Algeria: Investing

FDI in Figures

Rich in natural resources and enjoying economic stability, Algeria has been attracting record levels of FDI in the recent years, reaching 17.3 billion USD in 2009. These extremely encouraging figures nevertheless hide two opposing trends: a net decrease in European investments and a revival of interest from the Gulf investors.

The series of protectionist measures taken by the Algerian government, including a new regulation concerning the FDIs and imposing an Algerian majority stake of 51%, can also be seen as a discouraging factor in terms of the FDIs. Likewise, corruption and heavy bureaucracy, as well as the weak financial system and legal insecurity in terms of intellectual property rights, constitute an impediment to investment. Officially, the government remains committed to economic liberalization and continues to seek foreign investment in sectors such as the infrastructures, telecommunications, energy and water supply. There has also been a noticeable reorientation of the FDI toward the domestic market, through an efflorescence of developmental projects in transport and infrastructure.

The sectors attracting most FDI are the energy sector, followed by the telecommunications and tourism.

Why You Should Choose to Invest in Algeria

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

According to the edict n°01/03 of 20 August 2001, any legal entitiy or natural person, public or private, can invest in economic activities concerning production of goods and services as well as in investments carried out in the framework of granting concessions and/or licenses. It is possible to enjoy certain advantages according to one's projects and their location (Edict n° 01-03).

Acquisition of Holdings

Acquiring a majority interest in a local company is authorized in Algeria.

Obligation to Declare

An investment declaration is necessary; it must be made to the National Agency for development and investment (ANDI) which depends on the Ministry of participation and promotion of investment (MPPI). Consult the websites of these organizations to find out further details.

Competent Organization For the Declaration

National Agency for Development and Investment

Requests For Specific Authorizations

Many products are subject to procedures to obtain prior authorization. See the list of controlled activities on the Register of Commerce website (in French).

 

Learn more about Foreign Investment in Algeria on Globaltrade.net, the Directory for International Trade Service Providers.

 

Office Real Estate and Land Ownership

Possible Temporary Solutions

There are several temporary solutions: domiciliation of the company at the private address of the director, domiciliation in a business center, and renting professional premises.

The Possibility of Buying Land and Industrial and Commercial Buildings

You can buy industrial and commercial property. There are several possibilities: either buying land from a private owner (the most expensive solution), or making an application to the Government, through the CALPI (Local Assistance and Promotion of Investment Committee), which allows you to acquire land at affordable prices. However, you must have an eligible and reliable project. The CALPI office can be found in the one stop shop of the ANDI (National Agency for Develpment and Investment). To see the list of one stop shops and their location, click here. (in French)

Risk of Expropriation

According to Algerian law, foreign investors are entitled to compensation if they are victims of expropriation. The Constitution of 8 December 1996 provides legally-binding guarantees against expropriation and confers the right to equitable compensation.

Investment Aid

Forms of Aid

There are several types of advantages for setting up a foreign company in Algeria. You can consult the Investor's guide published by the National Agency for Development and Investment.

The various measures take the form of tax advantages, especially tax exemptions from 3 to 10 years. They are organized by the ANDI. Companies must make their application when they make their investment declaration. Investors also benefit from the State taking over certain expenses (duty on transfers against payment for all purchases of real estate intended for investment, fixed duty as regards reduced rate registration for charters and increase of capital, etc.)

Privileged Geographical Zones

Areas of economic expansion have been established, located on the high plateaux and in areas in the south. They allow investors taking part in regional industrial development, to enjoy exemption, for 5 to 10 years, from property tax on real estate purchases intended for economic activity and a reduction of 50% of the reduced rate applicable to reinvested profits.

Organizations Which Finance

The FGAR, credit guarantee fund for SMEs/SMIs

Investment Opportunities

The Key Sectors of the National Economy

Hydrocarbons, the food industry, real estate, chemicals and retailing.

High Potential Sectors

In terms of needs, Algeria suffers from a housing deficit and has extensive needs in the healthcare sector. The Algerians spend 140 billion DZD a year on healthcare (2 billion Euros).

About thirty kilometers from Algiers, the planned new urban area at Sidi Abdallah offers numerous investment opportunities in the sectors of IT, electronics, communication, pharmacy, research and development, health, international trade, telecommunications, tourism, NICTs and financial engineering.

Other fields of opportunity: the public buildings and works sector, development of infrastructures ( roads, trains, airports, ports, etc.), water treatment and management, hydrocarbons, the banking sector, the food industry sector, defense, automobiles, mass marketing.

Privatization Programs

From now on all public economic companies are eligible for privatization. Privatization concerns 1 200 public economic companies (EPE) and is a way of opening up the Algerian economy to the free market economy, legally recognized by the promulgation of a new legislative framework (edict n° 01-04 of 20 August 2001, ratified by a law voted by Parliament). The directory of companies eligible for privatization is available on-line on the MPPI website.

Since March 2005, foreign companies have been able to have complete ownership of an oilfield. For this, two independent national agencies have been created: on the one hand,the hydrocarbons regulation authority which is in charge of controlling and regulation activities concerning hydrocarbons and, on the other hand, the ALNAFT, national agency for the development of hydrocarbon resources. The hydraulics sector is one of the State's priorities. On a wider scale, the whole of the energy sector is opening up more and more to competition.

Finally, in August 2005, a Bill on the reform of the water sector was voted by the Parliament; it provides foreign companies to be able to sign contracts with the State for the management of the water network but for all that it does not allow these companies to fix prices.

Tenders, Projects and Public Procurement

Tenders Info, Tenders in Algeria
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

In principle, there are no longer any monopolies in Algeria. However, some sectors of activity are difficult to get into, such as the tobacco and hydrocarbon sectors.

Sectors in Decline

Textiles

Finding Assistance For Further Information

Investment Aid Agency

National Agency for Development and Investmentt

Other Useful Resources

Economic Developments and Prospects in Algeria - African Economic Outlook

Doing Business Guides

Guide to investment in Algeria, by KPMG
Algeria Commercial Guide 2010 - Buy USA

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