Business & Industry

Apr 1, 2016

Algeria Opens the Way to Business

Having one of the largest reserves of oil and natural gas in the world, as well as excellent location, Algeria has played a key role for political stability in Magreb, North Africa, and in the link with Europe, becoming a promising country for foreign investment. From renewable energy to tourism, the way to make big businesses is open.

If it is true that since 1992 Algeria has initiated a return path to the political stability of the region, especially after having suspended the "state of emergency" imposed at the beginning of the 90s as a result of clashes between Islamists and governmental forces, the economy of the country is equally relevant. The aspect that has been privileged by virtue of the association status it has with the European Union since 2001, is that it provides greater security to foreign investment. Being attentive to the growth of potential of the countries providing investment opportunities, Your VIP Partner undertook to understand the trend of the Algerian market.

With a GDP of 570 million dollars, the 16th largest oil reserve and the seventh largest natural gas reserve, Algeria has enormous potential to develop sectors such as agriculture, manufacturing, renewable energy, tourism, among others.

Algeria is, for example, a major producer of olive oil, cereals, fruit, and sheep farming, it has extensive arable areas in the plains and plateaus near the Mediterranean, so it is a good destination to invest in food production both of the domestic market and of export. Currently, it actively seeks new investments in urban development and production of renewable energy, wind and solar power to replace the old and traditional thermal power.

The large foreign exchange reserves of Algeria allow, despite the recent fall in prices of oil and natural gas, continue to invest in modernization of its economic capacity and international competitiveness, leveraging its excellent hinge location in the Mediterranean, between the Middle East region, the North of Africa, and Europe.

In this way, Your VIP Partner highlights the development potential of the Algeria tourism sector and neighbouring countries, Tunisia and Morocco, which have already reached a significant level in the international tourism. While the latter have a share of tourism in their GDPs ranging between 15% and 18%, in Algeria in 2015 the goal to be achieved still remained eighth percent, due to some backtracking and the reduced dynamism registered since 1992, which benefited Tunisia and Morocco.

Recently, the fall of oil and gas prices alerted the Algerian authorities of the need of diversifying economy, so one of the priorities is to recover the tourism more effectively in order to create more jobs and to strengthen foreign exchange revenues, which requires investment, knowledge and skilled people. Note that despite the reduction that has occurred in the flow of tourists to the Maghreb countries, due to security concerns in the region, the need to increase flights and to build more hotels is obvious, because the number of tourists who visited Algeria in 2015 begins to become significant and the projections for the coming years indicate a gradual growth. These factors illustrate the growing trend of business opportunities in this sector, particularly, in the construction of infrastructure and new hotels.

From Culture to the Economic Power

Algeria is the tenth largest country in the world, and the largest in Africa. However, given that part of the territory is occupied by the Sahara Desert, the 40 million of Algerians (with predominance of Arabs and Berbers), of which half are under the age of 25, are concentrated along the Mediterranean coast, mainly in three largest cities, especially in the capital Algiers, with three million habitants, Oran and Constantine, major ports for foreign trade.

Besides searching for many new business opportunities, another strong reason to visit Algeria is its natural beauty, including the Sahara Desert, the historic towns and beaches, as well as the nine sites classified by UNESCO as the World Heritage of Humanity, whose examples are the Roman ruins of Djemila, Timgad, Tipasa and Kasbah of Algiers. In fact, Algeria, independent 54 years ago, is a country with rich history and unique culture, - it used to be so both before and after the Islamization in the seventh century, because for a long time the Carthaginian, Roman, Ottoman and French domains prevailed here.

Algeria imports more than 53 billion dollars of goods, mainly from China, France, Italy, Spain, Germany and the United States. Now that part of the world economy is in a slowdown, or recession; the recovery of major economies passing through temporary difficulties because of the fall of oil and gas prices, as is the case of Algeria, is essential, and shows that there is an ongoing change to the traditional balance of economic power in the world. However, the collaboration with local partners and expert consultants is recommended to overcome the still remaining bureaucratic barriers.

Aware of the need to improve sectors such as infrastructure (energy, transport, shopping centers, hotels, office buildings), agriculture, fisheries, urban development, housing, education and health care, as well as increasing the consumer class, Algeria is paving the way for business and foreign investment.

Member of the Organization of Petroleum Exporting Countries (OPEC), the country produced about four million barrels of oil, per day, in 2015, intended for refining in the domestic market, exports to the region or to distant markets such as New Zealand. Thanks to these exports, Algeria has accumulated over 150 billion dollars from foreign exchange reserves and its external debt being almost insignificant.

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