Doing Business in Algeria
If you are interested in investing in Algeria then now is your chance!
Algeria, with its population of more than 37 million, hydrocarbon wealth, expanding infrastructure needs, and growing consumer product demand, is attracting interest from companies around the world. British companies continue to consider Algeria an emerging and growing market. The climate for international firms considering direct investments in Algeria has stabilized in the wake of a series of restrictive foreign investment rules enacted in 2009 and 2010, which imposed a requirement of at least 51 percent Algerian ownership of foreign investments. Foreign Direct Investment (FDI) in Algeria waned as a result of those measures. Investors highlight regulatory uncertainty, tight foreign exchange controls, lax intellectual property rights (IPR) protections, customs delays, and a large informal sector among ongoing commercial challenges. However, the Government of Algeria (GOA) has invested more than USD 286 billion in infrastructure development, making the local market sufficiently profitable for firms adapted to emerging markets to weather those challenges and explore new opportunities, especially in sectors like energy, power, water, health, telecommunications, transportation, and agribusiness.
The number of foreign trade missions to Algeria reportedly grew from 30 in 2010 to 60 in 2012, illustrating the increased focus and competition in the local market. In 2012, Algeria concluded commercial agreements with several Arab and European nations. President Abdelaziz Bouteflika appointed former Minister of Water Resources, Abdelmalek Sellal, as the new Prime Minister. Sellal is trusted by the political elite and viewed as a pragmatic politician who seeks new economic partnerships to tackle long-standing issues, such as housing shortages and unemployment. Algerian leadership remains focused on building domestic production capacity and reducing imports and seeks British expertise and partnership.
The signs of change are positive and Algeria’s macroeconomic outlook is stable, but vulnerabilities and challenges persist, including dependence on hydrocarbon revenue and risks posed by rising inflation. The public sector still dominates the economy and inefficient state-owned enterprises are a drag on productivity. The GOA has supported state-owned companies experiencing financial difficulties by cancelling their debts and providing investment credits and technical assistance. Such economic vulnerabilities have prodded the GOA to court FDI and reconsider the importance of private-sector development. This trend should continue through 2013.