The Report: Algeria 2017
With an area of 2.38m sq km, Algeria is Africa’s largest country. Its population, which numbered 41.6m as of December 2017, is expanding at an annual rate of 1.8%. The country is relatively young, with a median age of 27.8 years and 44.6% of citizens under the age of 25. Around 99% of the population is of Arab-Berber ethnicity, and the main languages spoken are Arabic and French.
Algeria is a major producer of hydrocarbons, which are crucial contributors to the economy. It has the third-largest proven oil reserves on the continent, though it is facing substantial fiscal challenges due to the sharp fall in the international price of oil in 2014 and 2015. In contrast to many other countries in the region, Algeria has maintained its political stability, while its international profile is in the midst of gradual shift as it seeks to reduce industrial imports from traditional trading partners.
This chapter contains interviews with President Abdelaziz Bouteflika; Dmitry Medvedev, Prime Minister of Russia; Angelino Alfano, Minister of Foreign Affairs of Italy; and Lord Richard Risby of Haverhill, Special Envoy of the UK Prime Minister in Algeria.Explore chapter
Despite the collapse of oil weighing heavily on the Algerian economy, it is still the largest and most prosperous in the Maghreb. Although it remains relatively closed, with foreign investors barred from taking majority stakes in local firms or projects since 2008, the private sector’s economic contribution has expanded significantly; it grew to 70% of GDP by 2015, and economic output increased four-fold over the same timeframe. While the oil price-induced fiscal difficulties facing Algeria have added pressure to efforts to improve living standards, they have provided a pressing incentive for the country to accelerate efforts to diversify away from hydrocarbons dependency and develop a more dynamic private sector.
This chapter contains interviews with Abderrahmane Raouya, Minister of Finance; Abdelkader Zoukh, Wali of Algiers; Ali Haddad, President, Algerian Business Leaders’ Forum; and Samira Hadj Djilani, President, Réseau Algérien des Femmes d’Affaires.Explore chapter
Algeria’s banking sector has held up relatively well. Credit growth remained in positive territory through the first three quarters of 2017, albeit having slowed from the double-digit rates seen prior to 2016. Lenders are capitalised well in excess of Basel III norms, while profitability remains high, particularly among private sector banks. Internet and mobile banking are still in the early stages of development, but market observers see these technologies as having great potential to improve financial inclusion if the relevant legal, regulatory and logistical frameworks are put in place. As bank borrowing becomes increasingly expensive, capital markets are emerging as a financing alternative for a range of domestic firms. The stock market will simultaneously provide non-inflationary financing means to economic agents and have better savings yields. With only a few new entrants to the market, the structure of Algeria’s insurance sector has remained relatively stable, with the four largest state-run insurers continuing to dominate. Purely private sector insurers capture less than one-quarter of the market, despite making modest gains of late. While the life insurance segment accounts for just 10% of total premiums, its growth has been outperforming the non-life segment – a trend that looks set to continue.
This chapter contains interviews with Mohamed Loukal, Governor, Bank of Algeria; Nafa Abrous, CEO, Maghreb Leasing Algérie; Lazhar Sahbani, Partner, PwC Algeria; and Mohamed Benarbia, General Manager, Salama Assurances Algeria.Explore chapter
Production at maturing oil and gas fields is encouraging Algeria to consider new approaches with regards to its hydrocarbons potential. In line with rising demand for electricity, the country has invested significantly in the power sector over the past 10 years. With rising domestic consumption and growing environmental awareness, solar energy has come to occupy a more prominent role in the development of the energy mix.
This chapter contains interviews with Abdelmoumen Ould Kaddour, CEO, Sonatrach; and Tobias Becker, Senior Vice-President and Africa Director, ABB.Explore chapter
Industry & Mining
While the economic contribution of industry is still relatively small, many of the key building blocks for a successful industrial sector are already established, with abundant energy reserves, mineral raw materials and infrastructure. Some segments of agri-business are well developed, and activity in heavy industrial such as steel and cement production is rapidly expanding. As the largest country in Africa, and home to a variety of topographies and geologies, Algeria has substantial mineral reserves. However, these are currently underutilised; the sector has attracted relatively little investment in recent decades, and as much as 60% of the territory has yet to be adequately explored, according to local estimates. While Algeria’s size and the need for infrastructure to exploit large mineral reserves in remote areas present a challenge for development, the government is keen to promote mining as part of broader diversification efforts, and the new mining law should help to attract investment in this regard.
This chapter contains interviews with Philippe Monestes, General Manager, Nestlé Algeria; and Amine Melouk, General Manager, SAREL.Explore chapter
As Algeria looks to curb its imports in the face of declining state revenues, the agriculture sector is well placed to contribute. Output improved between 2007 and 2017 thanks to efforts to clear some of the bottlenecks that have traditionally held back the sector’s development, such as legislation, land ownership and financing. Agriculture accounts for around 13% of GDP and employs some 11% of the country’s active population. Foreign investors are helping to speed up the development of large projects in face of population growth and rising demand, and as a way to move away from small-scale farming methods.
This chapter contains interviews with Abdelkader Bouazghi, Minister of Agriculture, Rural Development and Fisheries; and Abdelwahab Ziani, President, Confédération des Industriels et Producteurs Algériens.Explore chapter
Construction & Real Estate
Major projects in transport and housing are in the pipeline, though a flatter rate of expansion and an increased focus on priority projects are expected due to investment cutbacks. Affordable pricing is of the utmost importance. In late 2017 the government stressed that housing and infrastructure development are key priorities, and the 2018 budget will see an 8% rise from 2017 in funding allocated to social transfers, including social housing. Thriving revenues from hydrocarbons led to a period of widespread residential building in Algeria, with the housing segment leading the construction sector as the largest market in 2011-15, accounting for 41% of the total. Sustained growth is forecast until 2020, driven by an urbanisation expansion rate of 2.7% and a rising population.
This chapter contains interviews with Abdelghani Zalene, Minister of Public Works and Transport; and Rabah Guessoum, CEO, Algerian Industrial Cement Group.Explore chapter
Meeting the demand for transport infrastructure in Africa’s largest country is a priority for the government. The current five-year development plan includes a major sector reconfiguration programme that allocates around €6.9bn to the upgrade, extension and construction of strategic segments, primarily maritime and rail. Traffic congestion and overdependence on road transport, inefficiencies in maritime freight management and a growing demand for urban transport are among the priorities to be tackled, as well as the construction of El Hamdania deepwater port, which will establish Algeria as a maritime hub. The rapid rate at which urban areas in Algeria are developing has led to an expansion in public transport construction between major cities. Since establishing the first metro line in 2011, the country has installed tramways and a dense network of bus lines, and is pushing ahead with additional development of both hard and soft transport infrastructure.
This chapter contains interviews with Bernard Arkas, Executive Vice-President, Arkas Holding; and Wissam El Moukahal, CEO, Entreprise de Transport Algérienne par Câbles.Explore chapter
Technological advances over the past decade have played a fundamental role in transforming business practices and promoting a new digital culture in Algeria. A major shift in Algeria’s IT landscape has taken place following the arrival of 3G and 4G technologies, with the internet penetration rate jumping from 25.6% in 2014 to 71.2% by the end of 2016. Although still under consideration, the approval of the proposed telecoms law could help boost investment and new projects, while expansions of fibre-optic networks and international submarine cables will solidify the country’s internet connections, in turn opening possibilities for innovation, start-ups and partnerships.
This chapter contains an interview with Riad Hartani, Strategic Technology Adviser, Algiers Smart City project.Explore chapter
Located a short distance from Europe, and with a large and comparatively wealthy population of its own, Algeria is primed to make use of its significant tourism potential. Though the industry remains underdeveloped, particularly in regards to the number of hotel rooms and the cumbersome visa regime, foreign business tourism and niche areas such as spa, desert and ecotourism have strong scope for growth.
This chapter contains an interview with Lazhar Bounafaa, CEO, Groupe Hôtellerie Tourisme Thermalisme.Explore chapter
Health & Education
Over the past two decades, considerable progress has been made in the coverage and quality of health care services, with indicators improving steadily, alongside a decline in instances of communicable diseases. The opportunities for private sector growth and investment are strong, particularly in the pharmaceutical industry. The Ministry of Education has maintained its commitment to improving the standard of education provided to Algerian citizens. Public schooling is free and obligatory up to the lower secondary level, and tertiary education is developing rapidly, following the government opening up the segment to private sector participation.
This chapter includes a viewpoint from Mokhtar Hasbellaoui, Minister of Health, Population and Hospital Reform; and an interview from Mohammed Dib, General Manager, Groupe Général Maritime.Explore chapter
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, Partner, Gide Loyrette Nouel, on recent changes to the legal code and investment regulations.Explore chapter
In conjunction with Mazars, OBG explores the taxation system in Algeria.
This chapter contains a viewpoint from Samir Hadj Ali, Chartered Accountant and Managing Partner, Mazars Algeria, on the new investment law.Explore chapter
This section includes information on hotels, government and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.Explore chapter
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