Compared with the progress made elsewhere in the region, Libya has made it look easy. Egypt, Tunisia and Algeria started working on the privatisation of their state-owned banks almost eight years ago, and while Egypt and Tunisia have made some progress, Algeria has stalled.

Algiers’ lack of achievement is mainly because it has failed to install a proper decision-making process. Those involved complain of decisions being endlessly referred between committees nervous of making a wrong decision. In contrast, Libyan central bank governor Farhat Bengdara is the clear figurehead of the privatisation process.

The recent completion of a $1bn deal to sell Egypt’s Al-Watany Bank to National Bank of Kuwait shows that the appetite for acquisitions is still there, despite the credit crunch. However, the tough climate means fewer banks are chasing deals. Many of the largest international banks are too busy nursing sub-prime losses to look at acquisitions, but Gulf banks are increasing keen on expanding in North Africa.

If Algeria decides to press ahead with privatisations in the next 12 months, it might have to accept a lower price than before, as there will be fewer potential buyers competing.

Political indecision means it is unlikely it will make any progress that quickly. It would be better advised to wait until after its presidential elections in April 2009.

By then, international banks should be recovering and Algeria can reform its privatisation process to ensure decisions are made more quickly.