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Algeria is North Africa’s Tiger Economy

Global Arab Network - Robert Bailey

Tuesday, 20 April 2010 08:06

Hamid_Temmar_Algerias_Minister_of_Industry_and_Investment_Promotion

Algeria is a rich opportunity for international investors as North Africa’s largest nation steps up its drive for economic diversification and development of bold new infrastructure.

This was the message brought to London last week by Hamid Temmar Algeria’s Minister of Industry and Investment Promotion when he met Lord Davies the UK’s Minister of State for Trade, Investment and Business.

Algeria is steadily emerging from years of economic stagnation and has embarked on a huge multi-billion dollar make-over. The investment, spurred by its income from oil and natural gas sales, is vital in a country where jobs and housing are scarce and where an Al-Qaeda inspired insurgency was until recently thought to be sinking roots.

A determined effort to improve the economy and social conditions for those marginalised by poverty is proving an effective way to counter terrorism. The longer term aim is also for the country to become increasingly integrated into the modern global economy.

The government has taken a strong grip on the security situation but still confronts the aftermath of a 15-year long Islamist insurgency that has killed thousands of people,

While sporadic violent attacks on government police and troops are still carried out by extremists, these have become far more scattered and intermittent in the last two years. As greater security has become evident so have the many opportunities available to foreign investors.

Some $180 billion has been spent since 2005. According to Mr Temmar this investment has resulted in construction of 1 million new homes, a 12,800 kilometres water distribution network and 1,500 secondary schools.

Forty one per cent of the population now have access to natural gas supplies and 98 per cent to electricity. Four years ago there were just four universities now there are 62 institutions of higher learning. Fourteen new hospitals have also been built, he points out.

The focus continues to be on the special presidential programme to improve and extend Algeria’s infrastructure. One of the main features has been the building of the country’s six-lane east-west highway linking the countries principal cities of Constantine, Algiers and Oran.

The 1,300 kilometre highway is the longest continuous highway in Africa and .stretches from Annaba, close to the border with Tunisia in the east, to Tlemcen near the border with Morocco in the west.

The transport improvement programme is ongoing with another 1,500 kilometres of new roads being built as well as airport development and new railway track. By 2025 the national rail network will stretch 11.210 kilometres and is due to be entirely electrified.

A 4 kilometres long extension to the capital’s metro system is under way. Construction of the initial 9 kilometres long system was completed in 2009. The country’s vast hinterland stretching in the Sahara hinterland is also due to see huge infrastructure improvements.

Outside the hydrocarbon sectors most of the running for orders up to now has been made by Chinese firms that have been awarded contracts estimated at $20 billion.

China State Construction Engineering Corporation has been building most of Algeria’s 1.200 kilometre east-west highway which it has been completed in just three years.

Chinese companies are also constructing the main portions of the 1.300 kilometres long high plateau railway from Sidi Bel Abbes to Tebessa with branches linking Tiaret and Relizane.

There are already some 35,000 Chinese in Algeria the largest foreign element other than French nationals. A Chinatown area has even formed in the capital’s Bab Ezzour suburb.

As Algeria increasingly builds up substantial surpluses as a result of a price per barrel of oil approaching three times the figure Algeria’s budgets are based on, the country can confidently plan huge long term expenditure.

Mr Temmar wants to see UK and other European firms become more involved. He sees the UK as an advanced services-based economy whose expertise can support Algerian companies.

“We have the money and are looking for experience and medium size companies to invest. We are conscious that we do not have the expertise of managing companies within an international environment. We are focusing on developing human resources with thousands now undergoing courses abroad. As a result we are making efforts to send people to be trained in Korea, Germany, France and Italy and other countries.”

“Language is a constraint to developing trade but it should be noted that Arabic rather than French is the language of Algeria. English is being taught in fifth grade now rather than seventh grade. We aim to see it taught in third grade but we need to work on this.” the minister notes.

UK investment, while substantial, has been largely concentrated in the country’s oil and gas industry. Other sectors are increasingly opening up. Algeria signed an Association Agreement with the European Union in 2002, under which Algeria undertook to open its markets over the following 12 years. The UK, which ratified the agreement in 2004, was one of the first EU states to do so.

Prospects have also improved following the visit by President Abdulaziz Bouteflika to Britain in July, 2006 which represented the first visit by an Algerian head of state since the country gained independence in 1962.

During the visit, UK and Algeria signed a memorandum of understanding establishing a bilateral ministerial committee known as the UK-Algeria Joint Committee on Bilateral Relations.

“There are larger numbers of British business visitors coming to Algeria now and we have discussed setting up a UK desk in the Ministry of Trade,” Mr Temmar notes.
The British Council is also planning to return to Algeria after a long absence. We welcome companies to invest and there are big opportunities for those able to enhance our service provision.

The minister stresses that investors should view Algeria as a Maghreb economy rather than a Middle Eastern one. There are different issues and different ways of doing things, he notes.

The country is also geographically much closer to Europe, just 50 minutes air time to Barcelona, two hours to London and connects with the south Europe region, he says.
“We are very ambitious and want our place in the sub-region. Algeria will definitely be a player.”

Global Arab Network

Robert Bailey is Global Arab Network consulting editor and writer specialising in the Middle East. Photo credit: life

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Last Updated on Wednesday, 21 April 2010 21:29

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