During a conference with various employers’ associations in March, Hamid Temmar, the minister of state shareholdings and investment promotion, unveiled the Algerian government’s new strategy for industry. The state program consists of several growth plans, with a special focus on restructuring and upgrading production facilities to make Algeria more competitive and bring the country in line with international standards.
Temmar emphasized the need for companies to become more independent and act as sole decision-makers in their businesses. “Industrial companies,” Temmar said, “must seek to become modern enterprises with regards to technology. Besides, in the long term, industrial exports are expected to account for an integral part of the liberalized economy.”
If plans for economic diversification are to move ahead, industrial products will make up a greater share of exports, thus reducing the country’s reliance on hydrocarbons. Not only does this shake-up concern the existing industrial sector, including public and private companies, but also any future industrial investments, as they will need to be made with this logic in mind.
Set up in the 1970s and 1980s, the current industrial facilities are outdated and inefficient due to the political turmoil of the 1990s. This era prevented Algeria from following major technological developments. Although foreign direct investment (FDI) has picked up, most of it is still earmarked for the oil and gas sector, while the manufacturing sector in the country has been suffering from poor equipment and foreign competition from low-cost imports.
Time for companies to take center stage
Temmar added that while the government will remain a key actor in implementing the new strategy, individual companies will have to take center stage and not rely on the state for advice and assistance. Firms will need to build on their own strengths and comparative advantages in order to grow. Companies must adapt to world industry standards, create independent decision-making processes, and focus on technical, technological, financial capacities and human resources.
Indeed, among Algerian industrial companies, the training deficit is huge. Issad Rebrab, CEO of Cevital, described it as “the major stumbling block.” He added that “finding the right people in any position, but notably at top managerial posts, is increasingly difficult.”
As Algeria is embracing free market principles, local companies need to start acting and thinking in line with the changing economy. The state will target several sectors for development where it feels the potential is strong and where there are real synergies with other segments. The government has currently singled out the petrochemical industry, pharmaceutical industry, fertilizers, food-processing businesses, the steel industry and mechanical and construction material-making as areas of potential development. Two new activities are to be given priority: automobile production and information and communications technology.
Furthermore, some sites have also been targeted for the implementation of this strategy. Three types of zones have been established or are in the process of development. Firstly, there are “competivity poles,” which will involve the restructuring of facilities located in Algiers, Blida, Oran, Mostaganem, Annaba, Setif-Bordj Bou Arreridj, Boumerdes, Tizi-Ouzou and Ghardaia-Hassi R’mel. Secondly, there are “technopoles,” which will be located at Sidi Abdullah near Algiers for new technologies, Bejaia for food processing and as an export hub due to its sizeable port, and Sidi Bel Abbes for electronics. Finally, “specialized zones” will be developed at Arzew, Hassi Messaoud, Skikda and Oran. Other regions may also be identified in order to promote other sectors such as tourism, agriculture and fishing.
While companies are expected to upgrade their infrastructure, human resources and management remain key to the strategy’s success. An estimated $1 billion will be allocated to support its development, though how this is used will greatly determine the direction economic growth takes in Algeria.
