Algeria’s Economic Outlook
Algeria’s economy has been steadily progressing over the years. The country is full of resources and the government aims to ramp up different industries in an attempt to diversify from its oil-export reliance. We take a closer look at Algeria’s economy – backed by facts and figures.
Currency: Dinar (DA)
Population: 40.8 million
GDP: $612.5 billion
Growth rate: 3.7%
Inflation: 6.4 %
Major industries: Agriculture, Cement, Clothing, Fertilizers, Food Processing, Iron and Steel, Mining, Machinery, Oil and Natural Gas Production and Refining, Petrochemicals, Textiles, Transport Equipment, Wine Production.
Primary Products: Barley, Cattle, Cereals, Citrus Fruits, Copper, Dates, Fish, Grapes, Iron Ore, Lead, Livestock, Oats, Oil and Natural Gas, Olives, Phosphates, Sheep, Timber, Uranium, Vegetables, Wheat, Zinc.
Main exports: Crude Oil, Dates, Fruit and Vegetables, Natural Gas, Petroleum Products, Wine.
Main Trading Partners: France, Germany, Japan, the US, Italy, the UK, Spain, Belgium and the Netherlands.
Economic facts about Algeria
- Oil and gas make up 98 percent of Algeria’s exports
- A survey from 2017 reveals that the country has 12,200 million barrels of oil reserves, making it the 16th largest in the world
- Algeria has the largest oat market of the African continent
- The cost of living in Algeria is the highest of all North Africa
- 25% of Algerians live on less than a dollar a day
- Algeria has low external debts: only 2.4% of the country’s Nominal GDP
Key industries in Algeria analyzed
Oil and Gas
Accounting for around 35 percent of the country’s gross domestic product, the oil and gas sector is economic pillar of Algeria. Since joining the Organization of the Petroleum Exporting Countries (OPEC) in 1969, Algeria gradually reached the top three oil producers in the region. Currently, crude oil production amounts to 1000 barrels a day and the reports suggest the country holds the third largest oil reserves in Africa. More than 80 percent of its gas production goes towards Europe and The International Monetary Fund says 60 percent of Algeria budget come from oil and gas revenues.
Since the early 1970’s, high grade minerals such as zinc, mercury and iron ore have been another positive source of income for the country. Algeria counts over 950 non-fuel mineral operations, which includes joint ventures of state-owned and private companies involved in gold and other minerals. The Algerian government gives high priority to the mining industry and aims to exploit their rich natural potential to revive industrial production. The mining industry is considered a strong alternative to the hydrocarbon industry – the country is aiming to diversify its economic activities.
Agriculture accounts for around 10 percent of the country’s GDP and at least 14 percent of employment. Algeria has about 8.5 million hectares of land suitable for growing crops, which represents only 3.5 percent of its total surface. One third of the cultivable land in Algeria is the government’s property – this mainly goes on lease to farmers and private investors. Algeria’s main crops are cereals (mainly wheat and oats, vegetables and citrus fruit and dates. While investing in the agriculture sector in Algeria may be profitable, the venture should be able to cater for irrigation, since the country has faced serious droughts in the past. Importation of agricultural commodities and food amounts to almost $9.3 billion.
FMCG & Retail
Algeria is the second largest grocery retail market in North Africa and the fourth of the whole African continent. For a long time, the distribution market was primarily controlled by public companies but over the last decade, private owned stores dominate the retail sector. European investments have pushed private businesses in control of around 95 percent of the industry. With almost 75 percent of needs being imported, Algeria is the major importer of food products in Africa. Euromonitor International ranks the country on third spot for milk and dairy products imports. Figures from the Algerian Register of Commerce (2016) points that there were 1415 retail markets, 38 Hypermarkets and 232 supermarkets in the country.
Engineering and Construction
The construction sector in Algeria remains highly promising, despite volatile global oil prices. The government is reiterated its support for the sector with an investment plan worth $275.9 billion on a five-year investment plan (from 2015-2019). One of the main objectives of this plan is to move towards a diversified economy and reduce its over-dependency on the oil sector. One key measure adopted by Algeria to reduce the country’s import bill was the amendment of the law for the construction and engineering sector; property developers with projects partially or fully financed by the state must use locally produced building materials instead of imported ones. Results from this were significant – purchases of iron and steel fell by 34% year on year to $827.9 million, wood imports declined 29% to $390 million.
Doing business in Algeria
Setting up a business in Algeria can be smart move. The government welcomes foreign investments in many sectors, especially in the key industries we mentioned earlier. Perks of setting up a business in Algeria include low cost for fuel, gas and electricity.
There are four legal types of companies in Algeria:
- Limited Liability Company (LLC) – minimum capital required is 100,000 dinars ($861.7), divided in 1000 dinars ($8.62) shares. Partners liabilities are limited to the amount of their contributions.
- Corporation – minimum capital required is 1,000,000 dinars ($8617.4) and a minimum of seven shareholders. Liability depends on the amount of their contributions.
- Partnership Company – no minimum capital required. Partners have defined liabilities
- Limited Shares Company – no minimum capital required. Can have two types of partners; general partners and limited partners, where liability depends on amount of their contribution.
How can Africa HR Solutions help you setup your business in Algeria
Africa HR Solutions offers wide array of services to facilitate the employment and management of your employee’s. We allow you to legally employ people without having a registered entity. We cover over 40 countries on the African continent, including Algeria. Our company can act as your employer of record and hire on your behalf, allowing you to focus on your business. Our solution will ensure compliance and peace of mind while operating anywhere on the continent.
We are experts on the African continent and we can help you address key governing laws pertaining to:
Africa HR Solutions also provides you with salary surveys, which can help you get an idea of the salary scale in different industries in Algeria.