Country name: People's Democratic Republic of Algeria
Population: 33,333,216 (July 2007 estimate)
Land Area: 2,381,741km2
Official Language: Arabic
Comm. Language: French
Currency: 1 Algerian Dinar (AD) = 100 centimes
Main Cities: Oran, Constantine, Annaba, Blida, Setif
Visa Requirements: Required
The largest country in the Maghreb, located between Tunisia and Morocco, Algeria boasts a Mediterranean coastline of around 1000km. In terms of physical geography, the country’s landscape comprises radically contrasting features with the Atlas mountains in the north and the vast expanses of the Sahara dominating in the south. The northern climate resembles the Mediterranean of warm, wet winters and hot, dry summers. A period of drought occurs over several months during the summer accompanied by the severe sirocco wind which blows southerly from the Sahara. Algeria is rich in natural resources with the fertile plains and valleys of the coastal region providing support for cultivation of most of the country’s cereals, olives and fruit.
The country’s current population is 34,400,000 (2006 figure). About 70% of the population live in the northern, coastal area; the minority, inhabiting the Sahara desert, are mainly concentrated in oases. Some 1.5 million maintain a nomadic or partly nomadic existence. Almost 30% of Algerians are under the age of 15.
Administrative Districts
Algeria is currently divided into 48 wilayas (provinces), 553 dairas (counties) and 1,541 baladiyahs (municipalities). The capital and the largest city of each Algerian wilaya, daira, and baladiyah always has the same name as the wilaya, the daira, or the baladiyah it is located in, the same holds for the largest daira of the wilaya or the largest baladiyah of the daira. According to the Algerian constitution, a wilaya is a "territorial collectivity" enjoying some economic freedom, the APW, or "L'Assemblée Populaire Wilayale" (the Popular "Wilayale" Parliament) is the political entity governing a province, directed by the "Wali" (Prefect), who is chosen by the Algerian President to handle the APW's decisions; the APW has also a "president", who is elected by the members of the APW.
Highlights of 2006
The year 2006 was marked by some major new developments for Algeria, the privatization program moved ahead with the sale of state-owned bank, Credit Populaire d'Algérie (CPA) and the year also saw a successful repayment of the country’s foreign debt.
Algeria’s financial and economic indicators improved during the mid-1990s, in part because of policy reforms supported by the International Monetary Fund (IMF) and debt rescheduling from the Paris Club. Algeria’s finances have benefited from an increase in oil prices and the government’s tight fiscal policy, leading to a large increase in the trade surplus, record highs in foreign exchange reserves, and reduction in foreign debt. In 2001, the government signed an Association Treaty with the European Union that will eventually lower tariffs and increase trade.
In March 2006, Russia agreed to wipe $4.74 billion of debt. At the same time, Algeria also decided to pay off its full $8 billion debt to the Paris Club group of rich creditor nations in advance of schedule. This move will reduce the Algerian foreign debt to less than $5 billion by the end of 2006. The Paris Club agreed that the successful repayment reflected Algeria's economic recovery.
Rich in oil and gas, Algeria has benefited from recent high energy prices. The hydrocarbons sector is the backbone of the country’s economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. Algeria has the seventh-largest reserves of natural gas in the world and is the second-largest gas exporter; it ranks 14th in oil reserves. The US Energy Information Administration reported that in 2005, Algeria possessed 160 trillion cubic feet (Tcf) of proven natural gas reserves, which would make it the eighth largest in the world.
Latest Statistics
Currently, Algeria is running substantial trade surpluses and building up record foreign exchange reserves. Oil and gas exports stood at $51.75 billion in 2006, a 13.6% increase on 2005 and accounted for 97.98% of all exports, according to figures released by the country’s Centre National de l’Informatique et des Statistiques (CNIS). The CNIS also revealed that the country posted a $31.82 billion trade surplus in 2006, a 22.9% increase on the previous year. Total exports stood at $52.82 billion, a 13.7% increase and imports were $21 billion, recording a 2.2% increase on 2005.
Trade Relations
Algeria has close and important trade relations with the European Union member states. The EU-Algeria Association Agreement came into force in September 2005, giving the country fully-fledged EU-partnership. Total trade with the EU stands at around €31.1 billion, principally due to exports of oil and gas making Algeria one the biggest EU trading partners in the Euro-Mediterranean region.
Oil & Gas
Investment opportunities are particularly evident in the gigantic oil and gas industries. Oil reserves run to 9.2 billion barrels, roughly equal those of Norway. Prospects appear even more impressive in gas with proven reserves of over 4.5 trillion cubic meters which gives Algeria the sixth largest reserves in the world.
The international market for Algeria’s resources continues to grow as China and the countries of Eastern and Central Europe maintain rapid economic expansion. Demand can only increase in coming decades with the market for gas growing faster than that for oil and Algeria seems ideally positioned to meet these demands. Although already the second largest supplier of gas to Europe after Russia, accounting for more than a quarter of all gas consumed, Algeria has the potential to increase this. Algeria also supplies a significant proportion of Europe’s oil needs.
The hydrocarbons sector in Algeria is characterized by a world-class oil and gas infrastructure. National company Sonatrach remains the main player, although it lost its regulatory role with the adoption of a new Hydrocarbons Law in July 2005 when new industry regulatory agencies were created. Sonatrach’s operations involve discovering oil and gas as well as developing, transporting, and marketing. Its operations have been strengthened by the formation of a long-term partnership with BP, leading international investor in the country. The two companies joined forces to create Algeria’s largest joint development project - In Salah Gas.
A new decree adopted in November 2006 amended the hydrocarbon law 05-07 and maintained Sonatrach's monopoly. The 19 new amendments, which will be enforced early this year, are expected to maintain the level of oil and gas reserves. The country holds vast potential as much remains under-explored. The law also aims at slowing down the pace of exploration, though production will remain unchanged. The government is targeting an increase in output levels from 1.5 million barrels per day (bpd) to 2 million bpd and a rise in gas exports from 62 billion cubic meters to 85 billion cubic meters by 2010.
Algeria is pursuing closer relations with foreign partners, including Russia with whom it has reached a new memorandum of understanding on energy co-operation. Russia’s Rosneft has also sought government approval to invest $1,300 million in the development of two oil and gas discoveries in the southeast.
Proposals to develop block 245 South in the Illizi basin, with estimated reserves of 280-300 million barrels of oil equivalent, were discussed in Algiers on 21 January.
Rosneft has to date invested $66 million in the block, with discoveries made at Tesselit Nord and Takouazet West.
Medgaz Project
The Medgaz project company has committed to invest $1,170 million in the development of the 210km-long subsea gas pipeline linking Algeria with Spain.
The construction phase was launched after the signing of the final investment decision in late December 2006. The investment will cover construction and start-up of the 8,000 million-cubic-metre-a-year (cm/year) pipeline, coastal pre-installation work for the future addition of a second 8,000 million-cm/year pipeline and project costs incurred to date. Mobilisation is under way for engineering work which is due for completion by November, while material fabrication work is to be completed by May 2008. The work of construction will begin in January 2008 with completion in May 2009. The first gas should be obtained in June 2009.
Debt Repayment
Algeria quite rightly believes that the successful progress made on international debt repayment is an important indicator of its economic strength and will help increase investor confidence.
Increased revenue from high hydrocarbon prices throughout the year allowed Algeria to make debt repayments to foreign creditors, such as the Paris Club or the London Club. Minister of Finance Mourad Medelci also revealed that Algeria's debt with international financial institutions such as the World Bank and the African Bank for Development was nearly paid off. Moreover, in March 2006, Russia decided to erase $4.74 billion of Algeria's Soviet-era debt. Algeria is not only demonstrating its healthy financial situation but it is also avoiding paying significant amounts of interest in the medium to long term. By the end of 2006, foreign debt left to be paid reached $4.5 billion, representing only 6% of the foreign currency reserves. Some expect the repayments to strengthen Algeria's financial position internationally and make it a more credible and reliable partner for potential foreign investment.
Privatization
A partial privatization of state telecoms operator Algerie Telecom (AT), estimated to be worth around $3,000 million, has been unveiled with a completion target of mid-2007. The sale of the 51% stake has attracted interest from major telecoms operators with large Gulf telecommunications firms such as Emirates Telecommunications Corporation (Etisalat) and Saudi Telecom cited by observers as possible bidders.
Banking
Currently, the banking sector in Algeria is dominated by the seven state-owned banks representing 90% of the sector. Over 25 privately owned banks and nine finance companies manage the remaining 10%. Although the trend in recent years has been towards a steady increase in the number of privately owned financial establishments leading to increased competition, the authorities still believe that there is considerable scope for development.
A centre piece of the privatization drive has been the proposed sale of a majority stake in Credit Populaire d’Algerie, the country’s fifth largest banks. Much international interest has been generated by the offer. Six companies are chasing the 51% stake in CPA, which is expected to raise $1,500 million. The sale, launched in February 2007, was the first time that Algeria had offered shares in a government-owned bank.
The acquisition of CPA, which provides banking and financial services for light industries, building and public works, tourism and transport sectors, would guarantee a foreign investor a strong foothold in the rapidly growing Algerian market. Buying CPA would also allow a foreign major to avoid the time-consuming process of structuring a network, building a customer base and establishing a reputation.
Moreover, the relatively undeveloped Algerian banking market remains one of the last untapped growth opportunities in the Middle East and North African region. Banking and financial services remain comparatively unsophisticated with much scope for upgrading and introduction of new products.
The entry of major international banks into the Algerian market should serve as a catalyst for progress in the sector. The successful privatization of CPA could also bring forward two more banking privatizations in 2007 as well as enabling the banking sector to receive its much sought upgrade. The number of foreign banks in Algeria could double in 2007, as up to 12 applications from financial institutions seeking to operate in the country are under consideration. Credit Agricole Indosuez, the international banking arm of Credit Agricole, is expected to be the first applicant to be awarded a licence by Algeria’s central bank. Meanwhile, the British Arab Commercial Bank (BACB), the local arm of HSBC, is also reported to be one of the banks about to receive a licence.
Tourism Sector
Later in the year a $1,000 million investment program will start to be implemented in an attempt to revitalize the country’s tourist industry. The program is being developed by state tourism agency Agence Nationale du Developpement Touristique as part of a national 2025 tourism development scheme.
Construction work is scheduled to begin in late 2007 on the first of a planned 42 resorts, the last of which is due to be completed by 2015. Studies are nearing completion for 22 of the tourist development zones, providing an estimated 53,000 beds. Nineteen of the resorts will be on the north coast, with three in the southern Sahara region.
Bids for the provision of roads and utilities for the first of the projects were due to be submitted by 20 January, with an award expected in February. The first two construction tenders – covering La Messida in the El-Tarf district in the northeast and Moscarda near Tlemcen in the northwest – will be issued in 2007.
The proposed resorts range in size from about 65 hectares to the 114-hectare Bouzedjar resort near the Moroccan border. The resorts will all be located within 100 metres of the sea and will include hotels, tourist apartments and villas, water parks and other leisure facilities. Several studies for some of the proposed tourism projects have already been completed, but tenders for the preparation of additional studies are set to be issued by June.
Agriculture
About a quarter of the country’s population is employed in various aspects of agriculture. More than 7,500,000 acres (30,000 km2) are devoted to the cultivation of cereal grains. The Tell region is the grain-growing land. Productivity has increased substantially by the sinking of artesian wells in districts which only required water to make them fertile. Wheat, barley and oats are the principal cereal crops grown. A great variety of fruit and vegetables, especially citrus products, are produced for export.
A small amount of cotton is also grown in the southern oases as well as fibre made from the leaves of the dwarf palm. Olives are grown extensively for consumption and for production of olive oil Tobacco is also cultivated. Other Algerian agricultural exports include figs, dates, esparto grass, and cork. Only 5% of Algeria’s available land is currently under cultivation, but some 30% could actually be cultivable. It is seeking to become more self-sufficient in food production through investment in new technology and providing incentives to encourage farm innovation. Likewise, the country’s fishing industry requires investment for modernization and in an effort to upgrade the sector Algeria is renovating its ports infrastructure.
Water Sector
Algeria is restructuring its water sector to improve efficiency, minimize waste of resources and to reform the tariffs. A central feature of the plan is the need to attract the management skills of international water companies. As desalination becomes an increasingly important option for Algeria in order to meet increasing demands for water private investors will be playing a greater role.
USEFUL CONTACTS
Air Algerie
International Bookings: + (213) 2 58 95 05
International Airport Houari Boumediene Algiers: + (213) 2 50 91 91
Bank of Algeria
38 Avenue Franklin Roosevelt, Algiers, Algeria
Tel: + (213) 2 23 00 23
Fax: + (213) 2 664 99 / 664 37
Email:
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Website : www.bank-of-algeria.cerist.dz
Banque Commercial & Industrielle d’Algerie (BCIA Bank)
Siege Social 4, Chemin Doudou Mokhtar, Ben Aknoun, Algiers, Algeria
Tel: + (213) 2 91 18 45 / 91 30 06
Fax: + (213) 2 91 17 13
Website: www.bciabank.com
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