Algeria’s Stock Market, Business, Economy
The Algerian stock exchange in Algiers is probably one of the newest stock exchanges in the world. It was created as late as July 1999 but has been growing steadily ever since. The main reason for this late opening is because of the slow progression of financial lending services and practices in Algeria.
It all started in 1962 when the French and Algerian treasurers separated. In December 1962, the Central Bank of Algeria was created to provide necessary services to the people of Algeria. However, it was the sole bank of issue at the time. Initially it was impossible for other forms of lending agents to set up a practice and the Central Bank of Algeria continued to enjoy a monopoly on the local economy. Then, in 1996, things changed. In that year private companies were allowed to establish money-changing operations based on a directive issued by the Central Bank of Algeria. The goal behind the directive was to initiate open market operations and it resulted in bank base interest rates falling from 18.5% to 15% which further served to boost the local economy. By the following year six state-owned banks, one private bank and one public development bank were set up in addition to the Central Bank of Algeria. By 1998, interest rates had been cut back to as little as 10%. That same year saw the addition of five new private banks as well as a U.S. based bank. With more people able to consider investing, the Central Bank of Algeria exercised control over the matter by limiting lending.
In late 1998 it was decided that it was time for Algeria to enjoy the services of a local stock market. This was not easy since there were not that many companies worth listing on the stock exchange at the time. In fact, there were only three different companies which were listed – a pharmaceutical company, a hotel and a food processing company. However, this was all that was needed to help get the Algerian Stock Exchange off the ground. The Algerian Stock Exchange was opened in July 1999 and is located in Algiers. In October of the same year a fourth company – a national oil company – joined the ranks of those already registered on the stock exchange. The stock exchange has certainly served to boost the economy with the currency and demand deposits for 2001 reaching an equivalent of $16.0 billion. The interest rate of the central bank was also decreased to 6% and the money market rate was 3.35%. The Algerian Stock Exchange has certainly proved to be a worthwhile venture.
