The Report: Algeria 2013
Considerable oil and gas revenues have provided the Algerian government with sufficient funds to embark on generous public spending programmes in nearly all sectors, leading to improvements in many of the country’s socioeconomic indicators. Although hydrocarbons promise to remain the backbone of the economy for the foreseeable future, efforts are being made to diversify the economy and support private sector growth.
Country Profile
Covering 2.4m sq km, Algeria is the largest country in Africa, and borders the Mediterranean Sea in the north; Tunisia and Libya in the east; Niger and Mali in the south; and Mauritania, Western Sahara and Morocco in the west. Rich in oil and gas resources, which have supported relative stability in recent years, the country is also Africa’s fourth-largest economy. Algeria has strong trade ties with Europe and North America and is increasingly building links with its Maghreb neighbours as regional integration grows. This chapter contains a viewpoint with President Abdelaziz Bouteflika, and interviews with Mourad Medelci, President, Constitutional Council and Former Minister of Foreign Affairs; Lord Risby, UK Trade Envoy to Algeria; Anne Ruth Herkes, German State Secretary, Federal Ministry of Economics and Technology; and Martin Schulz, President, European Parliament.
Explore chapterEconomy
Having weathered the global economic crisis relatively easily and avoided most of the political turmoil that affected its neighbours during the Arab Spring, Algeria has continued along a steady path of economic growth and social development. In 2012 the country’s GDP reached AD15.84trn (€145.73bn), a 3.3% increase over the previous year. Algeria’s considerable oil and gas reserves, accounting for more than 60% of government revenues, have provided the authorities with sufficient fiscal flexibility to embark on major spending projects in nearly all sectors and subsidise key products such as fuel and food. Despite the economic growth, the expanding population and rising consumption are driving up unemployment and inflation. This chapter contains interviews with Karim Djoudi, Minister of Finance; Mustapha Benbada, Minister of Trade; Mohamed Seghir Babes, President, National Economic and Social Council; Réda Hamiani, President, Algerian Business Leaders’ Forum; and a viewpoint with Christine Lagarde, Managing Director, IMF.
Explore chapterEnergy
As the world’s 15th-largest oil producer and ninth-largest producer of natural gas, Algeria largely relies on its significant hydrocarbons reserves and strong export markets in Europe and the US to drive its economy. In 2012 the country produced almost 1.7m barrels per day of oil and 81.5bn cu metres of natural gas. State-owned Sonatrach controls around 80% of the upstream segment; however, foreign firms have long had a presence in Algeria and there continues to be major interest from international oil companies. In recognition of the country’s heavy reliance on oil and gas for power, efforts are being made to develop other sources of energy such as solar power and shale gas deposits. In early 2013 a series of changes were made to the Hydrocarbons Law, which promise to further attract foreign investors. This chapter contains interviews with Youcef Yousfi, Minister of Energy and Mines; and Touffik Fredj, President & CEO for North-west Africa, General Electric.
Explore chapterBanking & Financial Services
The banking sector is making steady progress as stability improves and economic growth continues. Banking assets grew by 8.6% in 2012 to AD9.78trn (€92.9bn), although branch access remains relatively limited, with only one bank per 28,000 inhabitants compared to one per 12,000 people in Morocco and one per 9000 in Tunisia. After years of high non-performing loan rates, the central bank is gaining a firmer hold on lending, as well as revitalising the leasing segment through new public housing programmes. The capital markets are expected to benefit from a new raft of initial public offerings. Insurers are also expanding the products on offer, with personal health coverage becoming increasingly popular. This chapter contains a viewpoint with Mohammed Laksaci, Governor, Bank of Algeria, and interviews with Abdenour Houaoui, General Manager, Arab Leasing Corporation; and Abdelhakim Berrah, President, Commission for Stock Market Organisation and Supervision.
Explore chapterTransport
With $286bn allocated to major infrastructure developments, the government has devised a five-year plan for improving connections, including road networks, ports, urban mass transport and rail lines. Three major highway projects are either under way or in planning, including the East-West Highway, the Hauts Plateau Highway and the North-South Highway. The government is also expanding capacity at existing ports, as well as constructing new ones, and is set to invest more funds in urban transport options. Besides the existing tramline and metro in Algiers, 2013 marked the launch of new tram systems in both Oran and Constantine. A total of 14 other cities currently have above-ground mass transit systems in the planning stage, with the government set to invest a total of $6bn. This chapter contains an interview with Takao Omori, CEO, Portek International.
Explore chapterBéjaïa
As part of government efforts to diversify the economy, large investments are being made in regional areas outside of the major population centres of Algiers and Oran. As the recipient of one of the largest of these public disbursements, with a package valued at an estimated €4bn over five years, the province (or wilaya) of Béjaïa is set to undergo considerable development. Major transportation infrastructure projects, including new roads, railways and the expansion of the Béjaïa port, promise to secure the province’s position as a trade hub. New industrial facilities are being established to supply the construction efforts, and to take advantage of improved transport links. This chapter contains an interview with Djelloul Achour, General Manager, Entreprise Portuaire Béjaïa.
Explore chapterIndustry & Retail
Improving economic conditions are leading to strong domestic demand for products, which is in turn spurring growth in Algeria’s manufacturing and retail sectors. However, industry’s contribution to GDP decreased from 18% in the 1980s to around 5% in 2013 due to the growing role of hydrocarbons production and under-investment in the country’s manufacturing facilities. Recent government efforts, such as a number of tax incentives aimed at foreign investors, hope to reverse this trend. To help ensure that manufacturers have sufficient access to suitable industrial real estate, the government is also establishing an additional 42 industrial zones, distributed throughout the country. This chapter contains interviews with Abderrahmane Benhamadi, Chairman, Condor; and Jean-Pierre Raffarin, Former French Prime Minister and Special French Envoy for Franco-Algerian Affairs.
Explore chapterConstruction & Real Estate
Major investments in a number of areas, such as transport, home construction and utilities provision are driving sector activity. The government is also planning a number of sector-specific initiatives, such as a plan to build 750 new hotels and create an additional 42 industrial zones throughout the country. Large-scale projects are attracting interest from both local and foreign firms. The real estate market is expecting major growth due to an existing housing shortage, the rising population and improving economic conditions. This chapter contains interviews with Farouk Chiali, Minister of Public Works; and Mark Dixon, Group CEO and Founder, Regus.
Explore chapterTelecoms & IT
With ICT expenditure reaching $4.59bn in 2012, Algeria spends considerably less than many of its neighbours, for example Morocco, which spent $13.25bn in the same year. However, the country is making efforts to help modernise and boost the sector. Internet users can expect improvements as the government has planned a major overhaul of network infrastructure. The launch of 3G should also help to further develop the sector, as well as push service providers to improve connection speeds and reliability, while parliament is working on drafting new legislation that is expected to increase competition. This chapter contains an interview with Abdelhamid Benyoucef, Chief Executive Officer, HB Technologies.
Explore chapterAgriculture
Although Algeria has historically relied heavily on food imports to meet domestic demand, the agriculture sector has seen considerable growth since the 2008 introduction of the Agricultural and Rural Renewal Policy. Under the policy, production has grown by an average of 13.8% per year, with total output reaching $29.3bn in 2012. Despite this growth, however, food imports still accounted for 19% of all imports in 2012, worth a total value of $8.98bn (although this was an 8.8% decline from the previous year). With the goal of producing 70% of the country’s food by 2014, the government has implemented a number of incentives to boost investment in the sector, modernise practices and boost agribusiness output.
Explore chapterTourism
Although the tourism sector currently makes up 2% of GDP and attracted nearly 982,000 tourists in 2012, the government hopes to raise the sector’s GDP contribution to 5% by 2015 and boost visitor numbers to 2.5m. The 2009 Complementary Finance Law introduced a number of fiscal incentives aimed at increasing sector activity, such as cheaper access to government land and better interest rates on loans used for tourism developments. Proposed hotel and infrastructure projects will potentially raise the number of hotel beds to 75,000 by 2015 and create 30,000 new jobs. In parallel with efforts to expand tourism facilities, a number of initiatives are also aimed at ensuring that the country has sufficiently skilled human resources capacity. This chapter contains an interview with Pierre-Frédéric Roulot, President and CEO, Louvre Hotels Group.
Explore chapterHealth & Education
Access to health care is expected to improve as the government embarks on an ambitious programme of investment in health facilities. Between 2010 and 2014, the authorities plan to invest AD619bn (€5.69bn) to enhance the sector, with plans to renovate 320 health facilities and build 172 hospitals, 45 specialised centres, 377 polyclinics and 17 paramedical schools. In 2010 the government launched a five-year plan that would see AD852bn (€7.84bn) invested in the education sector. Reforms to expand the number of vocational training courses on offer to students at the secondary level are helping to alleviate the high youth unemployment rate. This chapter contains interviews with Tarek Rabah, Middle East and Africa Vice-President, AstraZeneca; and Abdelatif Baba Ahmed, Minister of Education.
Explore chapterMedia & Advertising
The Algerian media sector continues to remain relatively underdeveloped; however, a number of recent changes suggest the sector may be going through a transition period. Print media continues to hold a dominant role, with a total of 105 daily newspapers published across the country, and many publications shifting from French to Arabic. Although government advertising continues to be the main source of revenue for most publications, some of the largest newspapers are beginning to find success attracting advertising from private companies. In addition to changes in the print segment, private television channels are emerging as serious contenders to the state-run offerings. Additionally, as the country’s internet penetration increases, online news platforms promise to become increasingly popular.
Explore chapterLegal Framework
OBG introduces the reader to the different aspects of the legal system in Algeria, in partnership with Gide Loyrette Nouel. This chapter contains an interview with Samy Laghouati, Managing Partner, Gide Loyrette Nouel.
Explore chapterTax
In conjunction with Mazars Algeria, OBG explores the taxation system, examining Algeria’s investor-friendly environment. This chapter contains a viewpoint from Samir Hadj Ali, Managing Partner, Mazars Algeria.
Explore chapterThe Guide
This section includes articles about the city of Constantine and about reforms to the book industry, as well as information on hotels, government offices and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.
Explore chapterTable of Contents
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