Interview: Ali Boumediene
What can be done to further improve the business climate in Algeria?
ALI BOUMEDIENE: The first thing that we need to re-examine is the 51:49 rule. If we want to see a real increase in the transfer of technology and know-how, we need to make the local business climate more attractive, and that begins with opening up the economic environment and ultimately removing the 51:49 rule. This is particularly true with respect to sectors such as industry and specifically high-tech industries where technology transfer is particularly important.
As long as the economy is not sufficiently open, we cannot go into more innovative industries. Algeria can most certainly host advanced industries such as aerospace manufacturing, but it is hard to imagine how leading companies in that sector will enter the Algerian market with the 51:49 rule in place.
It is also important to look at the decision-making chain and identify our needs. There is a tendency to look at the highest levels of government and wonder what needs to be changed. In fact, the success and development of local municipalities represents the base of the pyramid and from there we move upwards to the regional and national level. Furthermore, access to industrial land remains a challenge for Algerian companies. There needs to be real and concrete effort made in order to reduce bureaucracy and make it easier to acquire and build on industrial land.
How would you assess the strategies in place for helping companies move up the value chain?
BOUMEDIENE: Algeria suffers from a lack of subcontractors for the industrial sector. Therefore, as we open the economy to foreign investment, we will see more and more subcontractors emerging to meet the needs of those companies. These subcontractors will be subjected to audits from the large companies and consequently they will become more efficient and modern. These subcontractors will eventually continue to move up the value chain and eventually some will become large industrial brands themselves.
With respect to training, we have many universities that are training bright and capable Algerians, but as long as we are not moving up the value chain, our engineers cannot find the jobs that help them use and build their skills. Additionally, companies also need to participate in order to help students have the internships that prepare them for the professional world.
How is Algeria’s export capacity being developed?
BOUMEDIENE: The “green corridor” put in place by the Customs agency has had a clear and positive impact on the ability to obtain raw materials locally, but also to export. Before companies were waiting between 60 and 90 days at times to get raw materials. Exporting would sometimes take five to 10 days and so it was very hard to satisfy foreign customers who needed greater visibility with respect to their supply. Now things have changed considerably and we can import raw materials or export goods within a single business day.
There are also important improvements that have been made with respect to the banking sector for companies that wish to export. Before, companies that export had to repatriate the payment for the transaction within 90 days. This has now been extended to 360 days, which makes it considerably easier for companies to envisage exporting.
Additionally, another positive development is that Algerian companies that can maintain profits for their export activities for a period of three to four years can now create foreign subsidiaries in other countries. It is clear that Algeria can immediately become highly competitive for not only agricultural and pharmaceutical products, but also for industrial products and electronics. The African market may be more challenging in the short-term, but there is progress. By raising awareness and the visibility of Algerian products we can easily overcome these types of obstacles in the coming years.