Interview: Reda Hechelaf
How would you assess the current state of the agro-industrial sector in Algeria?
REDA HECHELAF: The majority of investments in this sector have been made since the 2000s, and have been for modern equipment and processes. In 1991 the state began to open the economy to private operators and took a more relaxed position on imports. As a consequence, in the following years there was a huge increase in imports, due in part to the fact that many local products were of poor quality. By the time real investment in productive industries took off at the end of the 1990s, imported products had become associated with quality, so Algerian industrialists made important investments in modern equipment. The impact of these actions on the industrial sector has been tangible, whether we look at electronics or agribusiness. For instance, in our sector we see that the majority of food consumed by Algerians today is part of the Algerian value chain.
While Algeria has made major progress on restarting its industrial sector, there is still work to be done. High-tech and finished goods are the future. In our segment we see investments in frozen meals as holding great potential, and this will create a need for investments across the whole of the agri-business industry.
What is Algeria’s export potential?
HECHELAF: Due to its geo-strategic position, Algerian industrialists can potentially have a considerable advantage in exporting to Africa. For instance, the road to Niger was previously a key point for reaching the sub-Saharan market, but now it is not open frequently enough for Algerian producers to fully benefit from it. When the route is open more consistently, Algerian producers can ship to sub-Saharan Africa in five days by road, whereas it can take 35 days by sea, with higher costs that make exporting less attractive.
As such, access to the sub-Saharan market by land is key, and I believe that a free zone should be established in Tamanrasset. The development of this free zone will create a centre that could serve as a major draw for foreign operators to create more value-added industrial activities in Algeria in light of the potentially easy access to the sub-Saharan market.
For this to happen, we must review the regulations. Currently companies that want to invest but do not possess adequate foreign currency reserves are not supported by the authorities. Yet allowing more Algerian companies to expand throughout Africa will help the country increase its foreign exchange reserves.
In the food segment as well, it is necessary to promote and consolidate legislative and regulatory stability, and to reduce the inhibiting effects of bureaucracy. Some measures also need to be reviewed in order to ensure that industrialists are encouraged.
What can be done to help develop a local network of industrial subcontractors?
HECHELAF: Thanks to the growth of this sector, a network of industrial subcontractors is beginning to take shape, but remains less than what is needed. A substantial network must be given the time and resources to develop. Nevertheless, the fact that Algeria had a real industrial sector before the 1990s means that the employees of former state companies are a key resource in terms of knowledge and experience.
For the food processing industry, there is a clear and tangible increase in the number of subcontractors. The sector has been able to generate some large players that have created a real demand, and subsequently the subcontractors that emerged from this demand have been able to create a network that today is able to serve the needs of small and medium-sized enterprises. So while large machinery might not yet be built in Algeria, there are many high-quality options in accessories for these machines that are being built locally. To build on this trend, we should look at other examples that have worked here, such as the creation of greater links between private sector companies and universities.