Interview: President Abdelaziz Bouteflika
In recent years, what has been the government’s philosophy regarding economic development?
ABDELAZIZ BOUTEFLIKA: Building an emerging market economy is a key policy area that I have pushed for and that Algerians have supported. In the early 2000s Algeria focused on developmental delays caused by a decade of terrorism. This challenge was met with great success, and my country has made significant progress on all indicators of human development, as well as upgrades to its basic infrastructure.
International agencies have also confirmed the progress made in areas such as education and vocational training, life expectancy, health coverage, access to water and energy, housing and telecommunications. Furthermore, the country now has a competitive, nascent industrial base and can rely on energy independence, a young and highly skilled workforce, and new public facilities. The synergies that exist between these qualities should allow for the positive transformation of the national economy.
Our strategy has been simple: we have strived to ensure economic growth, and it remains our conviction that nurturing the business community is the best way of doing so. As such, everything is being done to encourage investment and business development, and to improve the business environment. To accomplish this, we made efforts to achieve a very broad consensus around our goal of economic transformation. This involved the government, trade unions and business forums entering into a national economic and social pact for growth that places the Algerian company at the heart of the recovery process and provides all the necessary conditions for success and development.
However, these goals require actions, and we are striving to make decisions that will serve as catalysts for economic growth. For instance, legislation related to investment and the purchase of land has been simplified, and economic and trade procedures have been relaxed. Public procurement and project financing are now the object of transparent rules for both public and private companies.
The measures that we have taken in recent years have put us in a secure position, and despite the low oil price environment that has persisted since mid-2014, Algeria is among the few hydrocarbons producers that continue to see job creation and economic growth, which reached 3.9% in 2015. Furthermore, the number of investments recorded in the last three years represents 70% of total investments since 2002; some 24,386 projects were launched between 2013 and 2016. Meanwhile, lending to the economy increased by 10% in 2015 and unemployment had fallen to 9.9% as of June 2016, down from 11% in 2015.
How is economic diversification being pursued over the short and medium term?
BOUTEFLIKA: Today there is a clear awareness that commodities can no longer be the base of our socio-economic development. Even if oil prices rise in the future, they will not cover all our economic needs, so it is important to react and employ the necessary strategies to ensure a brighter future.
A new economic growth model has been created with budgetary strategies for the short and medium term. It includes a budget framework for the 2016-19 period, which takes the current economic environment into account but continues to offer social support for the disadvantaged and has the development of an emerging market economy as a central aim. The objective of these measures is to achieve sustainable deficit and external debt levels.
Actions will be taken to further socio-economic development, accelerate the diversification of our economy and strengthen social programmes without additional economic costs. Tax and budgetary reforms will also further growth and promote sustainable human development. Areas that can be future drivers of growth include industry, agriculture, energy and petrochemicals, tourism and the knowledge economy. Partnerships and investment in these areas will be encouraged and supported through a variety of financial and tax incentives.
Our industrial achievements be illustrated by the fact that national demand for cement has been satisfied domestically in 2016, with the export of surplus production to begin in 2017. In addition, the ramping up of steel production and locally produced pharmaceuticals will ensure greater coverage of national demand over the next two years. In agriculture, the growth rate reached 7% in 2015, and there was also an increase in exports, which reached a value of $800m. Regarding the housing sector, 2.8m units were completed between 1999 and 2015, and 2016 will see the completion of 350,000 units, with more than 1.2m new homes currently under construction. Many efforts are still needed to achieve our goals, but we are firmly on track and confident that we can count on our most important asset: the trust and support of our fellow citizens, who are aware of the current challenges and are supportive of a united approach to responsible spending. This unity supports the sustainability of our social model and will ensure economic success.
What is Algeria’s approach to international economic cooperation and the promotion of trade?
BOUTEFLIKA: If the last two decades of the 20th century saw the collapse of the theory that socialism is the only route to human happiness, the 2000s laid bare the contradictions of capitalism and the dangers of leaving deregulated financial markets unchecked.
In Algeria we have no dogma regarding economic models. We believe in the virtues of pragmatism and good sense, and can affirm that our economy and laws guarantee the conditions for a win-win business climate. We have no reservations with respect to seeking expertise in order to achieve our development goals. We hope to learn through our partnerships and use them to develop national productivity and to boost our managerial capacities.
It is also important to correct Algeria’s image globally, particularly in relation to the way that the country is viewed in the eyes of the international business and investment community. It is our responsibility to be aware of the strengths and potential of our nation, and to share and promote the many successful partnerships that have been formed between operators of different nationalities and Algerian companies in several key sectors, such as energy, industry and health, among others. Demonstrating past successes is the best way of underlining our potential.
If we aim to diversify our economy, it is logical to also broaden our range of partners. Algeria is a country that is open to everyone, and we are counting on the business sense of economic entrepreneurs around the world to seize the many opportunities we offer. To this end, we are working with the US, the UK, China and Russia, as well as political and economic unions such as the EU, to strengthen economic cooperation and to launch partnerships in a variety of fields.
Having strengthened its political and institutional systems, Algeria is now pushing for the modernisation and diversification of its economy. We are confident that Algeria represents a nation of stability and security, and one that can act as a suitable trade hub in the Mediterranean, Africa and the Middle East. To that end, the comparative advantages that Algeria possesses – the vitality of its economy, its young population, its stability and credibility as a trading partner – mean that we can be a major player in Africa, the Middle East, the Mediterranean and the world.
This is particularly true when considering the upcoming construction and launch of our deepwater mega-port at Cherchell, which will have 23 docks capable of processing 6.5m twenty-foot equivalent units per year. The port will also link to the Trans-Sahara Highway, which will connect Algiers to Lagos.
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