An industrial leader in the making

Already one of Africa's top five economies, Algeria aims to become a major manufacturing partner for leading European brands

Mohamed Benmeradi, Algerian Minister of Industry, SMEs and Investment Promotion

While Algeria has previously experienced tough times – with the 1986 oil price collapse, IMF intervention in 1994, and the ‘Black Decade’ of social distress and political crises – on the occasion of its 50th anniversary of independence the country can celebrate impressive economic development and renew its determination to consolidate and improve upon its position as one of Africa’s top five economies.

Mohamed Benmeradi, Minister of Industry, SMEs and Investment Promotion, recalls the challenging years: “We had to close thousands of companies, and cut hundreds of thousands of jobs, especially in industry. In 2000, when the situation calmed down, the economy was totally fragmented: the companies created in the 70s were functioning, but at 50 per cent of their capacity, and they needed to be reorganised, upgraded and stimulated.”                

Paradoxically, this crisis was the starting point of the country’s economic stabilisation, and eventually its growth. “The country was obliged to reschedule its debt and to adopt a series of measures to restructure its economy. As a result of these steps, by 1997-98 all the country’s macro-economic indicators were positive,” explains Ahmed Tibaoui, President of the World Trade Centre Algeria in Algiers.

The oil price collapse in 1986 also illustrated the need to diversify the economy, and to remove dependence on high energy prices.

Nowadays, Algeria has virtually no external debt, little or no public deficit, and an inflation rate among the lowest in the Middle East North Africa region. It successfully resisted the various financial crises that have so affected the global economy: while many countries still suffer the effects of prolonged recession, Algeria enjoys a steady 4-5 per cent annual growth.

Only those companies that innovate to improve their competitiveness manage to survive. Mohamed Benmeradi, Algerian Minister of Industry, SMEs and  Investment Promotion

A market economy emerges

The adjustments advised by the IMF led Algeria to open up to privatisation, foreign investment and competitiveness – a huge step for a country which had been largely socialist since its formation. “The state had been present everywhere: as employer, regulator, sponsor and protector,” comments Reda Hamiani, President of the Business Leaders Forum (FCE).

Algeria started a process of industrial transformation and transition towards a market economy, with major state enterprises reformed and opened up to the private sector and foreign capital.
“We told the public enterprises: we accept your consolidation plans, we will review your financial situation, we will give you the benefits of an investment plan – but we will do so on the condition that you find an international technology partner,” explains Mr Benmeradi.

With the renewed trust of the citizenry (the FNL party won the elections in May), President Abdelaziz Bouteflika has a mandate to press on with the transition of the Algerian economy towards the free market. The bid to reduce £32 billion-worth of imports, to provide jobs for a fast-growing population, and to modernise the economy have persuaded the government and people of the need to both privatise and open up to the world.

After many years of international isolation, Algeria has redefined its position and become a key regional player. President Bouteflika was invited to Germany in 2010, after Angela Merkel visited Algeria in July 2008. Last February, it was the US Secretary of State Hillary Clinton’s turn to visit the country. The international community, acknowledges Algeria’s role in the fight against terrorism, and the country is now classed as a strategic partner – the second largest of its kind in the Arab world.

With its political and economic situation now stabilised, the country offers attractive opportunities for foreign investors and enjoys excellent diplomatic and commercial relationships with Europe, particularly the UK, Spain and Germany. Various co-operation agreements covering trade and culture provide a reassuring framework for foreign investors. German interest has been particularly strong: more than 200 German companies including Mercedes, Daimler and MAN Ferrostaal have operations in Algeria and Siemens has just built the country’s first metro in Algiers.

Shaping a new industrial landscape: The 2010-2014 Development Plan

The challenges facing Algeria can be read between the lines of its advantages: the need to diversify its economy away from oil and gas revenue, the necessity to upgrade the manufacturing base and skills, the call for better infrastructure, and the need to develop small and medium-sized enterprises (SMEs) and reduce its reliance on imports.

These challenges are precisely those addressed by the ambitious $286 billion 2010-2014 Development Plan, a concerted effort to put Algeria on the map of industrial players.

“We have implemented very large projects: an estimated investment of $500 billion over the past 12 years by the state. This is the equivalent of three or four times the GDP of Algeria,” says Mr Benmeradi.

While energy-related ventures figure prominently in the investment plan, industrial projects worth $6 billion also feature. Not all the money is destined for large companies, the majority being reserved for SMEs through the development of sub-contractor networks within industrial development zones. “We have a $4 billion programme for the upgrade of 20,000 SMEs,” says Mr Benmeradi.

A range of opportunities

While Algeria has advanced its food processing, construction materials and pharmaceutical industries, the auto and electronics industries figure among the list of sectors in need of development. Steel represents another opportunity, as Mr Benmeradi explains: “Each year we import $5 billion of steel products. We have the natural resources, but we have only one complex which produces less than a million tons per year.” 

The modernisation of infrastructure is another Algerian priority, reflected in the administration’s plan for $632 million of public works. The need for diversification opens opportunities in the services and tourism sectors worth $1.3 billion and $382 million respectively, while the Minister has also identified cement, engineering and paper as fields that require foreign investment.

Thus, Algeria offers many opportunities for international companies wishing to gain access to a market of 37 million people, a large and educated workforce, and a selection of large-scale projects. Meanwhile the range of fiscal and legal incentives, private and public funds, and support from government agencies clearly demonstrates the sincerity of Algeria’s wish to build mutually profitable long-term partnerships with capable foreign investors.

ALGERIA PROJECT TEAM:
Christophe Laurent (Editorial Director);
Paloma Garralda (Project Director);
Alain Caignard, Jose Ignacio Alegre and
Brianne Bystedt (Project Co-ordinators)

Celebrating 50 years of independence

ALGERIA. Celebrating 50 years of independence
On July 5, Algeria celebrates 50 years since its declaration of independence from France in 1962. In addition to instilling pride and patriotism across the nation, the event also unites Algeria’s government, business community and citizens in highlighting the current peace, progress and stability that contrast so greatly with the country’s tumultuous past

 



http://www.worldfolio.co.uk/reports/81-algeria-worldfolio-afapress

ALGERIA. Celebrating 50 Years of Independence

Algeria is the largest country in Africa and the 10th largest in the world. More than 80% of its territory is covered by the Sahara Desert. Consequently, over 90% of its 37 million people live along the country’s fertile 620-mile Mediterranean coastline. The country is also one of the continent’s top five economies, fuelled by massive reserves of oil and natural gas which have given it a hefty cushion of $205.2 billion in foreign currency reserves, and a large hydrocarbon stabilization fund.

Wary of over-reliance on filling its coffers from hydrocarbons, the government has been taking action to create a diversified and competitive economy, with the ultimate aim of becoming the biggest industrial base in North Africa. As such, Algeria’s business framework has evolved substantially in recent years. Overhauled legislation and new investment incentives are making their mark on the nation’s financial environment, adding weight to the government’s affirmations that the formerly socialist Algeria no longer differentiates between public and private enterprises or national and foreign entities.

In May 2010, President Abdelaziz Bouteflika announced Algeria’s $286 billion investment plan for 2010-14, aimed not only at diversifying Algeria’s economy away from hydrocarbons revenue, but also improving infrastructure, increasing the overall skills base in the country, and supporting small and medium-sized enterprises (SMEs).

“After overcoming the hardest of trials, our country is now headed on a path of dynamic progress, taking into account the realities and aspirations of our youth, to strengthen the foundationS, expand the scope, and ensure the continuity of peace, independence and unity of the nation.” Abdelaziz Bouteflika, President of Algeria

Over the past five decades, Algeria has endured some turbulent times, including a civil war that dominated the 1990s. It has since become an oasis of relative peace and security in what is viewed as a fairly volatile region.

The Arab Spring uprisings in large parts of North Africa and the Middle East that toppled autocratic regimes to the east of Algeria – in Tunisia, Egypt and Libya – did not ignite an ‘Algerian Spring’ last year, thanks in no small part to a populace reluctant to return to times of conflict, as well as swift action by President Bouteflika to address popular demands. For example, riots in January 2011 in reaction to escalating food prices subsided in less than two days after the government announced subsidies designed to reduce prices by 41% for staples such as sugar and cooking oil.

Further measures followed in February last year, when President Bouteflika promised to rescind Algeria’s state-of-emergency legislation, which had been in place since 1992, and pledged to open up access to audio-visual media, an area that had been a state monopoly up to that point. Responding to widespread concern over unemployment in Algeria, the President also vowed to promote job creation, particularly for the country’s massive youth population, to further assuage discontent.

Reforms continued throughout 2011. In mid-April, President Bouteflika promised to amend the constitution and invited other political parties to submit proposals for changes to a parliamentary committee. Proposed reforms to the laws governing political parties, the electoral process, and nongovernmental organizations were announced in August. The following month, after the annual meeting between the government and the trade union confederation, a $40 increase in the monthly minimum wage to $240 was also announced.

Mr. Bouteflika became President of Algeria in 1999, and was re-elected in 2004 for a second five-year presidential term. A change to Algeria’s constitution, which removed the previous limit of two presidential terms, enabled a third electoral victory in 2009 when he was reported to have won more than 90% of the vote, carrying his leadership through to the next presidential elections scheduled for April 2014.

Peaceful parliamentary elections in May 2012 produced another win for the ruling National Liberation Front (Front de Liberation Nationale, FLN) party. Past elections have been marred by accusations of fraud, so at Algeria’s request these latest polls were held under international observation by the EU, the African Union and the Arab League. EU observers reported on how the elections were handled in “generally satisfactory” conditions, auguring well for the continued development of Algeria’s political system in the future.

Following the elections, new legislation and co-operation between Algerian authorities and UN Women regarding female representation in the country’s political sphere saw the proportion of women in the Algerian parliament increase from 7% to 31%. President Bouteflika believes the relatively high turnout for May’s legislative polls, of around 43% compared to 35% in 2007, should mark the rise of a new generation.

Quelling the tide of Arab Spring revolt with ongoing progressive reforms and opening up the electoral process to international supervision have helped burnish Algeria’s reputation with Western allies who rely on the North African nation’s supplies of natural gas and contributions to tackling terrorism. The elections, which dashed Islamist opposition hopes of gaining power, garnered praise internationally, with U.S. Secretary of State Hillary Clinton calling them a “welcome step,” and a statement from the EU referring to them as a “step forward in the reform process” that would consolidate democracy.

An oasis of stability and progress in North Africa

A stable political situation has contributed to a robust economic expansion over the past decade. Today, Algeria’s biggest challenges include tackling unemployment, addressing housing shortages, abating corruption, and further developing the private sector. Increased economic diversification and foreign partnerships also head the government’s priority shortlist.

A UNITED WORLD SUPPLEMENT PRODUCED BY:
Christophe Laurent (Editorial Director);
Paloma Garralda (Project Director);
Alain Caignard, Jose Ignacio Alegre and
Brianne Bystedt (Project Co-ordinators)

http://www.worldfolio.co.uk/reports/algeria/abdelaziz-bouteflika-president-of-algeria-n1329

AFA Press bets on social media

AFA Press bets on social media

AFA Press is already on facebook, twitter and Linkedin. The company wants to increase its online presence and reach out to readers who interact and share information and interests using social media. 

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Being well-aware of how significant and influential social media is today, AFA Press will continue to update and share information on these new platforms on a regular basis. We are excited about this new communication channel that allows us to be closer to our followers, clients and partners.

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