Economy
From The Report: Algeria 2015
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With industrial production increasing, construction projects breaking ground and transport activity rising, Algeria’s economy has benefitted from stable growth in a diverse array of sectors. However, oil and gas remain its lifeblood. The economy grew by 3.8% in real terms in 2014, according to figures from the National Office of Statistics, up from 2.8% in 2013. The IMF forecasts the figure to fall to 3% in 2015, before recovering to 3.8% in 2016. The government’s 2016 budget is based on non-hydrocarbons GDP growth of 4.6%. Algeria’s near-term economic prospects will depend heavily on oil price movements, and current price levels are putting the country’s trade and fiscal balances under substantial pressure, which will only increase should prices remain steady or fall further. However, the current environment is also pushing the country to attract more investment and step up long-standing plans for diversification, which could help to put Algeria on a more sustainable economic footing in the long term. This chapter contains interviews with Abderrahmane Benkhelfa, Minister of Finance; Ali Haddad, President, Algerian Business Leaders Forum; Kaddour Bentahar, General Manager, Algerian Customs Agency; Michael Lally, US Deputy Assistant Secretary of Commerce for Europe, the Middle East and Africa; and Mohamed Chami, Director-General, Algerian Chamber of Commerce and Industry.

Articles from this Chapter

Overview

Changes ahead: The decline in oil prices has bolstered efforts to diversify and improve the investment environment
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With industrial production increasing, construction projects breaking ground and transport activity rising, Algeria’s economy has benefitted from stable growth in a diverse array of sectors. However, oil and gas remain the lifeblood of the economy. As a result, the fall in the international price of oil since mid-2014 is having a substantial economic impact, in particular on the country’s trade balance and government finances. On the positive side though, the drop in prices is accelerating efforts…

Interview

Smart reforms: OBG talks to Abderrahmane Benkhelfa, Minister of Finance
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Interview:Abderrahmane Benkhelfa What are the major contributions of the Supplementary Finance Law of 2015? ABDERRAHMANE BENKHELFA: The measures contained in the finance act are intended to mobilise new financial resources without increasing the tax burden, as well as to encourage and support businesses and domestic production in Algeria. Thus the Supplementary Finance Law includes several notable measures. First, it introduces a differentiated rate for the corporate income tax which focuses…

Interview

Poised for growth: OBG talks to Ali Haddad, President, Algerian Business Leaders Forum (FCE)
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Interview:Ali Haddad Given the efforts to diversify the economy, what are the prospects in the short and medium term? ALI HADDAD: For companies to be competitive it is imperative that they operate in a favourable business climate. The FCE works for businesses to be at the centre of all government economic policies. It is clear that businesses are the main drivers of growth. I am optimistic about the economic development of Algeria because the government has initiated reforms for the re-industrialisation…

Analysis

Boxing clever: Ongoing fiscal pressures are prompting the government to seek out foreign investment and reduce imports
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Hydrocarbons production remains central to the Algerian economy, worth AD4.66trn (€42.87bn) in 2014, or 27% of GDP – down from 29.8% the previous year and a recent peak of 35.8% in 2011. Hydrocarbons also account for around 97% of export revenues and 58% of government income. However, the sharp fall in oil prices since mid-2014 has put substantial pressure on Algeria’s trade and fiscal balances, with average oil prices falling from $108.97 per barrel in 2013 to an average of just $58.23 by…

Analysis

Little by little: The government is working to support smaller businesses
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The Algerian government, with the backing of foreign donors, has been making efforts to develop the country’s small and medium-sized enterprises (SMEs). There are around 900,000 SMEs and, in October 2015, Rabea Kherfi, secretary-general of the Ministry of Industry and Mines, told media that the failure rate of companies in the segment had fallen in recent years to around 7-9% on the back of the government’s ongoing efforts. Government Backing The National Agency for the Development of SMEs…

Interview

Reducing barriers: OBG talks to Kaddour Bentahar, General Manager, Algerian Customs Agency
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Interview:Kaddour Bentahar What steps is the Algerian Customs Agency taking to modernise its operations and encourage increased investment in the country? KADDOUR BENTAHAR: Today we are witnessing the globalisation of the economy in Algeria. This is due to the opening up of the market and the development of trade flows across a very large geographic area, along with a diversification in our trading partners. Nationally, we have a policy that promotes diversification, as we are actively seeking…

Interview

Partners for growth: OBG talks to Michael Lally, US Deputy Assistant Secretary of Commerce for Europe, the Middle East and Africa
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Interview:Michael Lally What can be done to help diversify US trade and investment ties with Algeria? MICHAEL LALLY: With Algeria’s sizable pool of labour, vast geography and strategic location, there is significant untapped potential for US trade and investment. Increased foreign direct investment (FDI) will drive diversification through technology transfer, the development of human capital through training – including managerial skills – and the enhanced competitiveness of the receiving…

Analysis

For sale: Recent years have seen a shift towards privatisation
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While the state remains a major player in the Algerian economy, recent years have seen an impetus towards the sale of stakes in public enterprises. In the mid-2000s the government had plans to privatise a majority stake in the state-owned bank Crédit Populaire Algérie (CPA) and a minority holding in fixed-line telecoms operator Algérie Telecom, but these were dropped in 2007 and 2008 respectively. Plans To List In 2013 the State Holdings Council approved plans to list eight state-owned firms…

Interview

Taking an active role: OBG talks to Mohamed Chami, Director-General, Algerian Chamber of Commerce and Industry
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Interview:Mohamed Chami In the last 10 years, what have been the major reforms improving the business climate in Algeria? MOHAMED CHAMI: Perhaps most notably, we have facilitated access to industrial land. To accompany this we have created the National Agency for Land Intermediation and Regulation to manage Algeria’s industrial zones correctly. We have also been able to simplify business creation processes, such as company registration. Additionally, it is now much easier to access up-todate…