One aspect of Algeria’s push to diversify national revenue sources away from the hydrocarbons sector is to strengthen activity in regional markets outside of cities like Algiers or Oran, to foster job creation in outlying wilayas (provinces) and cultivate secondary and tertiary industries throughout. While in many cases the initiatives and projects designed to buttress this move and decentralise growth are coordinated at a national level, the success of the efforts are tangible locally, increasingly allowing the regions to leverage their comparative advantages to boost revenues and investment.
ROAD AHEAD: The Béjaïa region, which is due to receive one of the largest public disbursements under Algeria’s five-year spending plan, provides an excellent example of such development endeavours. After decades of moderated growth and limited transport links, the wilaya of Béjaïa – roughly 200 km to the east of Algiers – is now in the midst of a large-scale capital expenditure programme designed to strengthen the city’s positioning as a port and industrial centre. Although it has long served as a maritime centre, and now hosts the terminus for the Hassi Messaoud pipeline, one of the country’s principal transport pipelines for its largest oil basin, the performance of the wilaya’s economy has traditionally been linked to its agricultural sector, which benefits from favourable natural conditions.
Building off of this established strength, the region pursued industrialisation in agriculture-related segments, helping develop the area’s downstream activities in terms of food processing and agro-industry. It has also established textiles production facilities and a growing array of service industries. The Béjaïa region is now hoping to build upon its fortunate location and historic links to drive labour-intensive and higher-value-added economic growth.
HISTORY: A rich agricultural area, with a temperate climate and extensive water resources, in part a result of its position between a mountainous hinterland – known as the Kabylie – and the Mediterranean, meant that Béjaïa was an attractive prize for outside powers over the years.
While the region still has a large Berber population and the administrative capital of Béjaïa remains one of the largest Berber-speaking cities in the country, throughout its history Béjaïa was held by the Carthaginians, Romans and Vandals, coveted by Phoenicians and Arabs, and occupied by the Spanish, Ottomans and French at different points – although the mountains of the Kabylie often made holding the territory by force an extremely difficult proposition. Part of the Roman interests in North Africa, the city of Béjaïa was invaded by the Vandals in the 5th century CE, and subsequently became the capital of their Germanic kingdom, while the expansion of the Numidian Berbers also weakened the remains of the Roman empire in the region.
Later, in the early 14th century, Spanish invaders began to arrive in the area, but were harassed by local tribes and passing corsairs, eventually ceding their hold. As a part of the French campaigns in Algeria, the city of Béjaïa was taken in 1833. During French colonial rule, the Kabylie region mounted continuous opposition, leading to several instances of brutal repression, such as the bombing by the French navy of coastal areas in the region in 1945.
Béjaïa was later pivotal in the supporting the Algerian war of independence, with Ifri hosting the inaugural National Liberation Front-National Liberation Army meetings, which led to the establishment of the Algerian armed resistance. Since independence in 1962, demands for more autonomy and greater recognition of Berber cultural identity have partially defined interactions between the Kabylie region and the central government in Algiers.
GEOGRAPHY & CLIMATE: The wilaya of Béjaïa is located in Algeria’s mountainous north, along the Mediterranean coast. It is part of the larger Kabylie region, from where the majority of the country’s Berber, or Amazigh, population originates. The Béjaïa department itself has a total area of around 3268 sq km and is home to approximately 1m inhabitants, most of whom live in its governing centre, the city of Béjaïa, which oversees a territory divided into 19 daïras (an administrative division) and 52 communes, or towns. Occupying a central position compared to the rest of the departments in the region, Béjaïa borders the wilayas of Bouira and Bourjd- Bou-Arreridj to the south, Bouira and Tizi Ouzou to the west, and Sétif and Jijel to the east.
In addition to a handful of relatively long rivers that flow through its hinterland to empty into the Mediterranean, Béjaïa’s temperate climate and abundant rainfall have long provided an encouraging mix of ingredients for large-scale commercial agriculture. Several chains of mountains dot the landscape, including the Djurdjura massif, which peaks at 2308 metres on the region’s north. Unusually for the largely arid country, dense forests also cover large swaths of the wilaya. In addition, Béjaïa benefits from a long stretch of largely undeveloped coast, which is nonetheless a popular destination for millions of mostly Algerian visitors every year.
ECONOMY: A lack of sufficient investment has at times been a source of discontent and social unrest in parts of the Kabylie region. During the 1980s, a handful of state-managed manufacturing units were set up in the region, but these have seen growing competition from Asian manufacturers in more recent years. However, with the central government aiming to bolster expansion outside of Algiers and encourage non-oil growth, capital spending is increasing and redevelopment projects in Béjaïa are moving forward, with a number of initiatives aimed at improving transport links.
Under the 2010-14 government investment plan, Béjaïa ranks second after Algiers in the list of wilayas with the largest total investment envelope, which is expected to reach up to AD420bn (€4bn) for that five-year period, according to local media reports. Approximately 62% of the total investment is expected to go to public works, driven to a great extent by the construction of the Penetrante de Béjaïa, a new auxiliary highway that will better connect the region to other parts of the country as well as link up with the East-West Highway.
Investment has also been directed at easing access to affordable homes, with an additional 31,500 homes being built across the wilaya under the 2010-14 plan for a total investment of AD60bn (€570m). Under the same plan, the connection of an additional 50,000 homes to natural gas will raise the coverage ratio for access to gas for the province to 60% by 2014, according to government statements.
The regional economy is primarily driven by small, family-owned enterprises. Such businesses tend to dominate the local private sector, although the wilaya is also home to a number of larger enterprises involved in manufacturing, such as the diversified Groupe Cevital, which is one of Algeria’s larger conglomerates and is headquartered in Béjaïa, alongside a host of industrial players, including bottled water producer Ifri, drinks manufacturer Toudja and food processing firm Cojek.
INDUSTRY: The wilaya’s industrial segment has received a boost from the capital works currently under way, and a number of players in the sector have been looking to increase their capacity to take advantage of the strong links to both national and export-oriented trade networks.
Groupe Cevital, for example, recently expanded its sugar refining capabilities in the Béjaïa region by 25%, investing $15m to increase its annual refining capacity from 2m tonnes to 2.5m tonnes. Around half of its annual refining capacity is currently exported. Another local manufacturer, Général Emballage, which specialises in the manufacturing of carton packaging, has extended its production capacity by investing AD2.8bn (€26.6m) in a third production line, raising its annual production capacity by 80,000 tonnes to a total of 200,000 tonnes.
Domestic firms are not the only ones hoping to capitalise on the slate of projects planned for the wilaya. French cement manufacturer Lafarge opened a new sales and distribution centre in Ireyahen, hoping to supply cement to the various infrastructural projects scheduled for the region. It will also allow the cement manufacturer to take advantage of the construction going on in the neighbouring wilayas of Bouira, Sétif, Bordj Bou Arréridj and Tizi Ouzou.
TRANSPORT INFRASTRUCTURE: Expansion of transportation networks has allowed the Béjaïa wilaya to develop one of the Algeria’s most dense road networks, consisting of about 4000 km in total. Much is expected to improve as a result of the government’s nationwide infrastructure development programme. Another project of great importance for the region is the new Penetrante de Béjaïa road, which will be one of several connecting roads linking the port infrastructure in the north to the new East-West Highway currently under construction. The new Penetrante de Béjaïa is included in Algeria’s National Road Development Scheme 2005-25, which aims to greatly improve the country’s existing highway and road network over the coming decade. Estimated to cost over AD100bn (€950m) to complete, the auxiliary highway will also link the city of Béjaïa and its port with the wilaya of Bouïra, to help to ease congestion and reduce travel times for freight and passengers. Work is currently being carried out by an Algerian-Chinese consortium made up of China Railway Construction Corp. (CRCC) and Société Algérienne des Ponts & Travaux d’Arts (SAPTA). The new route is set to extend for 100 km, linking the towns of Tala-Hamza, El Kseur, Sidi-Aïch, Amallou, Akbou, Tazmalt and M’chedallah. Local firms expect the new highway to facilitate the transport of goods and better connect the region with the rest of the country.
THE RIGHT TRACK: Railway links in the wilaya are also being improved. In a move to modernise and further expand the existing railway connections, the Ministry of Transportation has stated a goal of increasing the current total length of Algeria’s railways from around 4800 km to 12,000 km by 2017. The National Agency for the Planning and Implementation of Railway Investments (Agence Nationale d’Études et de Suivi de la Réalisation des Investissements Ferroviaires, ANESRIF) is currently managing the $32bn envelope that the government has committed to railway transportation.
For the Béjaïa region this will mostly come in the form of a revamping of current links. Initial studies are already under way or have been completed for the laying of parallel track along an 85-km line between Béjaïa and Beni Mansour. This upgrade is expected to cost an estimated AD106bn (€1bn). The project also includes the removal of 86 train line crossings, to be substituted by a series of tunnel passages and overpasses, as well as the renovation of several train stations along the railway. The whole project is expected to take five years to complete, and will be undertaken by a consortium made up of three companies, Cosider, Infrarail and Saeti. Once completed, the new revamped train line will support six passenger and three freight trains daily, as well as junctions connecting to the Kseur and Taharakht d’Akbou industrial zones.
BIGGER, BETTER PORT: Planned developments at the port, which is the second largest in Algeria in terms of cargo traffic after the Port of Algiers and the third largest of the country’s seven hydrocarbons ports (see analysis), are also cause for optimism. Expansion work includes the development of mul-timodal connections and storage space, and there are also plans to extend and move Béjaïa’s oil terminal, which will help to further alleviate traffic in the central port area. The new oil terminal, which will be outfitted with three piers and four 50,000-tonne capacity storage tanks, will be located in Sidi Ali Lebhar. Work is also set to begin on a new passenger quay, estimated to cost AD3.5bn (€33.25m), to more easily accommodate passenger ferries into the Béjaïa port, especially over the summer months.
Adding to improvements to the city’s port facilities, plans are also in place for the construction of a dry dock and additional logistics areas to service increasing traffic, although a lack of sizable land plots in Béjaïa had long delayed the projects. Once inaugurated, these new zones will do much to improve logistics capabilities and ease the cost of doing business for companies in the region.
GREATER HEIGHTS: In the air travel segment, an increase in passenger traffic has put pressure on infrastructure. The wilaya’s international airport, the Abane Ramdane Airport, around 5 km from the city of Béjaïa, has seen incremental growth in the number of passengers. On average, the airport receives between 60,000 and 70,000 passengers in the summer months alone – mostly domestic visitors, although there are also regular flights to Belgium and France that cater largely to the Algerian diaspora – and the authorities expect the total number of such passengers transiting through the airport to reach 260,000 for 2013 as a whole, according to local media reports. In total, this would represent a 10% increase when compared to figures for 2012. The infrastructure is managed by Etablissement de Gestion de Services Aéroportuaires d’Alger, which launched two separate tenders in 2013 to find suitable contractors to expand the terminal infrastructure as well as the runway.
Although still not undergoing the same level of development as some other urban centres in the country, municipal authorities in Béjaïa have started to focus on enhancing public transport in the region’s capital city. Enterprise du Metro d’Alger, which manages the design and construction of several mass transit systems in Algeria, is currently considering bids for the construction of an aerial tramway system to connect different areas of the city. Béjaïa is one of four cities alongside Algiers, Constantine and Aïn Temouchent where cable transport systems are currently under development.
AGRICULTURE: Owing to the region’s climate, the wilaya is ideal for crop cultivation, which has helped to make it a strong base for the production and processing of agricultural goods, similar to most other wilayas in the Kabylie region (see analysis), although traditional cultivation and animal husbandry – largely family-based and on small plots – still plays a major role. Large-scale agricultural cultivation has tended to be confined to selected areas of the coastal plain. The extensive mountainous areas inland mean that mechanised commercial activity can be challenging, and less than 5% of the Béjaïa wilaya currently has access to year-round irrigation.
While the mountainous terrain has largely precluded industrial operations, communes in those areas still produce significant amount of certain products – such as olives, apricots and honey – that are well suited to the small plots and hilly landscape. Olives are among the leading crops in Béjaïa, accounting for nearly 50,000 ha worth of arable land, as compared to around 6500 ha for cereals, and this is indicative of the broader trend in the wilaya towards producing arboreal crops – such as olives, figs and fruits, which together comprise upwards of 60% of the total agricultural land in Béjaïa – as opposed to cereal or other herbaceous crops.
WHAT GROWS: According to National Agency for Investment Development figures, the wilaya had a total of 129,848 ha of agricultural land, or about 40% of its total acreage, allowing for the production of olives, fruits and vegetables, and cereals, and the raising of cattle. Recent years have seen a steady growth in activity, across all segments. According to the local government, cereal production – including all types of wheat and grains – was expected to reach 120,000 quintals (1 quintal equals 100 kg) during the 2012/13 harvest, as opposed to 110,000 the previous season, based on the harvest of 94,000 quintals by end-July 2012. It also has an established milk production capacity, which rose from 15m litres in the 2003/04 season, to 41m litres in 2011/12 season, according to local media reports. Production of olive oil, which comes from more than 400 small-scale production units, reached 19m litres in 2012.
The upward trend comes as something of a relief, given the fact that the wilaya is regularly affected by forest fires – including several earlier in 2013, some of which damaged more than 50 ha of agricultural land – as well as in light of the sector’s poor performance in the 1990s, when production dropped significantly due to the country’s civil conflict. Potato cultivation, for example, dropped by nearly 60% between 1986 and 1995, while milk output fell by around 40% and olive production by almost 70% during the same period.
SECURING THE BASE: Authorities have been looking to strengthen the sustainability of the sector to ensure that it is buffered from exogenous shocks and climate risks, and that it has a sufficiently large base of production to help leverage economies of scale in the downstream sector. A recent spate of initiatives by the Department of Agricultural Services (Direction des Services Agricoles, DSA), for example, has sought to stimulate new crop production and processed output in a number of the wilaya’s local communities. Among them, 27 communes – predominantly in the mountainous regions – have been selected by the DSA to participate in a ministerial initiative to replant acreage damaged by fires between 2008 and 2010. The communes will receive roughly 850,000 olive trees for planting, just under 20% of the wilaya’s total number of producing trees.
Other efforts have focused on addressing concerns that affect farmers nationwide, such as limited access to credit. In June 2013 the DSA and Banque de l’Agriculture et de Développement Rural (BADR) held a workshop for producers and investors intended to encourage them to participate in a series of lending programmes targeting the agricultural sector, such as Ettahadi, which provides preferential interest rates for any agricultural project that meets certain criteria, for a period of up to seven years.
There has also been an increasing push across the country in recent years to improve the marketing and branding of small-hold production crops, such as through organic farming initiatives (see Agriculture chapter). Organic production is still fairly limited in Algeria, covering just over 1000 ha of land as compared to nearly 20 or 30 times that in Morocco and Tunisia. However, it is especially well-suited for certain cash crops, including olives and figs, and in late 2012 the Ministry of Agricultural and Rural Development began exploring the potential for creating an action plan in conjunction with the EU to cultivate, market and export organic products to the EU.
INDUSTRY: The wilaya’s manufacturing base was established in the 1980s as part of a state development programme in areas such as Akbou, Sidi Aïch, Béjaïa and Kherrata. Some of the industrial units built under this programme, especially the ones involved in textiles and leather manufacturing, have faced increasing competition from Asian producers, prompting some to close, although six state-owned manufacturing complexes are still in operation.
The industrial sector got a boost from the relaxation of private investment regulations in the 1990s, which led to a rise in private investment, especially in agro-industry (see analysis). Authorities expect to be able to attract further investment to existing industrial areas in Akbou, Béjaïa and Kseur, as well as two other new industrial areas that are planned for El Kseur and Beni Mansour. State-owned Algerian hydrocarbons company Sonatrach is currently studying the possibility of establishing a petrochemicals industrial zone in Béjaïa, which would become the third largest in the country after the other petrochemicals complexes in Skikda and Arzew. The plan might be strengthened by exploration of potential hydrocarbons reserves on the Béjaïa coast.
TOURISM: With mountain ranges, beaches, rivers and lakes, Béjaïa has the sort of natural beauty that in many other countries has been exploited to great effect. However, as has been the case in other parts of Algeria, the region has lagged behind in its capacity to attract foreign tourists as a result of its inadequate infrastructure. Nonetheless, the Kabylie region has long been used to receiving visitors, not only Algerians living abroad, but also domestic tourists from other parts of the country.
Local authorities are increasingly looking to promote coastal areas and support local tourism by expanding the list of potential attractions. Béjaïa wilaya has a total of 46 beaches, 32 of which are authorised bathing areas, and the authorities have started the process of adding another 13 beaches to the list, pending their potential rehabilitation, cleaning and improvements to infrastructure.
In 2008 the wilaya designated 14 tourism activity zones (zones d’extension touristique, ZET) along the coast, and there are plans to potentially create another nine such zones. The ZETs are part of a national programme to channel tourism investment into designated areas that benefit not only from natural or cultural attractions, but also from the ability to carry out sustainable construction and activity. In total, some 205 ZETs have been established across the country, covering roughly 53,000 ha, although development of the zones has proceeded more slowly than was initially hoped, due to cost issues and bureaucratic obstacles.
Ultimately, increasing the number of visitors to the wilaya will also depend on the success of efforts to boost hotel capacity, not just improved attractions. The total accommodation capacity in the whole of the Béjaïa region is currently a modest 1615 hotel beds, alongside an additional 12,000 beds in other types of lodging, such as vacation camps. The number is not particularly surprising, given that as of 2012 Algeria, with its population of 37m, only had 1136 hotels containing 96,000 beds – and of those, only 18% meet international standards.
This is set to grow with plans for new investments in the sector. In early 2013 the Béjaïa Authority for Tourism and Handicrafts announced an investment of AD1.2bn (€11.4m) to build nine new high-end hotels and an additional holiday resort across several areas of the province. The new units, which are now more than half completed, will add 757 new hotel beds to the wilaya’s accommodation capacity, while the new holiday resort, which has only just broken ground, will include 60 beds and employ another 50 people. New investments are also expected to create 300 additional jobs.
Although the region has the natural ingredients necessary to develop a burgeoning tourism industry, focusing too much on beach tourism might leave Béjaïa vulnerable to the problem of seasonality, an issue that has affected coastal destinations like Sousse and Hammamet in neighbouring Tunisia.
ENERGY: Ensuring access to sufficient power has at times been a challenge, not only in Béjaïa, but also throughout the country, given the significant increases in domestic consumption in recent years. Demand in Algeria has risen at a surprising pace of late, and while per capita consumption of 1091 KWh still lags behind countries such as Tunisia and Egypt, where consumption is 1297 KWh and 1743 KWh, respectively, it is growing by double digits – at about 10.9% nationally for 2012. This is further exacerbated in Béjaïa by the expansion of industrial facilities, which are often large consumers of electricity.
POWERING UP: As a result, load-shedding and blackouts have affected the wilaya, particularly during peak periods in both the winter and late summer seasons. This will be partially solved through the construction of a new electric power plant at Amizour, 25 km south of the city of Béjaïa. In April, Algerian Prime Minister Abdelmalek Sellal inaugurated work on the new 160-MW unit, which is expected to be operational by the middle of 2014.
According to reports in the local press, the plant is being fast-tracked by the government due to the need for increased supply before the peak period the following summer. Managed by state-owned electricity and natural gas company Sonelgaz, the new power plant will include eight 20-MW gas turbines. The turbines will be provided by General Electric under an $800m contract, which was itself a precursor to a much larger $1.9bn deal inked in September 2013 between the US multinational and the Algerian government to deliver roughly 8000 MW worth of turbine equipment – equal to around 70% of the country’s total production capacity currently (see Energy chapter).
Although the new power plant will have a positive impact on energy generation capacity throughout the region, further upgrade work is also expected to take place to improve the transmission grid. Several electricity transformation units are planned across the wilaya at an investment of about AD2.5bn (€23.75m) over the course of 2013-14, but some of these initiatives have experienced delays due to disputes over land usage.
EXPLORATION: In April 2013 the authorities gave the green light for hydrocarbons exploration off the coast of the Béjaïa region, which might eventually see the wilaya become an oil producer. Exploration is set to take place in the Gulf of Béjaïa by foreign companies in partnership with Sonatrach, although the Ministry of Energy and Mines has yet to release details relating to the expected beginning of work.
WATER: Water also offers opportunities for investment in Béjaïa. Around $20bn was allocated to the water sector in the government’s five-year infrastructure plan to 2014, and desalination of seawater has been one of the key means of increasing supply in the arid country. The country’s first large desalination plant (91,000 cu metres/day) came on-line in 2005 in Arzew, but 13 more plants have since been planned, including a 500,000-cu-metre/day plant at Magtaa near Oran, built by Singapore’s Hyflux, which is set to become the largest desalination plant in the world. Béjaïa has also been selected as the site for a new plant under the government’s construction programme, with a capacity of roughly 100,00 cu metres/day, although the project’s investors have yet to be selected.
OUTLOOK: With the Algerian government’s public works plans enhancing infrastructure throughout the wilaya, Béjaïa has the potential to serve as an attractive platform for industrial production – particularly in agro-industrial and food processing – in terms of both national distribution and exports. The current state spending package targeting Béjaïa’s infrastructure networks – particularly in terms of both airport and seaport expansion plans and the new dry ports – will help to significantly reduce costs and encourage further industrialisation, which should, in turn, facilitate the creation of new jobs. The region’s service sector is still fairly limited; however, given the sizable number of domestic visitors the wilaya attracts, there is significant scope for further developing the local tourism infrastructure.
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