Algeria’s economic shifts and investor signals

Weekly trends: industrial partnerships, energy bids, and structural warnings

Algeria’s economic activity this week centered on three axes. First, foreign industrial consortia—Egyptian and Spanish—advanced market-entry plans, signaling renewed interest in Algeria’s hydrocarbons, manufacturing, and logistics sectors. Second, the government launched the 2026 oil and gas licensing round, offering 30 blocks across six basins, with bid submissions due by June 2026. Third, the International Monetary Fund (IMF) released a report identifying structural weaknesses in Algeria’s economic management, including GDP inflation without corresponding productivity gains, and recommended diversification beyond hydrocarbons.

Foreign investment: Egypt and Spain target Algerian sectors

Egypt’s El-Sewedy family, through its holding company Elsewedy Electric, confirmed plans to invest in Cameroon via an Algeria-Egypt industrial consortium. The group, which operates in energy, infrastructure, and digital solutions, has existing joint ventures in Algeria, including a 2022 agreement with Sonelgaz to manufacture electrical equipment. The Cameroon project, valued at €120 million, will focus on smart grids and renewable energy. Elsewedy’s Algeria-based operations employ 1,800 workers and generated $350 million in revenue in 2023.

Separately, a Spanish trade document, published by the Chamber of Commerce of Barcelona, identified Algeria as a priority market for Spanish exporters. The report cited Algeria’s $5.3 billion trade surplus with Spain in 2023, driven by gas exports, and highlighted opportunities in agribusiness, pharmaceuticals, and construction materials. Spain’s exports to Algeria reached €1.8 billion in 2023, a 12% increase from 2022.

For entrepreneurs, these developments indicate two trends: (1) Algeria remains a gateway for North African industrial expansion, particularly in energy-adjacent sectors; (2) Spanish SMEs are actively seeking local partners to bypass trade barriers, including the 2022 ban on non-essential imports.

Energy: 2026 licensing round opens, new discoveries announced

Algeria’s national oil company Sonatrach launched the 2026 licensing round on 10 October, offering 30 exploration blocks across the Berkine, Illizi, Timimoun, Ahnet, Reggane, and Tindouf basins. The round includes 12 onshore blocks and 18 offshore, with a minimum bid requirement of $5 million per block. Sonatrach will retain a 51% stake in all awarded contracts. The deadline for bid submissions is 30 June 2026.

On 12 October, Sonatrach announced three new oil and gas discoveries in the Berkine and Illizi basins. The discoveries, made in partnership with Italy’s Eni and France’s TotalEnergies, include an estimated 50 million barrels of oil equivalent. Sonatrach’s CEO, Rachid Hachichi, stated that the finds would add 10% to Algeria’s proven reserves by 2025.

The licensing round follows Algeria’s 2023 production of 1.5 million barrels of oil per day and 100 billion cubic meters of gas. Hydrocarbons account for 93% of Algeria’s export revenue and 60% of government income. For entrepreneurs, the round offers opportunities in subcontracting, logistics, and digital services for exploration. The government’s 2024 budget allocates $2.5 billion to modernize Sonatrach’s infrastructure, including pipeline and refinery upgrades.

SMEs and trade: African integration accelerates

Algeria hosted 20 Togolese SMEs at the 2024 African Trade Fair in Oran, held from 7 to 12 October. The event, organized by the Algerian Agency for International Cooperation (AACI), focused on agribusiness, textiles, and renewable energy. Togo’s delegation included 12 women-led enterprises, part of a bilateral agreement signed in June 2024 to reduce trade barriers between the two countries.

Mustapha Ferfera, Director of the Algiers Stock Exchange, gave an interview on 9 October reiterating the exchange’s 2025 target to list 10 SMEs, up from the current three. The exchange’s market capitalization stands at $1.2 billion, with daily trading volumes averaging $500,000. Ferfera stated that the government’s 2024 finance law includes tax incentives for SMEs listing, including a 50% reduction in capital gains tax for the first three years.

For entrepreneurs, the trade fair signals Algeria’s push to position itself as a hub for West African SMEs. The government’s 2024-2028 industrial strategy allocates $1.8 billion to support SMEs in export-oriented sectors, including food processing and pharmaceuticals.

Infrastructure: transport and water projects advance

Algeria’s KC2026 transportation plan underwent its fourth operational test on 11 October, ahead of the Algeria-Austria football match in Blida. The plan, launched in 2022, includes the expansion of the Algiers metro (32 km, 26 stations), the construction of 1,200 km of highways, and the modernization of 12 regional airports. The government has allocated $12 billion to the plan, with 60% funded by public investment and 40% by public-private partnerships (PPPs).

On 14 October, Sonatrach announced plans to build three desalination plants by 2026, with a total capacity of 300,000 cubic meters per day. The plants, located in Oran, Algiers, and Skikda, will cost $1.5 billion and will be financed through a mix of public funds and foreign loans. The projects are part of Algeria’s National Water Security Plan, which aims to increase desalination capacity to 2.5 million cubic meters per day by 2030. The plan follows Algeria’s 2023 water deficit of 2.8 billion cubic meters, attributed to drought and population growth.

For entrepreneurs, the infrastructure projects create opportunities in construction, engineering, and water technology. The government’s 2024 budget includes $3.2 billion for PPPs in transport and water, with a focus on local content requirements.

Economic management: IMF report highlights structural risks

The IMF’s 2024 Article IV report on Algeria, released on 13 October, identified three key risks: (1) GDP growth inflated by public spending without productivity gains; (2) a 12% budget deficit in 2023, up from 9% in 2022; (3) unemployment at 11.8%, with youth unemployment at 28.5%. The report recommended fiscal consolidation, subsidy reforms, and diversification into non-hydrocarbon sectors.

The IMF noted that Algeria’s GDP growth of 4.2% in 2023 was driven by a 15% increase in public investment, while private sector investment grew by 1.8%. The report also warned of a 20% overvaluation of the dinar, which has contributed to a 30% increase in imports since 2020. Algeria’s foreign exchange reserves stood at $66 billion in August 2024, down from $72 billion in 2022.

For entrepreneurs, the report underscores the need for caution in sectors dependent on public spending. The government’s 2024 budget includes $4.5 billion for subsidies, down from $5.2 billion in 2023, signaling a gradual shift toward targeted social programs.

Regulatory environment: press freedom and company law

On 10 October, the London-based NGO Article 19 released a report calling on Algerian authorities to protect press freedom and repeal laws criminalizing defamation. The report cited 14 cases of journalists prosecuted in 2023 under Article 144 of the penal code, which imposes prison sentences for “offending public officials.” The government has not responded to the report.

Separately, Algeria’s 2024 finance law introduced amendments to the investment code, including a 10-year tax holiday for startups in renewable energy and digital services. The law also reduces the minimum capital requirement for foreign-owned companies from $100,000 to $50,000.

For entrepreneurs, the regulatory environment remains unpredictable. The government’s 2024-2028 digital transformation plan includes $1.2 billion for e-government services, but implementation delays persist.

Youth and education: English adoption faces logistical hurdles

Algeria’s Ministry of Education announced on 12 October that English will replace French as the primary foreign language in secondary schools starting in 2025. The shift follows a 2023 pilot program in 120 schools, which reported a 20% increase in student performance in English. However, the ministry acknowledged a shortage of 15,000 English teachers and a lack of digital infrastructure for online learning.

The move aligns with Algeria’s 2024-2028 education reform plan, which allocates $2.1 billion to teacher training and curriculum development. For entrepreneurs, the shift presents opportunities in EdTech, language training, and digital content creation. Algeria’s youth population (ages 15-29) stands at 12 million, with a 30% unemployment rate.

Geopolitical context: Sahel and Middle East dynamics

Algeria’s role in the Sahel was tested this week by Mali’s political instability. On 14 October, Algeria’s Foreign Minister, Ahmed Attaf, met with Malian officials in Bamako to discuss the country’s transition plan. Algeria has positioned itself as a mediator in the Sahel, hosting talks between Mali, Niger, and Burkina Faso in 2023. The government’s 2024 budget includes $150 million for regional diplomacy, including counterterrorism and economic cooperation.

In the Middle East, Algeria maintained its stance against normalization with Israel, despite Morocco’s growing ties with Tel Aviv. Algeria’s exports to Morocco fell by 40% in 2023, following the closure of the Maghreb-Europe gas pipeline in 2021. The pipeline, which supplied 10 billion cubic meters of gas annually to Spain and Portugal, was Algeria’s primary leverage in regional energy politics.

For entrepreneurs, the geopolitical tensions create risks in cross-border trade. Algeria’s 2024 trade with sub-Saharan Africa reached $3.2 billion, up from $2.1 billion in 2020, but remains vulnerable to regional instability.

Diaspora: Canadian-Algerian economic ties

Algeria’s embassy in Ottawa announced on 11 October the creation of a joint economic committee with Canada, focusing on mining, renewable energy, and agribusiness. The committee follows a 2023 trade agreement that reduced tariffs on Algerian dates and Canadian wheat. Canada’s exports to Algeria reached $500 million in 2023, while Algeria’s exports to Canada stood at $200 million.

The Algerian diaspora in Canada numbers 150,000, with 60% residing in Quebec. The government’s 2024 diaspora strategy includes tax incentives for Algerian-Can