Algeria a politically stable country with an upper middle income, according to the World Bank. It is bordered to the northeast by Tunisia, to the east by Libya, to the west by Morocco, to the southwest by the Western Sahara, Mauritania, and Mali and to the southeast by Niger. It has a Mediterranean coast, providing good tactical links to mainland Europe.
The Algerian economy has historically been very dependent on the hydrocarbon industry and has struggled to diversify, largely due to heavy regulation and an emphasis on state-driven growth. President Abdelaziz Bouteflika, who has been in office since 1999, has introduced a wave of economic reforms that aim to restructure the economy. The government hopes to attract both foreign and domestic investment in industries other than the energy sector, strengthen the private sector and reduce high youth unemployment.
Following a wave of economic protests in early 2011, the government allocated around £15.8bn in public grants and retroactive salary and benefit increases to citizens, which continues to put a pressure on public finances. However, Algeria’s external debt is very low, standing at just about two per cent of GDP.
In terms of business culture, the official language of Algeria is Arabic, although French is also widely used. Since 2002 Berber has been recognised as one of the country’s official languages, and around 99% of the population speaks Arabic, Berber or both. Personal contact is important and businesses looking to export there should take time to visit and understand the system.
Many UK businesses are already operating in Algeria, such as BP, Unilever, HSBC, GlaxoSmithKline, AstraZeneca, Biwater, Jaguar Land Rover, Shell, DLA Piper and Hermes. In addition, multinationals Anadarko and GE manage their Algerian operations from the UK.
Strengths of the Algerian market:
- Algeria is only two and a half hours by plane from London, making it a practical place to visit regularly and keep an eye on operations
- The country is socially and politically stable, having had the same president since 1999
- An estimated 70 per cent of the population is under 30
- The country has an established desire to build a working relationship with the UK
- No foreign debt and around £127.2bn in reserves
- Economic growth averages between three and four per cent
Challenges of the Algerian market:
- There is a lot of legacy bureaucracy from previous regimes
- The 51/49 per cent investment law requires any foreign investor to have an Algerian partner and the foreign party may only hold up to 49 per cent of the shares. However, several successful joint ventures have been created
- There have been extensive discussions, but Algeria is not yet a member of the World Trade Organisation
- In February 2015 the UK government and the Ministry of Finance in Algiers signed a Double Taxation Agreement, which is expected to come into force imminently. This means that if you are a resident in one country and have income gains from another, you must pay tax on the same income in both countries
Algeria has a high dependency on the hydrocarbons sector, but has announced long-term plans for renewable energy projects, supported by a cash injection of around £68.8bn by 2030. UK firms can take advantage of opportunities available in the renewable energy, oil and gas, and technology sectors.
The Algerian government is investing money into the creation of new hospitals, with five already commissioned and another five expected to follow. There will be a specialised cancer strategy management plan. There are opportunities for UK firms with expertise in the field of healthcare and also for infrastructure companies to refurbish or develop facilities.
English language training is in high demand in Algeria, which naturally provides excellent opportunities for overseas companies. There is also demand for training providers.
Defence and security
The Ministry of Defence has the largest devolved budget in the Algerian government, and has to face a variety of challenging borders. There are opportunities for defence systems and security provision.
Algeria’s agricultural sector contributes around eight per cent of GDP but employs only 14 per cent of the work force. It is unable to meet its own food needs and much is imported. There are clear opportunities for international firms involved in the agricultural sector or the food industry.
Algeria’s tourism industry is not as strong as that of neighbouring countries Morocco and Tunisia. This has been attributed to poor accommodation options and the government is keen to address this lack of infrastructure. There are good prospects, therefore, for overseas companies looking to build hotels or expand the adventure holidays industry to the south of the country.
Official name: People’s Democratic Republic of Algeria
Area: 2,381,741 sq km
Official language: Arabic
GDP (current): $227.8bn
GDP growth: 3.3%
GDP per capita: $14,259
GDP – composition by sector of origin
Labour force: 11.31 million
Top export destinations: Spain ($11.4bn), Italy ($7.88bn), the UK ($6.65bn), France ($5.84bn), the US ($5.51bn)
Top import destinations: France ($7.08bn), China ($6.76bn), Italy ($5.78bn), Spain ($5.08bn), Germany ($2.92bn)
Main industries: petroleum, natural gas, light industries, mining, electrical, petrochemical, food processing, steel
Main exports: crude petroleum ($29.5bn), petroleum gas ($28.3bn), refined petroleum ($9.4bn), coal tar oil ($1.05bn), ammonia ($322m)
Main imports: cars ($4.02bn), refined petroleum ($3.62bn), delivery trucks ($2.19bn), wheat ($2.04bn), raw iron bars ($1.88bn)
1-3 Riding House Street
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3 Chemin Capitaine Hocine Slimane (ex Chemin des Glycines),
Telephone: +213 770 085 000
3 Chemin Capitaine Hocine Slimane (ex Chemin des Glycines)
Telephone: + 213 770 085 000