Efforts to improve social indicators and boost the private sector

Algeria has notable geographic, demographic and cultural diversity. Its territory reaches from the Mediterranean Coast to the depths of the Sahara Desert, and its population includes a blend of Arab and Berber linguistic and cultural traditions. Economic development has been driven by oil and gas, which today still account for 30% of GDP, 60% of budget revenue and 97% of export receipts. Ample hydrocarbons revenue has allowed the government to channel capital into generous public expenditure programmes on infrastructure, health care, education, social housing, and credit and consumer subsidies.

In the last five years, the government has reoriented its focus to diversify the economy and take advantage of the full range of the country’s natural and human resources, and to ensure that growth is more inclusive. A number of challenges remain, but efforts to support entrepreneurship, expand access to basic social services and reduce the housing deficit are beginning to bear fruit.

Natural Resources

Algeria has the world’s 16th-largest oil resources, totalling 12.2bn barrels of reserves in 2013. It also has 159trn cu feet of proven natural gas reserves, the ninth largest in the world. It is the leading natural gas producer in Africa and the second-largest oil producer after Nigeria.

However, as in many resource-rich emerging markets, attention is increasingly focused on developing the non-hydrocarbons economy to provide more employment opportunities and expand the limited private sector. Planned investment in key sectors such as manufacturing, agriculture, tourism and retail under the 2015-19 economic plan should help to engage a wider array of human and natural resources, providing a stronger basis for future growth.

Algeria also has reserves of iron ore, phosphates, uranium, lead and zinc. A revised mining code adopted in February 2014 aims to streamline oversight of the mining sector. The country also has some 8.4m ha of arable land, but only about 919,000 ha are permanently cultivated. In order to ensure the country’s food security, the government is investing heavily in subsidies for agricultural equipment and aims to increase the cultivated surface area to 1m ha.

Geography & Climate

Algeria became the largest country in Africa when South Sudan achieved independence in 2011. The country covers 2.38m sq km, divided in 48 provinces, or wilayas. The government is studying plans to create three new wilayas in the Hauts Plateaux and southern regions to create more direct oversight and channel investment into under-served areas.

The northern boundary stretches 1000 km along the Mediterranean Sea, and shares 6734 km of land borders with Tunisia and Libya to the east, Niger and Mali to the south, and Mauritania, Western Sahara and Morocco to the east. Its border with Morocco has been shut since 1994 due to an ongoing dispute over the status of Western Sahara.

Algeria is typically divided into three principal regions: the north, the narrow Hauts Plateaux region in the centre, and the desert south. A discontinuous fertile plain, known as the Tell, occupies Algeria’s northern coast. Its climate is typical of the Mediterranean, with mild, wet winters and hot, dry summers. An estimated 91% of the population lives in just 13% of its territory, as the majority of economic activity and urban centres are concentrated in the north.

The coastal plain rises into the Tell Atlas Mountains, which are part of a range stretching from Morocco to Tunisia. Farther south, the mountains give way to the semi-arid Hauts Plateaux region, which is characterised by cold winters and hot summers, but nonetheless accounts for 23.6% of agricultural production. The Saharan Atlas Mountains form its southern edge and stretch into the desert south.

Average temperatures in Algiers and much of the north range from a low of 9ºC to a peak of 30ºC in August. Rainfall in the north typically peaks around 140mm in December. In the desert south, daytime temperatures frequently exceed 40ºC and can fall below freezing at night.


The population reached an estimated 38.8m in 2014. While Algeria is the largest country in Africa in terms of land mass, 85% of its territory is desert, and its population is dwarfed by the 177m people in Nigeria, the most populous country in Africa, and 86.9m inhabitants in Egypt, the most populous in North Africa. Like many countries in the region, the population is becoming younger, with 45.8% under the age of 25.

Algeria has an urbanisation rate of 74.5%, up from 71% in 2009; urban populations are expanding at a rate of 3% per year, compared to 1.9% per year for the population as a whole. No more than 10% of the population lives in the southern Sahara region. Inhabitants are mainly concentrated in the key cities of Tamanrasset and Tindouf, as well as the desert cities of Hassi Messaoud and Adrar. The southern areas are home to much of the country’s oil and gas exploration, which brings in both foreign and domestic businesses. An estimated 1.5m inhabitants are partially or fully nomadic, including the Tuareg.

Cultural & Linguistic Diversity

Algeria’s population is 99% Arab and Berber. Berber peoples, also known as Amazigh, are the indigenous inhabitants of North Africa, and their presence dates back to 10,000 BCE. While much of the population is of Berber origin, only a minority identify themselves solely as such. The population is made up of several sub-groups that speak distinct Berber dialects and languages. The largest population resides in the mountainous region of Kabylie, east of the capital, and speaks a unique dialect, Kabyle. Other notable Amazigh populations include the Chaoui in the eastern Atlas Mountains, the Mozabites in the M’zab Valley, and the Tuareg in the far south.

French remains an important language for the media, administration and business, but Arabic dominates daily life. The Algerian dialect, Darja, differs substantially from standard Arabic, weaving in words of Berber languages and French.

Berber groups have long agitated for autonomy, and the instruction and official use of the Berber language, Tamazight, was outlawed for decades. However, in response to rising social pressure in the 1970s and 1980s, the state created a High Commission for Berber Affairs in 1995 and legalised Berber language instruction nationwide.

Social Indicators

Algeria’s gross national income (GNI) per capita jumped 42.2% in five years from €2770 in 2009 to €3940 in 2013, according to World Bank figures. This puts Algeria ahead of Morocco, which had a similar population size and GNI per capita of €2290 in 2013, and Tunisia with €3180. High levels of public spending on basic social services has helped strengthen Algeria’s social and development indicators, although a number of challenges remain.

Access to basic health care and nutrition are generally good in urban areas, although the availability of specialist services is lacking and Algeria is working to hold onto its qualified medical personnel. Noncommunicable diseases accounted for more than 77% of deaths in 2012, followed by 14.5% for communicable diseases, maternal, prenatal and nutrition conditions. Algeria’s total health expenditure was equivalent to 5.2% of GDP in 2012, or €204.8 per capita at current rates. The government accounted for 84% of total health spending in 2012, and health care represented 9.8% of total state spending.

Primary education enrolment rates rose from 96% in 2009 to 97% in 2012, with near parity between boys and girls. The government indicated that the primary completion rate reached 100% for the first time in 2012, up from 89% in 2009. Public spending on education was equivalent to 4.3% of GDP in 2008, according to the most recent figures available, and 11.4% of total government expenditure. In 2006 Algeria had an adult literacy rate of 72.6%, broken down into 63.9% for women and 81.3% for men. However, the youth literacy rate in the same year was 91.8%, indicating that rates are on the rise.


The national unemployment rate dropped to 9.8% in 2012 from 10.2% in 2009, but levels are much higher among the growing youth population. Unemployment estimates for youth aged 15-24 years were around 22.4% in 2012, up from 21.2% in 2009, according to the World Bank. In 2011, 10.8% of the labour force was employed in agriculture, down from 13.1% two years before; another 30.9% were employed in industry and 58.4% in the services sector. However, given the size of the civil service and the number of state-owned enterprises, much of this is in the public sector.

Algeria is looking to develop its nascent private sector in order to provide more reliable economic opportunities in the future. The oil and gas industry accounts for 30% of GDP, but provides just 2% of employment. The government announced it will increase financial mechanisms to support SMEs and entrepreneurship under its 2015-19 five-year plan.

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The Report: Algeria 2014

Country Profile chapter from The Report: Algeria 2014

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