Expanding to North Africa? Everything You Need to Know About Doing Business in the Region
- Last updated: March 14, 2025
Understanding North Africa’s Business Landscape
North Africa is a diverse region, both geographically and culturally, with its own unique challenges and opportunities. The three countries of focus — Tunisia, Algeria, and Morocco — are all members of the Arab world and share a rich cultural heritage shaped by history, religion, and regional influences. However, each country also has its own distinct political, economic, and regulatory environment, which must be understood to ensure success in the region.
Tunisia
Known for its progressive approach to reform and its strategic location on the Mediterranean, Tunisia offers a relatively stable business environment with a growing startup ecosystem. The country is open to foreign investment, particularly in sectors like technology, renewable energy, and agriculture. However, bureaucracy, local labour regulations, and a complex tax system can present challenges for foreign companies.
Algeria
As one of the largest economies in North Africa, Algeria is rich in natural resources, particularly oil and gas. While the country offers significant business potential in sectors like energy and infrastructure, Algeria has a highly regulated business environment. The government has historically been cautious about foreign investment, and companies face challenges such as limited access to foreign currency, a rigid labour market, and complex tax policies.
Morocco
Morocco has become a major business hub in the region, thanks to its favourable investment climate, business-friendly policies, and growing manufacturing and export sectors. The country’s proximity to Europe makes it an attractive location for businesses looking to establish trade routes between Africa and the EU. While Morocco boasts a relatively easy process for foreign companies to enter, navigating local labour laws and managing a diverse workforce can be challenging without the right support.
Key Considerations for Doing Business in Tunisia, Algeria, and Morocco
1. Local Regulations and Labor Laws
Each country in North Africa has its own set of labour laws, regulations, and employment practices that companies need to adhere to when expanding into the region. Here’s a brief overview:
Tunisia
Tunisia’s labour laws are generally worker-friendly, with strong protections for employees in terms of working hours, benefits, and severance pay. The country also has a well-established social security system, which employers must contribute to. Additionally, Tunisia requires companies to offer annual leave, maternity leave, and sick leave.
Algeria
Algeria’s labour market is governed by strict labour regulations, with a high level of job protection for local employees. Foreign companies will need to navigate the complex labour laws, which include regulations on hiring, firing, and compensation. Moreover, employers are required to hire a certain percentage of local employees, depending on the industry. The government also has strong control over wages and benefits, particularly in state-owned industries.
Morocco
Morocco’s labour laws are relatively flexible, especially for foreign businesses. While there are certain regulations in place regarding contracts, salaries, and working conditions, the legal framework is conducive to foreign investment. However, companies must still comply with Morocco’s social security system, which provides benefits such as health insurance and pensions for employees.
2. Taxation and Business Incentives
Understanding the local tax environment is essential for foreign companies entering North Africa. Tax policies and incentives vary by country and often require careful planning:
Tunisia
Tunisia has a corporate tax rate of 25%, but businesses in specific sectors like IT, renewable energy, and export industries may benefit from reduced rates or tax exemptions. The government has introduced incentives to attract foreign direct investment (FDI), particularly in the technology and services sectors.
Algeria
Algeria has a higher corporate tax rate, with a standard rate of 26%, but it can go as high as 40% for certain industries. The government also imposes a tax on foreign companies repatriating profits. That said, Algeria has enacted laws to encourage foreign investment in its energy sector, which remains the backbone of the country’s economy.
Morocco
Morocco offers competitive corporate tax rates, with a standard rate of 30% and lower rates for smaller businesses or those operating in certain sectors. The country has established free zones that offer tax exemptions for businesses involved in export and manufacturing, making it an attractive destination for foreign investment.
3. Cultural Sensitivity and Workforce Management
North Africa has a diverse cultural landscape, and understanding local customs and practices is essential for successful business operations:
Tunisia
Tunisia has a largely secular society, but Islamic customs and traditions still play an important role in daily life. In the workplace, respect for hierarchy and relationships is important. Tunisian workers tend to value job security and social benefits, so offering competitive compensation packages and benefits can help attract and retain talent.
Algeria
In Algeria, understanding the country’s complex political and economic environment is key to managing relationships with local stakeholders. Algerians place a high value on personal relationships, so networking and building trust are crucial when doing business. The workforce tends to be younger, with a high level of education, but employers must navigate regulations around hiring and firing to ensure compliance.
Morocco
Moroccan culture blends Arab, Berber, and French influences, and it’s important for foreign companies to respect these cultural differences when managing teams. Moroccans are generally formal in business interactions, and respect for authority is important. Understanding how to build trust and navigate negotiations is vital for long-term success.
4. Currency and Payment Systems
Each country has its own currency and exchange rate policies:
Tunisia
The Tunisian dinar (TND) is the local currency, and the country has controls over foreign exchange transactions. Foreign businesses may face challenges when repatriating profits or converting dinars into other currencies.
Algeria
The Algerian dinar (DZD) is similarly controlled, and there are restrictions on foreign currency transactions. This can make it challenging for foreign businesses to manage cash flow and repatriate profits.
Morocco
The Moroccan dirham (MAD) is not freely convertible, but Morocco has relatively liberal exchange controls compared to Algeria and Tunisia. Foreign companies can open foreign currency accounts, which helps facilitate international business transactions.
How an Employer of Record (EOR) Can Help
- Simplifying Hiring and Compliance
- Managing Payroll and Taxes
- Cultural Sensitivity
- Cost and Risk Reduction