Algeria businesses hope gov’t will stay the course on reforms

ALGIERS - Algerian businesses say they are starting to benefit from new rules to encourage investment and exports in one of the world’s most closed economies, but they fear a petrodollar windfall could push the government back to its state-heavy model.

Recent rules aimed at diversifying the economy to reduce reliance on oil and gas sales include a new investment code that came into force this month and cash incentives to non-oil exporters.

“Algeria is in a real race against time. It has to secure revenues away from oil and gas before prices are crushed again,” a former government minister, who still advises on economic issues, said on condition of anonymity.

For decades Algeria had used its high energy revenues to run a top-down economy in which private or foreign investment was difficult, large sectors were reserved for the state, and entrepreneurs were stifled by bureaucrac.y

But cash reserves tumbled after oil prices fell in 2014, imperilling state finances and putting pressure on social spending, adding to public anger over political stagnation that fed mass protests which rocked the state from 2019-20.

As Algeria’s foreign currency reserves fell by two thirds in six years and the long-term risk of unrest grew, President Abdelmadjid Tebboune’s government pushed reforms to strengthen the private sector, boosting local businesses.

“We are still suffering from a heavy bureaucracy, very often corrupt bureaucracy. This is still reality,” said Mohammed, an entrepreneur who has waited three years along with a foreign partner for approval to start a factory making fridges.

“I understand Tebboune is trying to do things. But it is still too early to say if he will succeed, so to me it is still wait and see,” added Mohammed, who did not give his family name for fear it would complicate his business efforts.

Perplexed by arbitrary policy changes, plagued by corruption, hampered by bureaucracy and constrained by tight rules, Algeria’s private sector has struggled to prosper for years.