Algeria
In-depth country-focused analysis on Algeria’s economic, political and operational risk environment, complemented by detailed sector insight

Algeria’s government responded swiftly to public demonstrations at the height of the Arab Spring by granting a series of reforms that appeased protesters. Elevated international energy prices have bolstered the country's fiscal accounts in the past few years, and we do not expect weaker oil prices to lead to a fundamental turnaround in the government's expansionary fiscal policy. Investments into the oil and gas sector continue to be prioritised by Algeria’s government.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 10 of Algeria’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Algeria.

Country Risk

Algeria Country Risk

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Core Views

  • As a result of ongoing political violence, a significant degree of productive capacity (both physical and human) throughout the Libyan economy has been lost. Road, housing and utility infrastructure have suffered considerable damage and will take years to repair under even the most stable of political environments. Moreover, given the importance of the hydrocarbon industry, damage to oil production and refining infrastructure will pose significant long-term challenges.

  • Libya's political climate will remain volatile through 2015, as competing militias compete for control over the country's vast resource wealth.

  • A lack of institutional capacity will hamper reconstruction efforts. Libya lacks the institutions necessary to carry out much-needed investment projects.

  • Low oil prices, coupled with...

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Algeria Industry Coverage (10)

Agribusiness

Algeria Agribusiness

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BMI View: With wheat and dairy production falling consistently short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on improving food self-sufficiency is helping the grains and dairy sectors to rebound. Increases in government support will be positive for productivity and product quality in the medium term. However, the country will remain a key importer of wheat and dairy products in the coming years. Algeria is increasingly expanding trading links with countries such as Brazil and India,...

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Autos

Algeria Autos

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In November 2014, Renault is set to officially open its new Algerian production plant at Oued Tielat, with the first Symbol model set to be coming off the production line on November 10 2014, just after this report was written. BMI believes that the commencement of local production by Renault should prove transformative for the local auto production and supply chain sectors and we will report fully on the official launch of local product on in our next quarterly update.

Ahead of the official launch, Renault Algérie has been carrying out extensive media promotion activities, including the launch of 'teaser trailers' on its YouTube channel. The factory's initial output will stand at 25,000 vehicles per annum, but this will steadily rise to 75,000 vehicles a year, primarily for sale locally.. Recent media reports indicate that there is currently 12% local content being...

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Food & Drink

Algeria Food & Drink

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BMI View:  We recently revised upwards our forecasts for economic growth in Algeria, and now expect to see nominal GDP growing at a compound annual rate of 10.9% between 2014 and 2018 (up from a previous forecast of 8.3%), as we are more positive about private consumption, and expect to see strong growth across the food and drinks sector. We continue to view inflation and political unrest as the biggest risks to consumption.

Headline Industry Data

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Infrastructure

Algeria Infrastructure

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BMI View: Algeria's construction sector saw relatively healthy growth in 2014, and with an uptick in GDP growth forecast in 2015 we expect this trend to continue moving forward. The government is launching an extensive new five-year development programme, including wide-ranging investments across a number of public infrastructure projects, with USD262bn due to be allocated. Prime Minister Abdelmalek Sellal has also reiterated a commitment to encouraging more foreign investment, indicating a range of opportunities for international firms. Despite a contraction in the oil and gas sector, Algeria's large reserves mean we expect to see public spending continue to rise, supporting our positive growth forecasts for the country's construction sector.

The key trends and developments in Algeria's infrastructure sector are:  

  • Construction industry value is expected to...

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Insurance

Algeria Insurance

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BMI View : We believe life insurance penetration in the North African region will remain low due to the lack of affordability among households. Furthermore, we see an increasingly likelihood of consolidation among the regional markets in the coming years due to the large number of sub-scale insurers which lack capital. We also see an opportunity for the larger insurers to expand beyond their domestic shores into other African markets. 

Life penetration in all the four countries profiled in this report - Algeria, Morocco, Tunisia and Libya - is low and we expect it to remain so over the coming years due to the low levels of income of many households. However, Morocco is the only country where life insurance has become somewhat established as a conduit for organised savings. Even then, it is used by...

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Oil & Gas

Algeria Oil & Gas

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BMI View: Despite Algeria's substantial hydrocarbons reserves, rapid production decline in the country's major producing fields weighs on its longer-term production outlook. Whilst new projects due online in the coming years will offer temporary support to production growth, we grow increasingly bearish towards the end of our 10-year forecast period. The high prospectivity of Algeria's unconventional and offshore acreage could see this trend reversed, but a poor above-ground environment continues to drag on international investment.

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Headline Forecasts (Algeria 2012-2018)
  2012 2013

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Petrochemicals

Algeria Petrochemicals

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Fertiliser production is increasing in Algeria with a third major complex coming onstream in 2015, but olefins and polymers production will remain small following the cancellation of the planned Arzew petrochemicals complex.

Petrochemicals have major potential as Algeria looks to reduce its reliance on raw commodity prices. Its main value-added products are methanol and fertiliser. Petrochemical exports amount to around two-thirds of Algeria's non-hydrocarbons exports, but hydrocarbons comprise 95% of the country's total exports. Algeria has the fourth-largest oil reserves and second-largest gas reserves in Africa but production has plateaued in recent years.

  • Algeria's petrochemicals market is likely to witness a steady improvement in growth in 2015. This is driven mainly by domestic demand and public investment activity.

  • The fertiliser sector is set to grow in 2015 as...

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Pharmaceuticals & Healthcare

Algeria Pharmaceuticals & Healthcare

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BMI View: The Algerian government's five-year investment and industrial development plan to be implemented from 2015-2019 will provide opportunities to foreign drugmakers looking to enter the Algerian pharmaceutical market or to expand their operations in the region through strategic partnerships or agreements. This is illustrated by several cross-border recent agreements, including a partnership established between multinational pharmaceutical firm AstraZeneca and local drugmaker Saidal to transfer expertise and manufacture locally. Meanwhile, the Algerian government will maintain an expansionary fiscal while pushing forward healthcare facilities construction and modernization, contributing to market growth rates over the next years. However, operating challenges including weak intellectual property law and...

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Power

Algeria Power

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BMI View: Despite Algerian government's efforts to spur the development of renewable energy in the country, conventional thermal sources are expected to remain the dominant fuel for electricity generation in the coming years, with many power projects under construction or planned that will use natural gas. We estimate 2013 total power generation in Algeria was 50.4TWh, having risen 3.8% on the 2012 level. We forecast an average 4.7% annual increase to 60.9TWh between 2012 and 2017. Thermal generation, comprising coal, gas and oil, is expected to grow at a similar pace - by 4.7% per annum and is forecast to reach 60.3TWh during the period to 2017.

We forecast Algeria's power...

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Telecommunications

Algeria Telecommunications

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BMI View : The strong demand for mobile data services in the North African telecoms markets is driving investments in network upgrade and expansion, with operators in Algeria, albeit from a low base, and Morocco leading the way in capital expenditure (capex) spending in 2014. The uptake of 3G network services in this region, aided by the increasing availability of low-cost smartphones, will allow mobile operators diversify their revenue streams away from basic services amid increased regulatory and competitive pressure. Libya is still left out of this development trend, with insecurity and political stability delaying a much-needed liberalisation process in the telecoms sector and...

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