, etc.

“This gap in our educational system also explains why we have very few SMEs: only 75 per 100,000 inhabitants, whereas Morocco has 350 per 100,0000 inhabitants. Today, we have 600,000 SMEs, of which 95 per cent are artisans, when we should have at least 1.5 million of them. We need to train our young how to take the initiative, take risks, invest and create a company, and it is urgent.”

In Algeria, consumer habits are changing, and there is an increasing demand for new products and new design development, such as 3D glasses. Mr Fettouhi says, “We have noticed that people are obsessed by everything that is new. If it is new, they want to buy it.”