Economy
From The Report: Algeria 2014
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After years of sustained high oil prices and a comparatively prudent fiscal policy – albeit balanced on a high breakeven price – Algeria has built up considerable financial buffers, which will help the country to ride out the current decline in global commodity prices. Declining oil prices have also highlighted the government’s efforts to develop the non-hydrocarbons sector, something it has sought to do for several years, with varying levels of success. The state continues to play a key role in the economy, through both regulatory tools and direct intervention via state-owned enterprises. According to the IMF, overall GDP is projected to jump 4% in 2014 to €167.5bn, up from 2.8% in 2013.

This section includes interviews with Amara Benyounes, Minister of Commerce; Issad Rebrab, CEO, Cevital; Mohamed Laid Benamor, President, Algerian Chamber of Commerce and Industry; Kamel Moula, President, Club des Entrepreneurs & des Industriels de la Mitidja; and Réda Hamiani, Former President, Algerian Business Leaders’ Forum.

Articles from this Chapter

Overview

Oil prices offer new impetus to develop the non-hydrocarbons economy
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In many senses, Algeria finds itself in a strong economic position, particularly when compared with its regional neighbours. It holds the fourth-largest oil reserves and the second-largest natural gas reserves in Africa. After years of sustained high oil prices and a comparatively prudent fiscal policy – albeit balanced on a high breakeven price – it has built up considerable financial buffers, which will help the country to ride out the current decline in global commodity prices. Beyond Oil Foreign…

Interview

OBG talks to Amara Benyounes, Minister of Commerce
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Interview: Amara Benyounes How has the EU free trade agreement (FTA) affected the competitiveness of Algerian companies? AMARA BENYOUNES: The FTA went into force in 2005 to create a win-win partnership, as well as attract investment, promote competitiveness and diversity exports. In trade terms, the result has been to our disadvantage so far, as imports from the EU have risen from €10bn in 2004 to €28.5bn in 2013, while non-hydrocarbons exports to the EU have been stable, at €1.1bn per year.…

Analysis

Several programmes aim to stimulate private sector activity
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The public sector remains the primary driver of economic growth in Algeria. State-owned businesses – such as oil company Sonatrach, one of Africa’s largest corporate entities – dominate production in sectors such as energy and industry. Unsurprisingly, this has a dampening effect on private enterprises, but the government is increasingly looking to strengthen private sector activity in order to support sustainable economic growth and reduce unemployment. Several programmes launched in the last…

Interview

OBG talks to Issad Rebrab, CEO, Cevital
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Interview: Issad Rebrab Which industries require particular attention in order to increase value-added production? ISSAD REBRAB: Algerian industry needs to focus more on vertical integration in the upstream and downstream segments if it is to create more added value. On the upstream side we need to produce sugar cane for sugar extraction and other derivatives. With oil, we need to encourage the production of oleaginous seeds so that crushing can be developed and our imports of raw oil can be reduced.…

Interview

OBG talks to Mohamed Laid Benamor, President, Algerian Chamber of Commerce and Industry
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Interview: Mohamed Laid Benamor What major hurdles must be overcome to encourage the creation of companies? MOHAMED LAID BENAMOR: There is still much to do in this regard. It is true that many reforms have already been enacted to facilitate or encourage the setting-up of firms and to improve the business framework in which companies are working. Nonetheless, these measures have not produced the expected outcome. To boost the creation of companies, some financial barriers still need to be broken…

Analysis

Efforts to seek out foreign investors to contribute technology and transfer knowledge
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The hydrocarbons sector continues to absorb the lion’s share of foreign direct investment (FDI), but in recent years the government has sought to channel inflows into the non-oil sector in a bid to encourage greater diversification, increase job creation and strengthen export revenues. Algeria has the second-largest gas reserves and the fourth-largest reserves of oil on the continent, and is estimated to hold 707trn cu feet of untapped shale oil and gas resources, the third largest in the world,…

Interview

OBG talks to to Kamel Moula, President, Club des Entrepreneurs & des Industriels de la Mitidja
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Interview: Kamel Moula What are some of the biggest challenges faced by the private sector in Algeria? KAMEL MOULA: The most common companies in Algeria are family-owned businesses. Since the opening of the market, we have witnessed a proliferation of family businesses, which today account for 60% of GDP. While these companies have managed to develop fast, it is still important to highlight the challenges they face. Governance within family-owned businesses is a key issue, as well as unfair competition…

Analysis

Risky business: Tapping into financial reserves to cover rising expenditure
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Development of Algeria’s oil and gas resources has allowed it to amass considerable financial reserves, helping maintain high levels of domestic investment during periods of slack global growth and partially offsetting the country’s vulnerability to external price shocks. Indeed, Algeria’s public works and robust GDP growth make for a distinct contrast to the more moribund climates in nearby Europe. Algeria’s abundant natural resources continue to play a key role in underpinning growth,…

Analysis

Trading down: Rising US shale production impacts African oil and gas exporters
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The single-largest structural shift in the global energy market over the past decade has been the emergence of shale gas and oil in the US. The beginning of production in states like Texas, North Dakota and Pennsylvania has reduced imports for one of the world’s largest energy consumers. This has had significant impacts for large-scale producers from Africa, in particular, who are seeing their trans-Atlantic hydrocarbons exports drop and are having to look for new potential customers amidst an…

Interview

OBG talks to Réda Hamiani, Former President, Algerian Business Leaders’ Forum
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Interview:Réda Hamiani Has Algeria been able to make steps towards building up a local production base? REDA HAMIANI: We know that petroleum production is going to dwindle in a decade or two, meaning the Algeria of tomorrow will no longer be able to subsist on oil wealth. We need to evolve and move on to new economic foundations. There is a clear need to develop a local industrial base; however, action remains superficial at best. Both the public and private sectors see eye to eye and agree…