Industry and Retail
From The Report: Algeria 2014
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Overreliance on the energy sector in the last three decades has siphoned investment away from manufacturing and left Algeria with high import demand in a number of critical areas, including food supply, machinery, electronics and other consumer goods. However, in the last 10 years, Algeria has focused on developing local manufacturing industries in order to reduce its heavy import spending, boost employment, increase value addition and export revenues, and diversify the economy. Industry’s redevelopment has been somewhat arbitrary in recent years, yet a handful of segments have grown quickly, attracting new sources of foreign direct investment.

In the retail sector, consumption patterns in Algeria are beginning to shift towards modern retail, supported by rising income levels and greater exposure to formal shopping outlets and international brands. Retail sales increased 30% from $28.7bn in 2007 to $37.5bn in 2011, while per-capita spending rose by 22% over the same period, to reach $1023 in 2011. Authorities hope that the rise of modern retail stores, particularly in the grocery segment, will have a positive knock-on effect for locally produced goods.

This chapter contains interviews with Hamoud Tazerouti, CEO, Entreprise Nationale des Véhicules Industriels (SNVI); Amor Habes, Owner and General Manager, Faderco; and Javier Goñi, CEO, Fertiberia Group

Articles from this Chapter

Overview

The country seeks to return to its industrial past
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In the last 10 years, Algeria has focused on developing local manufacturing industries in order to reduce its heavy import spending, boost employment, increase value addition and export revenues, and diversify the economy. Today the oil and gas industry contributes 97% of export receipts and roughly one-third of GDP, yet it employs only a fraction of the workforce. Over-reliance on the energy sector in the last three decades has siphoned investment away from manufacturing and left the country with…

Analysis

In the text: New legislation on mining is designed to encourage foreign partners
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Hydrocarbons have long served as the backbone of Algeria’s economy, but in the past year there has been a push to encourage activity in other extractive industries, following the introduction of new legislation aimed at increasing mineral production. The text of the new mining bill, which was approved by the National Assembly and the upper house in late January 2014, is seen as crucial to helping stimulate new exploration and production in the sector, with reforms improving both procedural transparency…

Analysis

Local pharmaceuticals manufacturing is set to expand in the near term
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Pharmaceuticals production capacity in Algeria will increase noticeably in the next few years as several new plants come on-line. Sector authorities have been working to boost domestic output of basic medications for the last decade, and in 2011 the Ministry of Health announced a goal of meeting 70% of demand for pharmaceuticals through local production. The actual figure today is about 40%, estimates the National Union of Pharmacy Operators. Yet imports continue to rise. After South Africa and…

Analysis

Down the road: Strong automotive sales bolster local industry
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Authorities have zeroed in on the automotive industry in their bid to re-industrialise the Algerian economy and reduce import spending. Automotive sales have boomed in recent years and, despite a slowdown in late 2013 and 2014, strong demand for personal vehicles among Algeria’s 38.8m people will continue to drive sector growth. Recent state investments in industrial and transport infrastructure should help reinvigorate the manufacturing sector, provided that private investment can keep up the…

Interview

OBG talks to Hamoud Tazerouti, CEO, Entreprise Nationale des Véhicules Industriels (SNVI)
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Interview: Hamoud Tazerouti How will the Algerian automotive market evolve over the coming years? HAMOUD TAZEROUTI: After a historical high of more than 600,000 cars were imported in 2012, the Algerian automotive market has experienced a progressive slowdown in 2013, as well as during the first half of 2014, due to a reprioritisation of household expenditures by consumers – particularly towards housing, which has seen a rise in costs. However, while the domestic market has traditionally been…

Interview

OGB talks to Amor Habes, Owner and General Manager, Faderco
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Interview: Amor Habes What are the most important obstacles to greenfield investment projects in Algeria? AMOR HABES: While there were many obstacles a decade or so ago, industry has benefitted from a revival thanks to the initiatives undertaken by public authorities since the adoption of new legislation in 2009. There remain, however, specific areas for improvement. The different sector stakeholders – the industrial land regulator, those responsible for infrastructure and energy providers –…

Analysis

A new industrial zone in El Kseur advances the diversification agenda
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The choice of Béjaïa as the location for a new petrochemicals plant and industrial zone was finalised in January 2014, a step forward for the government’s plan to invest in downstream energy as part of its broader goal of diversifying the economy. In that month, Hamou Ahmed Touhami, the governor of Béjaïa, a province on the coast east of Algiers, announced that the town of El Kseur had been selected as the site for what will be the country’s third-largest industrial zone, spread over 250…

Interview

OBG talks to Javier Goñi, Chairman and CEO, Fertiberia Group
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Interview: Javier Goñi What sort of scope do you see for expanding fertiliser production in Algeria? JAVIER GOÑI: The potential of the Algerian market is very high for many reasons. First, Algeria is rich in many of the raw materials required for producing fertilisers – it is notably one of the world’s major producers of natural gas, the most important input for making ammonia, which in turn is the major component in nitrogen fertilisers. Gas is transformed into ammonia, which is then either…

Overview

Retail chains are chipping away at the dominance of informal markets
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Consumption patterns in Algeria are beginning to shift towards modern retail, supported by rising income levels and greater exposure to formal shopping outlets and international brands. Small neighbourhood stores and the informal sector still account for the majority of retail turnover, but in recent years several domestic chains have expanded their footprint. Authorities hope that the rise of modern retail stores, particularly in the grocery segment, will have a positive knock-on effect for locally…