ALGERIA COUNTRY PROFILE: ALGERIA’S MARKETS POTENTIAL
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INTRODUCTION AND OVERVIEW
With an increasingly liberalized economy, Algeria is beginning to attract more and more foreign investors, through Foreign direct investments, which are beginning to expand in new areas, much different from the traditional ones: hydrocarbons, telecommunications, tourism, Industry, Construction (building, civil works and hydraulic), water and environment, agriculture and food farming, renewable energy.
Algeria has already carried out several projects and there are a lot of them that are under way; despite the situation Algeria keeps on attracting an increasing number of foreign direct investments, because they are getting better and better. The final payment of the investment projects of 2014, analysed by the Agenzia Nazionale per lo Sviluppo degli Investimenti (National Agency for the Development of the Investments) shows a dramatic and dynamic development of investments, as well as a market that is beginning to draw attention on itself.
There have been 9904 investment projects in 2014, a number that has increased with time, for an amount of 2.192 million DA (Algerian dinar), about 20 billion euros. In 2013, there were 8.895 projects for a counter value of 1.716 million DA, which created almost 151.000 job vacancies.
The development of the indicators shows a progressive and constant development of the investments on a national level, and more and more appealing markets. The opportunities development and the market shares to gain, the different partners, the effective efforts to promote business, the assessment of the potential make Algeria a highly appealing country for the foreign business community and network.
Since 2001, 2014 has been the best year in terms of investments, date of application of the disposition that regulates the development of the investments, number of projects, capital invested and potential in creating jobs. This kind of investments development is also found in the region of the plateaux and in the South: in fact, 2.166 of the projects that have been presented have developed in those two regions.
The projects of investment are mostly concentrated in the provinces, with a high concentration of economic activities; 6.514 projects have been realized in the northern regions last year, for an amount of 1.286 billion DA: they should create 109.275 job vacancies. The incentives and the specific support dedicated to the investments in the Highlands and in the South have led to a crescent interest in both regions, as the development plans produced by ANDI about them. The measures taken about these regions must continue and get stronger, in order to contribute to medium and long term development, in line with the stated objectives for the regional balance for the country’s economic and social development.
The measures taken through various reforms, all aimed to improve the entrepreneurial context, is starting to earn the investors’ trust, as demonstrate the more than 1.000 billion DA reinvested in this field. This trust has been confirmed also by some other investments, especially the “entrepreneurial start-ups”, whose number has reached 5.650 projects, almost 57% of what was declared.
As regards the dimensions of the companies, small and medium enterprises that tend to move towards industry, especially industrial processing chains, have carried on most of the projects that have started in 2014.
The industrial sectors are food production sector, chemical and plastic industry, wood and paper industry, textile and leather industry and finally glass industry.
The government provides with big funding for the great projects in the water, energy and telecommunication management.
These results get registered, following the governmental effort to improve Algerian economy in many ways, such as: developing business and entrepreneurship, supporting manufacturing activities helping them recovering through several incentives, especially in the land managing sector, simplifying access to loans and incentives for investments as well as reducing bureaucracy and reforming the public sector.
DEMOGRAPHICS OF ALGERIA
Algeria has a surface area of about 2.4 million square kilometres, and it is a country with great geographic and climatic biodiversity: there is a vast coastline, high plains, semiarid plateaux and it includes a huge portion of the Sahara, characterized by hot and dry climate. Such an extremely varied environment corresponds with the different exploitation of the soil and the population density.
The coastline represents the 4% of the land area; in addition, two thirds of the population live there. On the contrary, the High Plains region represent 9% of the land area, and about a fourth of the population lives there.
- 38.7 million inhabitants 1st Jan 2014 estimate
- 39.5 million inhabitants 1st Jan 2015 estimate
- 963.000 live-born children, child mortality: 168.000, 388.000 marriages in 2013.
FOREIGN TRADE STATISTICS
Algeria’s foreign trade statistics for 2014, drawn by the databases of the Customs Information System, have highlighted a development of the trade balance in the following way:
- Imports have increased by 0.6 % by comparison with 2013. Their distribution highlighted that the capital goods have increased by 17.13% and foodstuff by 14.87 % in 2013; on the contrary, non-food consumer goods have decreased by 8.23% and production machinery by 0.35%;
- Goods related to the operation of the manufacturing facilities are mainly built with building materials (bars, steel tubes, wood, etc.) and oils intended for the food-processing industry;
- As regards the division of the various economic areas in 2014, foreign trade mostly takes place with traditional partners. OECD countries have the largest share: 65.03% of imports and 81.01% of exports in Algeria. 14.47% of Algerian imports comes from non-EU OECD countries, and 16.65% of exports are addressed to these countries. Most of the trade takes part with the USA (4.9% of imports and 7.45% of exports) and Turkey (3.64% of imports and 4.61% of exports). Trade between Algeria and other countries is still low.
NEW POLITICS FOR PER LA REDUCTION OF IMPORTS
In order to reduce the number of imports, the Algerian government has issued a law that forbids using imported constructing materials, which are manufactured locally; this measure is also aimed at increasing the integration in the construction industry, and promoting local manufacturers. This law has already begun to bear fruit on the territory. It will increase the percentage of constructing materials “Made in Algeria” in the construction industry, from the actual 70% up to 85%.
This regulation, signed in December 2014, forbids the supervisors of the several projects partially or fully financed by the State resorting to imported goods if the same product is manufactured locally and of the same quality.
In order to achieve it, the Department has entrust the directors of the promotion centres and of the property management offices (OPGI) with improve the implementation of this regulation; they hold the majority of the public housing projects, which represent 75% of the five-year programme for 2010-2014.
Actually, people in charge for the public sector will have to use Algerian products when signing contracts involving Algerian products’ manufacturing. They will also have to join invoices with production contracts with companies that manufacture in Algeria various construction material.
Finally, it must be pointed out that this regulation has a double aim. On one hand, the mail goal is to reduce imports costs of all construction materials, to which the bill refers. On the other, it is about “consuming national products”. About that, all specialists agree on the fact that Algerian products are of very good quality, similar to imported goods from China or Europe.
Algeria’s GDP was 17.731 million dinars (about 221 billion dollars) in 2014; in 2013, it was 16.570 billion dinars (196 billion dollars). Algeria’s economy has increased by 4.1% in 2014, by contrast with the past year and by 2.8% in 2013 compared to 2012. On the contrary, the growth of GDP concerning non-oil related goods has decreased: it went from 5.1% in 2014 to 7.1% in 2013.
ECONOMIC FIELDS DEVELOPMENT
The industrial sector has a weak positive growth rate, even if the deep decrease has stopped, growth rates of this sector are still very irregular from one hand and insufficient on the other hand. Indeed the this sector represents a small part of the GDP (lass than 5%). In order to reach 10% this sector should achieve a double digit growth.
In 2013, the industrial added value was 765.400.000.000 billion dinars and 728,6 billion in 2012. ( a nominal increase of 5%). In volume, in 2012 the industrial growth was 4.1% and 5.1% in 2013. It had a clear decrease explained by a decrease in energy supply sector, ISMMEE and chemical industry.
Sectors that have increased growth in 2013:
- Energy supply sector, with an increase of 4.3% in 2013 and 10.2% in 2012;
- Steal and iron industry (ISMME) 5.5% increase in 2013 and 7.4% in 2012;
- Chemical, plastic and rubber with an increase of 5% in 2013 and 5.8% in 2012;
- Food industry sector increased of 7% in 2013 and 5.6% in 2012.
BTPH, CONSTRUCTION SECTOR AND CIVIL ENGENEERING BUILDINGS:
BTPH growth (Algerian state-owned society working in construction sector) is expected to reach 6.9%. This is a remarkable performance but slightly lower than 2012, because of a decrease in public.
Except for oil and public works sectors which had a weak increase in 2013 (+1% in 2013 and 0.4% in 2012), BTPH including oil and public works , had a 6.6% increase in 2013 and 8.2% in 2012.
The Brute Formation of FBCF fixed investments (it is a group that measures gross fixed investments and it is composed of a “physical” component such as constructions, machineries, means of transport and a “non-physical” component such as software and licenses), in 2013 it was the most dynamic component of the demand. Indeed, after that in 2011 growth rate was 2.9%, investments have positively increased of 7.2%, achieving an higher cadence than 2010. In 2013, this recovery trend of investments was confirmed, indeed gross fixed investments had a 8.6 % growth rate. This acceleration in gross fixed investments is due to a 13.8% increase of industrial equipment volumes imports and to an increase in state capital expenditures, as follows:
- Infrastructures and administration +13.7%
- Agriculture and Hydraulics + 6,2%
- Manufacturing services +8.8%
- Education +1.2%
B.T.P.H SECTOR IN ALGERIA
The wealth made with oil allowed the country to recover from foreign debt and to start large scale campaigns to boost is economy. The BTPH economy is taking a great advantage of this recovery.
Algerian government has lunched for the period 2004-2008 , complementar support for growth plans (PCCS) and special projects for Highlands and south.
Almost 70% of imports in this context should be used to develop basic infrastructures, houses and public infrastructures such as universities, schools, sport and cultural centres, hospitals etc…
The housing became a basic need for Algerian people because of population growth rate. The industry abandoned in the eighties and nineties, during the black decade that froze every business, and cause an important delay in the lodging conclusion. The President willingness and the interest in this sector have created a surprisingly real estate development. Moreover, it is famous the sentence according to which “When the construction industry works, everything works”.
As other developing countries, Algeria population and urbanisation have remarkably increased, this has increased the demand for lodgings, basic local services and tools essential for community life.
For lodgings, the President program has laid foundations in order to ensure an intense construction of buildings in the future. In order to diversify lodgings availability to support real estate development, credit development and access to housing. Everything is supported by State finances.
Construction companies are competing and every company tries to face challenges with its resources and leadership.
Private and state-owned companies such as ENPI, ALDA, e OPGI, tend to develop a partnership policy with strong Spanish, Turkish, Chinese, French; Portuguese and Italian companies.
For information, prices decided by the government to create a social housing is fixed between 42.000 and 54.000 DA per square meter (1 Euro= 105 DA).
Moreover, according to the prime minister “Government will not move backwards on promises made for social housings, despite a decrease of oil price”. However, he wanted to underline that there is the possibility to develop a list of construction materials temporary prohibited to import.
The recent increase in population in Algeria during these years, has increased the demand for building areas in the main Algerian cities such as Algeri, Orano, Costantina and Annaba. For this reason the government has continually modified services needed for the creation of new urban systems according to national needs.
KIND OF HOUSING UNITS
1.034.566 are were foreseen by the PCSC but they arrived at 1.228.597 for South and Central Highlands programs. Almost 39% is intended for rural buildings to encourage people to grow their own land. The distribution of 1.228.597 housing units of PCSC is divided in:
- Social housing for rent (23%);
- Social active buildings (23,2%);
- Rural housings (38,7%);
- House for sale (10,5%);
- Other housing kind (4,6%).
Only a small number of housing units have been built in the period 2010-2014. After a five-year plan, in 2014 started a building project to build 418.752, public housing for rent (164.749), rural housing (196.140), social housing for rent (16.081 ), social housing (17.893) leasing housing ALDA (20.600) and housing offered by “CNEP-bank” (3289 units).
These projects have cost billion dinar(around 7 billion dollars) with 1.738 billion DA of funds udes between 2010-2014. High expense rates underline that housing programmes are important projects.
The real estate sector lunched a project for the period 2015-19 to build 1.6 million of houses, in order to solve housing by 2019,improving the business environment for workmen who cooperate with employers organisations.
Moreover the Ministry of housing, urban planning and municipality, announced in January 2015 the creation of a five-year project 2015-2019, a new solution for “self-built” housings. This solution gives to citizens the opportunity to build their own house after having purchased a plot of land and the financial assistance of the State, whether projects respect the urban plan.
Allotments will be allowed in wilays, Southern Highlands and than North wilays. According to data of the Ministry of housing, there are 1098 available areas for allotments, in 425 towns of Highlands and South. The overall are is 6.699 hectares, this allows the distribution of 295/394 allotments.
Moreover, the Ministry of Housing and Urban Development, is trying to adopt corrective measures for construction sectors to lure private investors of this sector; this aims to increase production dimensions. Several building regulations have been revised.
It is a law that includes to avoid bureaucracy in every sector, especially housing, to decrease administrative procedures, for example construction permissions. These subsidies will include reliefs to obtain plot of lands, but also regulations that take into account construction techniques such as PVC and aluminium.
In conclusion, this is the perfect situation to boost this sector, that aims to increase the national production to satisfy real estate market needs. Administrators, business men and industrialists have to contribute to boost the sector, in order to build 120.000 units per year, using modern techniques of construction in building sites that follow international standards.
INFORMATION FOR BUILDING PROJECTS
Only 22% of national companies working in the building sector pushed for build 100.000, have positively answered for this projects, according to Ministry of Housing and Urban Planning.
The new list drafted by the Ministry in 2014 includes 83 companies with 23 more companies selected after several complaints, the final amount is 106. Public promoters, such as ENPI, OPGI e ALDA can use this list to select a company and enter in “over the counter” market, capable of make easier procedures to start housing buildings projects.
Moreover, the strengthen of construction material sector in Algeria, including the creation of 8 new cement plants and plants for steel production in Bellara (Jijel), will be an important asset to support more than 35.000 building entrepreneurs.
L’ENTREPRISE NATIONALE DE PROMOTION IMMOBILIÈRE (ENPI)
The national body for real estate promotion “ENPI-SPA” ha been established after the re-organisation of the housing promotion of family-owned businesses “EPLF”.
Its main goal is build new Public Housing Promotion “LPP”.
More than 32.000 units will be built thanks to the project Public Housing Promotion (LPP) created in 2014.
Works for this projects are developed in 39 wilayas and ranges from 5 and 30%, and the building cadence has increased in 2015. Currently, the companies working in this projects have been selected in the Ministry list (70%), public works (7%), joint ventures (7%), private Algerian companies (20,5%).
The biggest problems for the realisation of these projects are: it is difficult to find plots of lands, especially in Algeri, where have been built 15.906 buildings LPP.
The promotional project (LPP), launched in 2013 has been given to citizens with an income between 108.000 e 216.000 DA.
HOUSING PROJECT (LSP + PL + LPP), BRIEF OVERVIEW ON ENPI
NATIONAL AGENCY FOR IMPROVEMENT AND DEVELOPMENT OF HOUSING (AADL)
The AADL, which falls under the supervision of the Ministry of Housing, has the purpose of providing a public service mission and it has a legal entity and financial autonomy. Its goal is to implement, across the whole national territory, the national plan regarding the rental and sale of housing, the promotion, the supervision, the territory and the market property development, the dismantling of the existing slums to transform them into habitable structures with better conditions, the restructuration and restoring of ancient buildings, the urban restoring and the creation of new cities.
This plan also deals with the development of innovative construction methods through its action program, as well as the elaboration and the diffusion of a more extensive information, and the management of the markets and the estate and construction actors (developers, citizens, financial institutions, local authorities, materials manufacturers, advisers, manufacturing companies, property managers, associations…).
The agency also carries out the work given by the Ministry, such as the dossier on the development of new cities like Boughezoul, 270 km from Algiers, Ali Boumendjel in the Costantine wilaya (province) and Sidi Abdellah in the Tipasa province. By way of information, the dwellings intended to be rented out, namely the F4-type, represent 60% of the total, while the F3 residences represent 40%. Regarding the size of the dwellings for sale and for rent, they go from 75 square meters to 90 square meters for F3 and F4 types.
AADL plans to achieve 230000 residential units, including 106373 that have been built but not completed yet, while 124000 are still under construction. We present you how the AADL dwellings have been distributed and the PVC products which will be used for the construction.
Allocation of the housing AADL plan per wilaya (province):
The wilayas and the works that have not been started yet are : Djelfa, M’Sila, Adrar Bordj Bou Arreridj, El-Oued El-Tarf, Illizi, Medea, Ouargla, Oum-El-Bouaghi, Souk Ahras, Tamanrasset, Tébessa, Tiaret ,Tindouf, Tissemsilt.
The country offers different helping solutions (financed by the National housing fund CNL) to buy real estates in Algeria. The Ministry of housing launched the AADL (rental or selling) housing and LLP, but the most known and promotional schemes are the Housing Assisted (LSP) and the rental housing (social housing). The OPGI plan is a very important element which is under the direction of the Ministry of housing throughout the national territory; we hereby present you a list of contracts established with enterprises in the fiscal year 2014.
Le Projet des Villes des HAUTS PLATEAUX:
The goal in the high plains is creating the adequate conditions and measures to develop the cities which can have a knock-on effect in the area covered and as a consequence increase the growth. The goals by 2025 concern the ongoing urban restoring related to the high plains and they require a restoration of the urban system and a well-structured hierarchical system.
In the high plains there are 3 new plans to build cities, as set out below:
Boughezoul in Medea province: at the heart of high plains region, within the national strategy of territorial development;
The new city of Aricha, in the Tlemcen province, which is 80 km south of Tlmecen city. It is the only urban project in a territory of more than 20.000 km2 from the western bypass which leads to the high plains, which has been prepared for 150.000 inhabitants by 2025;
The new city of Inedghassen in the Batna wilaya, which is 30 km north of Batna city and will aim, through its realization, at decreasing the high concentration of population in the other cities.
Other main construction projects:
International conference center: the conference center is located in the Club des Pins in Algiers, it will be managed by the Chinese company CSCEC and built on an area of 270000 square meters at a cost of 50 billion dinars;
Marriot hotel: the private group Red-Med aims at bringing to 6 the number of three-star hotels with an investment of 50 billion dollars; the first hotel will be built in ADRAR, the other one near the industrial and port areas;
MEDINA Algiers: DAHLI Society HILTON hotel project predicts an investment of 2.5 billion Euros, a business that will expand upon an area of 100 hectares near SAFEX in Algiers;
The Great Mosque of Algiers: it will cost 1.2 billion Euros and it will cover an area of 275000 square meters on the seafront opposite the SAFEX and the MEDINA project in Algiers. The CSCEC has to compete with a Chinese company.
The poles for the development of competitiveness in the High plains area in Algeria
To illustrate the importance of the High plains area in the national policy concerning the establishment of development and competitiveness poles, those which have been planned are set out below:
Electronic pole: Sétif and Bordj Bou Arréridj wilayas;
Mechanic and oil pole: TIARET wilaya;
BTHP pole: M’Sila wilaya , Batna, Djelfa, Nâama, El Bayadh;
New division energy: Djelfa, Boughezoul, Nâama, El Bayadh;
Audio and visual industrial division: M’Sila, Bou Saâda, Tébessa, Khenchela;
High-end tourism pole: Aures Nemmemachas, Saharan atlas Ksour;
Food and industries pole: Djelfa wilaya and Oum El Bouaghi;
Local meat and farming pole: Saida wilaya , Tiaret, M’Sila, Djelfa, El Bayadh;
PUBLIC INDUSTRY SECTORS
Only 67% of more than 6800 public infrastructure projects set out in the framework of the 2010-2014 five -year plan have been implemented. 3812 of the 10188 investment projects set out at the beginning of the five-year period, have been delivered and 3008 projects are still ongoing, while the remaining has not been implemented yet. These projects are related to 26 sectors including the education and higher education which received the lion’s share among the projects presented.
The result was the establishment of 2784 installations in high schools, primary schools with their helping structures (boarding structures, gyms, etc.) in 6630 projects set out in the education sector, while 1613 installations are currently under construction against 2233 infrastructures waiting to be constructed.
With regard to higher education, 390 installations have been delivered. The initial plan called for 1016 installations, including the 325 projects currently ongoing, against 301 projects which have not been started yet.
Efforts on the construction of public structures led to a strong increase of the financial investments which overcame 773 billion dinars. The Ministry of housing sets out to provide installations for 1138 projects and other 1285 development projects in all sectors by 2015-2016. The situation of the sectorial projects of public structures is relevant only for projects whose specialization in the works is guaranteed by delegation of Ministry of Housing and Urban Development decentralized structures. Wilayas (provinces) are usually responsible for residences and the DLEP public services depend on the UCR urban planning and construction managements.
HEALTHCARE SECTOR AND HEALTH INFRASTRUCTURES
For the National Agency for Healthcare Equipment and Management of Health infrastructures (AREES) a budget of 400 billion dinars will be allocated to the construction of 5 new UHCs (university hospital centers) in Algiers, Tizi-Ouzou, Tlemecen, Constantine and Ouargla. Similarly, the agency stated that the construction works of the new hospitals would start soon, they will cover an area of 5 million square meters and will be completed within 48 months of the beginning of work.
Moreover, 600 billion dinars will be allocated to the restructuring of 15 UHCs and will cover a 10-years period, having established that the state of the 15 existing hospitals is not meeting the international minimum requirements.
To overcome this challenge, the Ministry of Health launched a project of requalification, restructuring, improvement and repair of existing buildings, many of them being almost 100 years old and originally military camps.
WATER SECTOR AND WATER RESOURCES
The potentially available resources in Algeria are estimated to be about 18 billion cubic meters, 10 billions of which are surface resources, 2.5 billion cubic meters are underground water resources in the north and 5.5 billion cubic meters are both surface and underground water resources, in the south.
To face the challenge of guaranteeing an adequate coverage of the continually increasing water needs at national level, for both agricultural and industrial purposes because of an alarming shortage of the resource, a new national water policy has been implemented since the beginning of the 2000s. It revolves around three main axes : improving the organization and development of resources in all their forms, the economic protection of water and the reform of water governance framework.
There are currently 70 dams that are operating, 14 in construction for an overall capacity which covers 8.4 billion cubic meters of sea water, 9 desalination plants in operation and another four under construction for an overall capacity of 2.3 million cubic meters per day. Moreover, the 140 waste water treatment plants allow to recover around 800 million cubic meters of treated waste water per day.
These management infrastructures of the waters originating from both conventional dams and large transfers and underground water or unconventional from desalination sea water plants and recycling of sewage disposal, are giving concrete solutions to the problems of water shortage in Algeria. The concrete results of this proactive action by the State should be noticeable very soon. The development indicators in the water sector have increased substantially largely overcoming the millennium targets set in this sector by the United Nations.
The equal distribution of water resources between the different regions of the Algerian territory is a key factor of the policy implemented by the government. To overcome the geographical differences, a regional water infrastructure plan has been implemented in order to guarantee a better equality between the regions regarding the access to water. In the last ten years, important measures have been adopted and are now under construction for ANBT.
These aqueducts meet the targets regarding the strategy for food safety of the country and they are aimed at supporting the regions with a strong agricultural potential. Therefore, for example, with the construction of big aqueducts in the Sétif and Djelfa wilayas, the government intends to make those wilayas wheat-producing regions, which, within few years, will guarantee 20% of the country’s need in this sector.
These measures are aimed at connecting the water resources of the different regional systems in favour of the big urban centers, while the neighbouring cities will be served by smaller infrastructures.
- Census of the houses to be connected for the supply of gas;
- Launch of studies to implement projects;
- Definition of the annual plans per wilaya;
- Beginning of the construction works by the companies managed by Sonelgaz in accordance with the provisions on public procurement.
Regarding the gas distribution of the public grid it has been set out:
- The connection of 1000000 users;
- State programme which predicts a quota of 211600 MDA (million dinars).
The investment prospect of SONELGAZ for the 2015-2019 period focuses on the means of production and on the conveyance and distribution of gas. A supply plan has been established to meet the national market’s needs for natural gas. This large project has the goal to meet the populations’ demand for gas, the safe supply in the country at the end and the medium and long-term support, especially, for the development of the Highlands and southern areas. This program concerns the supply, NG and LPG, for new clients.
5900 kilometers of transmission system at a high pressure will be constructed and the existing system is planned to be extended. The financing of this new plan is covered by state funds to 75%, while 25% will be covered by Sonelgaz. The gas transmission system, which will be completed by 2023, will be 11553 kilometers long, 7862 km of which have already been approved. The total amount set out for all the works related to the development of the system to transport gas for 2014-2023 period is around 382554 million dinars.
PROGRAM FOR THE DEVELOPMENT OF SOUTHERN WILAYAS
The developed program concerns the following 10 wilays in the SOUTH: Adrar, Laghouat, Biskra, Bechar, Tamanrasset, Ouargla, Illizi, Tindouf and Wadi EL Ghardaia, without mentioning the creation of the new city of Hassi Messaoud in the framework of this oilfield preservation. Therefore, the development which has been decided in the framework of the special program for the development of the South will cost 377 billion DA (dinars). More than 296 billion dinars are allocated to improving the life conditions of populations, including:
More than 110 billion dinars for the realization of 60000 additional dwellings;
Almost 20 billion DA to connect houses with natural gas and electrical energy;
More than 80 billion dinars for water resources;
Almost 7 billion DA allocated to higher education especially for the creation of 10000 additional teaching jobs and 7500 refugee accommodation;
Almost 12 billion DA for national education and the creation of 14 high schools, 50 primary schools, 497 classrooms, 202 school canteens and 327 sport facilities;
More than 3 billion dinars for vocational training, in order to create 11 training centres and 10 specialization and internship centres;
15 billion DA for the health, in order to build new hospitals, two university hospitals, laser therapy units and 13 specialist care centres;
Almost 6 billion dinars for youth and sport sector to create 10 gyms, 16 sport and helping centres and 31 swimming pools;
19 billion DA for the enhancement of tools for employment promotion;
3 billion of dinars for the culture sector in order to create of 19 libraries, 2 theatres, 1 museum and 1 music school;
2.5 million DA for environment safeguard.
Around 74 billion DA for the economical development, including:
More than 47 billion dinars for the development and enhancement of road network;
More than 2 billion dinars for transport sector;
More than 17 billion dinars for agricultural sector;
More than 2 billion dinars for the development of industrial sector and of activities;
More than 1 billion DA for the development of small and medium enterprises, craftsmanship and tourism;
3 billion dinars for the improvement of bank credit interest rates for the investments in small and medium enterprises and in the agricultural sector;
Around 20 billion DA for the improvement of management and administration methods, including justice and inspection services.
THE INVESTMENT PLAN OF 2014
During 2014 Algeria showed a sharp increase in investment projects, equal to 28% compared with the allocated contribution in 2013. According to the Ministry of Mines and Industries at least 10000 investment projects have been launched during 2014.
These investments focused on the setting up of manufacturers which produced an additional value in several sectors, including the industrial one, and the extension to others, with a cost of 2 billion DA (dinars); 1.5 billion DA of them have been used to foreigner partnership projects, equal to 62% of the total cost. 60% of these projects concern the development of productive potentials, the introduction of innovative technologies and the acquirement of knowledge and instruments for the governance and the development of enterprises on national and international markets.
These projects involved different market segments, including Agri-Food, Industries, Chemistry and Industry. These results “provide information on the steady improvement of the business climate in Algeria”, including the partnership with foreigner operators.
The industrial sector, where the investments mainly focus on transformation sectors, appears in the forefront both for the amounting of investments and in the potential for job creation, with 1845 projects and 1507 million DA in 2014, with a potential for creating 71362 jobs (42.27 of the total potential).
The same is true for investment projects concluded with foreigners, which focuses on industrial sector and this is the case of 74 projects amounting to 156 billion DA, especially in the steel, mechanical and electrical, chemical, food and construction materials sectors. Moreover, it has been noticed a significant investment volume of partnership in the regions of Haus Plateaux and in the south.
On the whole, the most affected industrial districts pointed out by ANDI (National Agency of Investment Development) are the food industries (IAA), which represent 26% of all industrial projects which have been highlighted, followed by construction materials one 22.4%, the steel, mechanical and electrical industry (ISMME) to 17.13% and chemical industry to 15.72%.
These findings show a strong effort in the industrial sector by the government for the diversification and development of the industrial activities, and show important markets to be hold in different areas of activities and industrial processing, LPN (Natural Conservation Act), extraction activities and other sectors.
MATERIALS FOR BTPH, CREATION AND REQUIRED MEANS
The local row materials production, in spite of the great stocks, it cannot meet the sharp increase in local demand, which required an increase in import, including imports of cement, steel, pipes, materials and equipment, such as: floor coverings, plumbing, electrical equipment, locks, etc … … and the production of materials, machines and equipment. The secondary market, which benefits from a stable construction sector, suffers from low quality of local production.
National construction sector
The decision of the government concerning the ban on imports of construction materials is justified by a national production modestly sufficient for the implementation of all programs. The country’s authorities said: “Importing row materials that can be produced in our country is an economic crime.”
The country’s reindustrialization project will involve the support of internal production that in different sector could and must replace the imports. Therefore, it will be important to develop the small and medium enterprise and the supply, which will receive increasing attention through the facilitation of the proceedings of the creation and support to development plan.
The strategy will focus on the removing of constraints to a sustained growth and it will be supported by the improvement of investment conditions. Therefore, ANDI will become a specialized pole that will lead the potential investors in promising projects and follow up their implementation and provide advices for the organization and management and also on the investment promotion act which will be modified in accordance with the investment liberalization and with the entrepreneurship and the public support to the business projects.
The imported products will be replaced by materials locally produced
The imports cost will be reduced replacing the wood with other products like PVC and aluminium, especially in the construction sector. The country imports from an average of 300 to 320 million dollars in wood every year. The wood industry realizes a turnover of 12 billion dinars (12 million Euros). A significant part of coniferous imports comes from the northern countries (Finland and Sweden) or from Russia. Oaks and beech trees are imported by Europe, the tropical wood comes from Africa and Asia. The demand is estimated to be 1.5 million cubic meters every year, while the local production is able to meet only 15% of the demand. This caused an excessive expenditure for the wood import, especially because of the needs regarding the projects launched by the state.
PVC and aluminium to stop using the wood
The construction sites monopolize more than 70% of wood imports. Although the government took actions to educate the constructors about the benefits of using formworks with metal stamps which offer longer depreciation periods of the wood, the manufacturers keep on using the wood, even though its high cost.
On the contrary, other materials take their part in the Algerian market, especially in the carpentry sector for the residential and promotional construction. For example, the PVC locally produced has a production capacity of 30000 tons, while the volume of import from Turkey and China are unknown. This product has advantages that reduce the long-term costs because their duration is estimated to 50 years.
Another material is the aluminium and in particular the plant located in Beni Saf (Témouchent) is managed by a consortium of companies that promote development: Moubadla (Moubadala Development Company), Dubai Aluminium (Dubal) and by an Algerian consortium made of Sonatrach and Sonelgaz. They have a production capacity of 700000 tons per year. Another foundry, with a capacity of 1.5 million tons per year, is going to be built by 2016. Therefore, the wood imports are supposed to be reduced in the future. Currently the construction deployment of all wood elements is equal to 70%, against the aluminium and PVC use which only represent around 15% each one.
ECONOMIC CENSUS OF THE COMPANY IN ALGERIA
The number of the companies included in the census of the national territory runs into 990496 unities and more than 934200 of them are limited liability companies which represent more than 94% of the total and the remaining of them (56246), equal to 6%, are management consulting centres; these are the final results recorded by National Statistics Office (NSO).
This important action, the first of its kind in Algeria, showed that the national economy is largely dominated by solely companies to 95% (888794), while the legal entities (enterprises) represent only the 5% equal to 45456 unities. This finding shows that the Algerian economy mainly depends on micro enterprises.
The structure of legal entities in the wilaya shows a concentration of 21% capital, followed by Oran wilaya (6.8%) and Sétif 5.3% from afar. This is the result of the market survey which was aimed to the census of all economic and management institutions, whatever was the sector or legal form, not including the agricultural sector.
The same trend has been observed in solely companies, therefore, Algiers area is characterized by the presence of 9.9% economic actors, followed by Oran (5.6%) and Sétif (5.1%). On the other hand, the number of industrial realities identified is 95445, 24.8% of which operate in different sectors: 23,4% in the metal product manufacturing; 11,1% in clothing; 1.7% in wood processing; 1.3% in textile; 1.3% in repair and installation of machines and equipment.
Moreover, 84% of 934250 enterprises, equal to 781439 are located in urban areas against 16% equal to 152811 in rural areas. Regarding the urban areas, Algiers is in the forefront with more than 12%of the total, Oran is in the second place (6.6%), followed by Sétif wilaya with 4.8% according the final results of census. With regard to rural areas, Tizi Ouzou wilaya is in the forefront with 8.1% of the total and Sétif is in the second place with 6.7%. In terms of activities, 81.3% of extractive industries are located in rural areas, while the production represents 19%, according to the survey findings.
THE CURRENT CONSTRUCTION ACTORS
Regarding the findings in the construction field, the census recorded 26780 enterprises, whose main activity is the construction. It should be noticed that 17% equal to 4222 Enterprises of the total 26780 have been ranked and qualified to launch the 5-year plan.
While the public actors are affected more strongly by budgetary constraints, private national measures are currently experiencing a sharp increase related to the enthusiasm developed from the prospects and growth opportunities of BTPH sector. Among the foreigner enterprises, the Chinese ones are very competitive, they indeed won the majority of the last public procurements in the construction sector. A lot of actors coming from the Middle East and from Turkey, such as Sidar, Emar, Fiducia Investimenti… and construction companies such as Arab Contractors, Atlas, etc, are benefiting from the current situation.
The Ministry of Public Work (DPW) manages a road network of around 108000 km (70% is paved road), 4800 bridges and provides 85% of goods and people transport in the country. A quarter of current network is in poor condition and half of the works need to be restructured. The main projects concern the creation of East-West highway. This is the main goal of the government (recorded project as PCCS), 1216 km long, which will connect the main northern cities of the country.
The highway project in the Highlands, which will connect Tlemecen wilaya to Tebessa, has been launched recently. After the preparation of studies related to this project of 1020 km, they will start the works of the stretch of highway regarding TIARET, which will connect the Algerian –Tunisian border, 800 km long, while those related to the stretch Algerian- Moroccan of TMLECEN will start later.
In the framework of PCSC programs and the special programs for the south and highland, there are also projects for restructuring more than 14000 km of roads and 50 bridges, building more than 3700 km of new roads and 216 bridges and realizing 3700 km of channels to reach rural cities. The Ministry of Public Works is thinking about new projects for the future, including:
17 projects regarding the 1396 km of fast motorway connecting the East/West Highway identified by ARDS in the period 2005-2025:
A.P.D. project, the highway connecting Bejaia to East-West Highway for 100 km;
Freeway planning and development at the suburbs of the great winds park;
Highway planning in the highlands;
Planning of the third bypass in the south of Algiers: Bourmedes-Tipaza south 150 km long on two lanes;
Planning of the fourth Ring Road between the wilaya of Ain Defla and Bordi Bou Arreridj on 300 km;
The doubling planning of RN 01 for 320 km;
The doubling planning of RN 67 for 20km;
The expansion planning from 2 to 3 lanes of the highway connecting the second Ring Road of the new city of Bouinan for 13km.
Implementation of the third ring road Bourmedes-Tipaza for 150 km on two lanes;
Completion of the fourth Ring Road between the wilaya of Ain Defla – Bordji Bou Arreridj for 300 km on two lanes that can be extended to 3 lanes through the wilaya of Tupaza, Bilda and Bourmedes;
Implementation of Bou Ismail Cherchell freeway, connecting to OEA for 65km;
Implementation of the Transrhumel and Constantine viaduct;
Development of a stretch of two-lanes highway RN 12 for 23.5 km;
The doubling realization of RN 01 for 70 km between Bougheoul and Berrouaghia and in the province of Medea;
The doubling realization of RN 24 for 9 km (second Tranche) in the wilaya of Algiers;
Realization of roads in 10 tourist areas of the 7 coastal wilayas of Algiers, Tipaza, Annaba, El Tarf, Tlmecen, Oran, Aïn Témouchent, Mostaganem;
Realization of the main highway section in the highlands for 600 Km Saida Batna;
Completion of the freeway connecting Djen Djen harbour up to EO Highway for 100 km;
Implementation of a two-three lane highway connecting the second ring road with the new city of Bouinan for 13 km.
HARBOUR AND COST AREAS IMPLEMENTATION – MASTER PLAN 2005 – 2025
The expected results for the construction of harbours until 2025 are as follows:
Construction of nineteen (19) harbours addressed to people who dedicate to fishing;
Capacity development and enhancement of twenty-one (21) harbors dedicated to fishing boats;
Construction of sixteen (16) tourist harbours;
Protection of twenty-seven (27) land sites for 16 km;
Realization of thirty-six (36) beaches;
Maintenance of 498 beaches and development of 36 accesses to the beaches.
MAIN PROJECTS OF ROAD MANAGEMENT (MTP)
The project of road and highway development (ARDS) 2005/2025 is the framework which led to the optimal structure of the current road network, aimed to meet the future road links and road transport to boost the social and economic development of Algeria until 2025.
This goal focuses on the following main areas:
The continuing extension capacity of the network;
The intermodal transport enhancement;
The heritage and environment conservation;
The road network improvement in the highlands;
The motorway network improvement in the deep south, the development of the main links and of the border roads to open up towards a higher development of exchanges with Africa.
THE GREAT PROJECTS FOR THE RAIL NETWORK MANAGEMENT
The government puts great emphasis on the railway sector in which allocated a large investment. In 2012, the Algerian government announced that it sets out a massive investment of approximately 18 billion dollars in this sector for the modernization of railway transport infrastructures until 2015.
The current figure of 25 billion dollars is currently on the agenda of National Agency for Studies and Monitoring of railway investments implementation (ANESRIF) is the prime contractor in this sector. The main projects are as follows:
The modernization of the Northern Moroccan railway ring road, Annaba -Algiers-Oran, border of 1200 km;
The modernization and creation of the new railway lines starting with the northern junction;
The electrification of the current lines, including the northern bypass;
The electrification of the suburban network of Algiers;
The complete electrification of the Algerian network (expected by 2020);
The modernization of 430 km of railway lines;
The implementation of 391 km of new lines;
The modernization of lines and stations for 1100 km;
The doubling and rebuilding of more than 600 km of lines;
The high speed rail implementation;
The two North-South lines implementation.
Taking into consideration the current market data and the trends for the future in different sector, it follows from the above that the BTPH market is largely developing. The public works sector plays an important role in the government action at short and long term. It shall boost the recovery with a significant number of created jobs. Road and airport plans should lead to a consumption level of bitumen of approximately 1 million tons per year for the next five years.
Moreover, the fairs which have been held in Algeria in the last years, such as BATIMATEC; FIA; SITEP, SIEE, PMI, ect… offered the opportunity for investors in order to have a better perception of Algerian market and review its industrial potential and its opportunities, which would possibly offer in terms of alliances and partnership. These fairs have proven to be important events for entrepreneurs and foreign firms at international level.
The BATIMATEC 2015 is indeed an event that aims to introduce all the potentials of the construction industry which represents both in economic terms and evident results for all those who wonder what it might mean in terms of economic recovery and entrepreneurship. It would be a sector recovery of huge dimensions to such an extent that there will not be Algerian firms enough to meet these needs. It will be a benefit for foreign groups to show their skills.
GENERAL INFORMATION OF INVESTMENTS (ANDI SOURCE)
The information on investment made to identify the level of investment in Algeria are reported below:
Distribution of the investment projects implemented in the period between 2002-2012
EVOLUTION OF EXCHANGE RATE
Source: Bank of Algeria
The yearly average rate of the dinar has depreciated against the dollar by 2,36%. The yearly average exchange rate of the Algerian dinar against the US dollar is estimated to be at $ 79,3809 USD/DZD in 2013, 77,5519 USD / DZD in 2012. The yearly average exchange rate of dinar has depreciated against the euro by 3,21% in 2013 compared with 2012, increasing from 102,1627 EUR/DZD in 2012 to 105,4374 EUR/DZD in 2013.
The society is the lifeblood of all industrial development process of a country. Algerian government is currently aimed at providing the opportunities for the growth of modern and innovative enterprises, and development in international standards of excellence and competitiveness. The government focuses on stimulating the entrepreneurship, encouraging the project leaders and the innovators, operating on different levels towards this objective. The government is working methodically in order to eliminate all the development constraints for enterprises and investments.
The Algerian market is one of the most profitable in the large Eur-Afrique area. It offers good development prospects within 2030. The growth mainly derives from the national programme for housing with the aim of reducing the huge housing deficit that Algeria accumulated during the last decades and that has gradually been eliminating successfully.
BTPH, indeed, is the engine for economic growth and it is the backbone of the Algerian economy, the sectors of housing, constructions, public works and residences which keep showing a growth in comparison with other sectors.
The unprecedented involvement of the government in the country boost explains this growth. The positive tendency, therefore, will be maintained for years because, first of all, the requirements for social demand are still numerous and ever-changing.
Considering that the expressed national needs are around 250.000 unities per year, there is an urgent need of country modernization; therefore, other important construction projects are planned. The last housing programme is a significant example for ambition and size. Of course, in this field, it should be mentioned that there are no engineering, new techniques and technologies to face these challenges.
Moreover, apart from few big Algerian enterprises, the majority of the others cannot face this challenge. These big projects require the participation and the direct involvement of foreign partners, required to transfers powers and technologies. Finally, it should be mentioned that the construction industry has become the leading job provider in Algeria.
Besides the known strategic activities of the State, there are also the creation of new cities on the two motorways adjacent to the cities of Algiers and Blida. This opens new grounds to current depressed areas, which will be able to take the pressure off the big cities.
For this reason, we can add the development plan that is targeted to highlands and south Saharan areas population, especially through the building of new cities and the expansion of existing ones.
An important indicator provides information on the BTPH activity that is the sector of fair-trade. Trade show in this sector in Algeria, indeed, such as BATIMATEC, la FIA, la SITEP il SIEE, small and medium enterprises, BEST 5 ALGERIE, etc. in the last years have offered the opportunity for the investors to have a better perception of the Algerian market and to measure its industrial potential and the opportunity that the market has most likely to offer in terms of alliances and partnership. These events established themselves as key element of the profession on a global scale.
Looking closer at the achievements of the Algerian economy showed by different reports and analyses by national or foreign institutions, the constant peak of growth is evident, deriving from a considerable programme mainly in public investments and by significative efforts by the private sector.
The Algerian economy doesn’t just work on the sector of hydrocarbons, BTPH and others, but also services, such as agriculture, show their considerable dynamism. According to COFACE (http://www.coface.com/Economic-Studies-and-Country-Risks/Algeria), in Algeria the enterprises benefit from a bright and increasing economic context. This takes into consideration the internal demand force caused by the State projects and by the consumers expenditure increased sharply after the job creation which produces additional income for families.
The choice of moving to Algeria through joint ventures is a strategic step for SMEs and investment projects shareholders. 2015 begins with promising economic prospects. What can be more favourable for the entrepreneurs than a social-economic environment characterized by social party and an increase in great infrastructures projects?
INFORMATION REQUIRED TO BUSINESSTRIPS IN ALGERIA
Developing and keeping good relationships with Algerian people is possible, by understanding better their way of thinking.
- The organization for a business appointment is necessary for itself. The Algerian weekend is composed of Friday and Saturday. The office are open from 8.00 am to 4.30 pm.
- Arabic is the official language of Algeria. The national languages in Algeria are Arabic and Tamazight. French is used as technical and professional language;
- The paperwork in French is preferable only to those in English and Arabic. The use of images too close with the local costumes and traditions could cause stress, in the introduction (pig sausages, eroticism, etc.);
- To book your hotel, the capital offers a lot of great hotels. Quality hotels are completely booked in a short time during international events (conferences, trade shows and exhibitions …). It is better to book at home before leaving. International hotels provide a free shuttle service on advanced reservation. On the contrary, you should take into consideration a taxi or a car service;
- Avoid long road trips, at night, especially unescorted by Algerians. Avoid showing off an attitude of excessive luxury. The extremely friendly attitude showed by local people must not make us forget the basic precautions;
- In Algeria, the relationship dimension is very important. We have to take time to know the informal approach. It is, therefore, necessary to take into consideration this parameter to choose the programme. However, arriving on time to an appointment is a sign of respect for the person who has accorded with. Don’t let you be deceived by appearances, the way your interlocutor dresses or the small dimension of his enterprise should not be a reason of discrimination and could not reflect the real potentials.
- “Classical” clothes for men and “no provocative” for women are recommended. Don’t forget that your interlocutor is more familiar with your cultural context through media (satellite uplink, trips and internet) than you with his);
- Concentration, being available to their needs and priorities are recommended. Make sure that you have identified well your interlocutors; it is necessary that negotiators have the same level of responsibility and/or technical level;
- Algerian businessmen are often involved in different entrepreneurial activities and can show more business cards. The familiar dimension of Algerian enterprises can make these operators become good partners;
- The public and private sector have not the same way of trade functioning. The publishing procurement can be postponed or done in a short term. A sustainable partnership is often required. The support of legal advisory is essential to guarantee a rapid intervention within the required times;
- In Algeria, European product brand image is acknowledged. French are more facilitated in comparison with the other nationalities because of their cultural closeness, and quality of their products/services, know-how and technical assistance. Nevertheless, the competitors of all over the world are numerous and very competitive towards French.
- Although they are price-sensitive, Algerians are sensitive to consultancy and training support of post-sell. Your interlocutors could have a strong technical knowledge or a knowledge of small enterprise;
- In a market open recently, like Algeria one, there are business development opportunities. Your interlocutors sometimes could have as financing capacity as lack of preparation in their project;
- Credit cards have not been used yet, except in international hotels. Banks are currently installing electronic payment devices;
- Algerian post services are good enough. However, delivery time can be long. For important communications or sending money, choose the registered mail or courier services (Chronopost, UPS and DHL are available in Algeria);
- The period of Ramadan lasts one month. It is a fasting period and the restaurants are closed, except the international hotels, and all the shops close before and during the fasting period.
- Algerians prefer the personal contact. They like knowing their partners before giving confidence. A negotiation relationship will be more favourable at the end, after two or three preparatory meetings;
- Stay informed on the economic events in Algeria to make the trips more regular and keep contact; – In the framework of a partnership, Algerians give priority to an enterprise with a long-term presence on the territory. Algerian trading partner is often involved and is committed to ensure that the business relationship works. However, sometimes, there are some management slowness problems to be faced, that foreign partners have difficulty to understand and deal with them;
- The heaviness of the banking system tends to hinder and weaken the enterprises. The number of government reforms aimed at improving the financial system, is gradually improving the situation;
Vacation days and religious events:
1st January: New Eve;
8th March: International Women’s Day;
1st May: Labour Day;
5th July: Independence Day (5th July 1962);
1st November: Revolution anniversary (1954);
Dates of the religious vacations vary depending on the lunar calendar.