After the transition to a market economy in the early 1990s, the share of industrial sector in GDP was about 5%. Services and trade cover 83% of the Algerian economic area. The national industrial sector has a great growth margin.
The development of domestic industry was brought to the forefront in the government’s agenda after the roughly 60% decline in the country’s revenues due to the sharp collapse in oil prices.
Developing new industrial strategy and reforming the investment code are the main steps taken over the last two years to boost domestic industrial production.
As a medium-term objective, the government aims to increase the industry share in GDP to 10% by focusing efforts on promoting private sector investment at national and international level.
For this purpose, Algeria has put in place a new industrial recovery strategy that aims to develop, modernize and integrate the Algerian industry in the current context.
In this regard, the Government is seeking to improve Algeria’s attractiveness as an investment destination, namely by promoting the digital economy, developing and providing flexible and innovative financing to encourage manufacturers to modernize their production tools.
According to the choices set out in the industrial strategy, the sector-based deployment of the industry will be carried out according to the action plan, which is based on three axes:
Natural resource development: promoting industries will enable Algeria to better exploit its natural assets and switch from a mere exporter of primary commodities to a producer and exporter of processed goods, using high technology and added value. The identified strategic sectors include petrochemicals, synthetic fibres, fertilizers, steel, (aluminium) non-ferrous metallurgy and (hydraulic binders) building materials.
Densification of the industrial fabric: this aims to encourage industries that contribute to integrate activities which are currently taking place at the end of the production chain. Such industries are those generally that operate in assembly and packaging field, for example, electrical and electronic industries, pharmaceutical and veterinary industries, agri-food industries and capital goods industries.
Promotion of new industries: promoting new industries or those still lagging behind, is worthy of attention. These include ICT and automotive industries.
Thus, in the context of the new industrial recovery strategy, the sectors mentioned below are considered strategic and the focal point the public authorities.
In 2018, the Construction Industry, Public Works, and Hydraulics (including oil services and public works) grew by 5.2% compared to 2017 (+4.6%). Now, this sector seems to be stabilizing after a decade of strong growth backed up by significant public investment.
In 2019, it grew by +3.6% compared to +5.2% recorded in 2018. It should be noted, once again, that the growth rate of the national economy was mainly driven by Agriculture and Construction Industry, Public Works and Hydraulics.
According to the ONS, in the first quarter of 2020, the aforesaid sector grew by 1.1%, despite the COVID 19 pandemic.
The country has already taken delivery of some very important economic and social infrastructure and is in the process of doing so for others (various housing programs, East/West Motorway, Highland Plateau Motorway, East/West double rail track, port infrastructure, various dams, and reservoirs, etc.).
The authorities hope to lead the country out of a long phase of relative stagnation through budget action. The four revival and growth support plans (2002/2004, 2005/2009, 2010/2014, 2015/2019), with a global budget exceeding $800 billion, devote the bulk of their resources to infrastructure.
Algeria intends to be an important player in the production of electricity from the photovoltaic and wind sectors by integrating biomass, cogeneration, geothermal and eventually thermal solar, under its renewable energy program.
These energy sectors will be the driving force for a sustainable economic development model. This is a real investment opportunity.
According to the initial forecast government program, 37% of installed capacity by 2030 and 27% of electricity generation for domestic consumption will be of renewable origin.
Algeria considers the solar energy, which is widespread on the territory as an opportunity and a lever for economic and social development, particularly through the establishment of industries that create wealth and jobs.
Moreover, several wind farm projects and the implementation of experimental biomass, geothermal and cogeneration projects are launched.
The sustainable and flexible energy model for 2030 and 2050 will be based on:
the energy saving potential in all business sectors,
the progressive integration of renewable energy into the energy mix,
using all existing and exploitable energy potential such as nuclear power.
This new energy model will enable Algeria to move away from dependence on fossil fuels, ensure its economic and social development and finally leave a legacy for future generations.
The multi-annual program for the development of renewable energy and energy efficiency, adopted by the Government in February 2020, sets a target of 15,000 MW by 2035. This program will consider the existing potential and absorption capacity of the national electricity transmission and distribution network.
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Building new university hospitals and prioritizing the South and highland plateau
The Algerian healthcare system comes within the competency of the Ministry of Health, Population and Hospital Reform (MSPRH). There are five health regions across the country with five Regional Healthcare Councils and five Regional Healthcare Watchdogs. There is one direction of Healthcare and Population per province (wilaya).
This new healthcare scheme is characterized on the one hand, by the creation of self-running local public healthcare facilities. They are required to implement the prevention programs and basic care and, on the other hand, to create self-running public hospitals likely to offer the population a wide range of care and eliminate geographical disparities.
The new public healthcare policy emphasizes the need to implement an integrated health plan that ensures adequate care for citizens. A policy that focuses on increasing the healthcare share as a share of gross domestic product (GDP). It aims also to build hospitals and new university hospitals that meet international standards and improve existing infrastructure.
The share of gross domestic product intended to health sector reflects the importance and extent of the resources allocated to preventive and curative care. This means investing more in health protection and disease control. It can also mean an inflation in health-care spending relative to the country's income growth.
The increase in health share in GDP comes within the frame of the objectives of the new health policy in Algeria.
This increase must be driven by strong economic growth, equitable collective funding, resource allocation focused on high-impact health interventions, and continuous efficiency research with regular and uncompromising assessment.
For more than 30 years, new hospitals and teaching hospital facilities in Algeria have been built. Huge equipment and operation budgets have been spent to significantly improve the efficiency and quality of care, to satisfy both patients and families and health professionals, including university hospitals.
Within the framework of the integrated regional and sub-regional health plan, the priority is to build new university hospitals, in line with international standards, for the Southern and Highland regions.
Algeria’s energy mining district stretches over more than 1.5 million km². It consists of several basins of deposition which are classified under three major provinces:
The province of northern Algeria which includes the offshore, the Saharan Atlas, Cheliff, Hodna and Melrhir/Southeast Constantine basins.
The Western province of the Saharan Platform, composed of Ahnet, Timimoun, Bechar-Oued Namous, Reggane, Tindouf, Taoudéni and Sbâa basins.
The eastern province of the Sahara platform composed of Amguid-Messaoud, Berkin, Oued Mya, Illizi and Mouydir basins.
Major hydrocarbon deposits of Algeria:
The two most hydrocarbon-producing basins are Oued Mya, which includes two huge deposits of Hassi Messaoud and Hassi R'mel, and Berkin, which contains two vast deposits of Ourhoud and Hassi Berkine Sud.
The southwestern basins are a relatively important hub for gas exploration and gas field production and development in In Salah and Adrar.
More than two hundred deposits are recognized today. The reservoirs are almost all sandstone and are mainly located in the Cambro-Ordovician, Siluro-Devonian, Carboniferous and Triassic deposits.
Produced hydrocarbons are largely supported by enhanced recovery operations, both by water injection and gas injection.
Under the new hydrocarbon law (Law 19-13 of 11/12/2019), several opportunities are available to interested companies by means of invitation to tender likely to be launched by the National Agency for the Development of Hydrocarbon Resources (ALNAFT) for the award of hydrocarbon contracts in partnership with the national company Sonatrach.
Mining Resources :
Algeria’s mining sector is also rich and varied in mineral resources. Analysis of the different geological environments shows that the country has enormous potential for minerals to be discovered, namely:
Precious metals: gold, silver.
Precious and semi-precious stones: diamond, topaz, beryl, etc.
Base metals: zinc, lead, copper.
Ferrous and non-ferrous metals: iron, manganese, etc.
Platinum Group Elements (PGE): platinum, palladium, iridium.
Rare metals: tantalum, niobium, beryllium.
Rare lands (REE: rare-earth elements).
Industrial minerals: phosphate, barite, bentonite, diatomite, etc.
The minerals extracted in large quantities are iron, lead, phosphate, uranium and zinc.
In Algeria, the market service sector remains an important growth driving force. It is an important component of the economy because of its upstream and downstream presence. It has a great dynamism that strongly supports growth, but it depends on the performance of other business sectors.
During the growth period ranging from the year 2007 to 2014, the market service sector was able to achieve an annual average growth rate of +8%. This strong growth began to decrease in 2015 with a volume growth of +5.4% due to the slowdown in the growth of certain business sectors and the decrease in imports of goods.
This business downward trend deepened in 2016, when the sector recorded only +2.8% of growth. A higher growth rate of +3.7% was recorded in 2017 and 2018. The growth rate of market services was +3.1% in 2019.
According to the ONS (National Statistics Office), market services decreased by (-2.8%) in the first quarter of 2020 compared to an increase of (+5.0%) in the first quarter of 2019.
The drop in growth was mainly due to transport, communications, hotels, cafes and restaurants sectors and household-provided services’ shortfall.
Non-market services are mainly government services recording a growth rate of +2.7% in 2018 compared to 0.2% in 2017 and 1.6% in 2016. The growth rate of non-market services was +1.8% in 2019.
It seems obvious that this moderate growth in government services is due to the fall in State revenues, which are largely made up of taxes on hydrocarbons (oil taxation). This decline impacted the employment in some public service sectors. Moreover, the pressing need to adjust the budget has led to a decrease in public expenditure and hence a decrease in the public administration activities even if the growth was higher in 2018.
According to the ONS, non-market services also registered a drop of (-1.6%) during the first quarter of 2020, which is mainly due to a decrease in the added value of public administrations.
In the aftermath of its disintegration during the nineties, the Algerian
textile industry suffered the effects of globalization, which lead to the
shutdown of its flagships in the seventieths, Sonitex and Sonipec, and their
restructuring into groups. Sonitex became TEXALG and Sonipec became Leather
However, the public authorities intend to revival the textile, clothing and
leather sectors and reduce Algeria's dependence on external markets in the
coming years, in order to meet the needs of the growing market.
For this purpose, Africa's largest textile plant was inaugurated in Sidi
Khettab, province of Relizane (west of Algeria), in 2018, thanks to a
partnership with the Turkish giant Taypa, which invested $1.5 billion. This facility
will satisfy more than 40% of the domestic market and 60% of the production
will be destined for export.
Another project is under way to create a
production plant for wool yarns and threads and other textile products by
Turkish company Boyner Sanayi A.S in partnership with Algerian TEXALG Company
in Meskiana in the Wilaya d'Oum El Bouaghi for an investment of 16 million
Since the 2000s, the authorities have shown
their willingness to relaunch the Textile - Clothing and Leather sectors.
According to the statement presented at the 3rd
International Textile, Clothing, Leather and Equipment Exhibition held in
Algiers from 21 to 23 January 2019 at the CIC of Algiers:
The textile market counts for 160 million DA/Year which is currently
covered at only 10 %.
The need for the clothing manufacture and clothing market is estimated at
150 million items.
Hide and skin market is estimated at about 30 million pounds per square inch,
covered at 20% only.
The shoe market needs are estimated at 50 million pairs of shoes, covered
by only 0.6%.
The textile sector in Algeria is a strategic
sector with strong assets. It plays a lead role in providing investment
As for the leather and footwear industry, the
Algerian market offers international companies win-win partnerships.
Transport is one of the fundamental pillars of sustainable development and
prosperity for any country. Efficient transport systems and modern networks are
therefore a necessity for economic development, social well-being, large-scale
production and environmental preservation.
In Algeria, the transport sector is undergoing a real transformation. Many
projects have been carried out or are under achievement in order to make this
sector more efficient and effective for the country's economic and social
development. For example, the railway tracks splitting into two along the
entire new North Motorway, the progressive electrification of the network and
the construction of new stations and commercial harbour in the central region
were part of the five-year program 2015-2019.
The port infrastructure has undergone a development of ports specialized in
the transport of hydrocarbons, such as the port of Djen-Djen, the only port in
deep water. A new plan to extend and modernize existing ports should be put in
place. In the medium term, Algeria should have a modern port in the west of
Algiers that meets world standards.
Airport infrastructure has benefited from significant investments in recent
years (80 billion dinars) for the modernization and upgrading of existing
airport runways. The traffic is dominated by Air Algérie at more than 50%.
Land transport has developed more rapidly than other modes of transport, backed
up somewhat by the development of road infrastructure (motorways, express ways and
other roads) and the financing facilities granted by State agencies. There is a
public enthusiasm for urban and interurban transport because of it does not
need funding neither require qualification.
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Agricultural sector contributed 12.4% to the national economy’s gross domestic product (GDP) in 2019.
Cereal products are strategically important to the food chain and the national economy. From 2000 to 2017, the area of cereals was estimated at 40% on average of the total cultivated area.
The planted- cereal area has been increasing since 2000, reaching 3,385,560 ha in 2017. Durum wheat and barley account for 74% of the total cereal crop in this surface area. The government’s latest policy focuses on durum wheat production.
As part of discussion on the draft Act of Finance for the financial year 2021 in the Finance and Budget Committee of National Popular Assembly, the Minister of Agriculture and Rural Development, stated that the total area of irrigated land, estimated at 650,000 hectares in 2010, increased by 780,000 hectares in September 2020, being 1.43 million hectares.
AGRICULTURE AND RURAL DEVELOPMENT POLICY
Agriculture and rural development policy focuses on food security, making agriculture a driving force of economic growth and diversification, by intensifying production in strategic food-processing sectors, and developing rural areas
Strategic lines of agricultural and rural development policy
Preserving efforts to strengthen and expand the productive base.
Continuing integrated intensification of agricultural sectors.
Adapting support tools and supervising national product.
Continuing human resources strengthening and technical support.
Main assets of Algerian agriculture:
Diversity of agricultural-climatic environments.
Low use of chemicals.
Large market (regional and local external markets: Mediterranean basin, African countries).
Possibility of placing its products on the market all year round and off-season.
Wide range of products.
High quality products.
Main real estate indicators:
Cultivated area: 8.5 million hectares, being 19.7 % of the total agricultural area and 0.19 ha per capita (2018).
Farms: 1,198,000 farms, of which 50% have less than 20 ha and 26% have less than 10 ha.
Main legal status of land:
The private property of the State: 2,566,199 ha, being 30 per cent of the total cultivated area, developed by 215,000 farmers.
The private property called Melk: 5,857,212 ha, of which 2,384,868 ha are registered, being 69 per cent of the total cultivated area, developed by 802,760 farmers.
Wakfs property: 28,877 ha being 0.14% of the total cultivated area, developed by 2,877 farmers.