Algeria’s energy push reshapes business landscape

Algeria’s economic activity in July 2025 centered on energy expansion, digital infrastructure, and regulatory adjustments. State-backed investments in hydrogen, petrochemicals, and solar energy exceeded $32 billion in announced commitments. E-commerce and fintech saw operational expansions, while startup funding in the MENA region declined sharply. New company laws and tax reporting rules introduced compliance requirements for businesses. SME financing received a $200 million boost from Afreximbank.

Energy sector drives investment, diversification efforts

Algeria’s state oil company, Sonatrach, announced a $7 billion plan to expand petrochemical and refining capacity. The investment includes upgrades to existing refineries and construction of new processing units. Separately, Algeria set a $25 billion target for hydrogen production by 2040. The government aims to produce 1 million tons of green hydrogen annually by 2030, rising to 10 million tons by 2040.

The Medlink interconnector project, linking Tunisia and Algeria, secured Italian support. The 600 MW underwater cable will export electricity to Europe. Italy’s Terna will co-finance the €800 million project, expected to be operational by 2028.

Algeria also plans a new oil bid round in April 2026 for seven exploration blocks. The blocks cover onshore and offshore areas, including the Berkine Basin and the Illizi Basin. Sonatrach will retain a minimum 51% stake in all awarded contracts.

Solar energy projects face delays. The 1 GW Tindouf solar plant, announced in 2022, remains in the feasibility study phase. Algeria’s installed solar capacity reached 500 MW in 2025, below the 2020 target of 1 GW.

Digital infrastructure expands, e-commerce grows

Ooredoo completed 5G network deployment across all 58 Algerian provinces. The rollout covers 80% of the population, with download speeds averaging 300 Mbps. Competitor Djezzy launched 5G in 12 provinces, targeting urban centers.

E-commerce activity increased. The electronic payment market surpassed 22 million active cards, up from 18 million in 2023. Yalidine, an Algerian delivery firm, expanded its logistics network to 48 wilayas, covering 90% of the country. The company processes 15,000 daily orders, a 40% increase year-on-year.

Fintech startup Gifty introduced a payment solution for small merchants. The platform allows QR code-based transactions with a 1.5% fee per transaction, below the 2-3% charged by traditional acquirers. Gifty reported 50,000 merchant sign-ups since its 2024 launch.

Yassir, Algeria’s largest mobility startup, partnered with Huawei to develop digital payment and AI-driven logistics tools. The collaboration includes a pilot for autonomous delivery vehicles in Algiers. Yassir’s valuation fell to $1.8 billion in July 2025, down from $2.1 billion in 2024, after Moove overtook it as Africa’s most valuable mobility unicorn.

Startup funding declines, regulatory changes introduced

MENA startups raised $52 million in June 2025, the lowest monthly total in a year. Algerian startups secured $3.2 million, down from $8.1 million in June 2024. The decline follows a regional trend, with total MENA funding dropping 62% year-on-year in H1 2025.

Algeria waived IPO fees for startups until 2028. The measure applies to companies with annual revenue below DZD 1 billion ($7.3 million). The government also reduced capital requirements for tech startups from DZD 5 million to DZD 1 million ($7,300).

Afreximbank approved a $200 million facility for Shoreline, an Algerian engineering, procurement, and construction (EPC) firm. The funding supports a gas processing plant in Adrar, part of Algeria’s $5 billion energy infrastructure program.

Compliance rules tighten for businesses

Algeria’s National Center for Trade Register (CNRC) introduced reporting requirements for physical goods production. Companies must submit quarterly data on output volumes, raw material usage, and energy consumption. Non-compliance carries fines up to DZD 5 million ($36,500).

The tax authority mandated digital integration of financial data by December 2025. Businesses must link accounting systems to the tax administration’s platform. The measure targets SMEs, which account for 90% of Algerian enterprises.

Parliamentary elections in July 2025 maintained the ruling coalition’s majority. The new assembly is expected to review a draft law on public-private partnerships (PPPs) in Q4 2025. The bill proposes tax exemptions for infrastructure projects exceeding DZD 10 billion ($73 million).

Economic outlook mixed, oil dependence persists

Algeria’s economy grew 3.2% in H1 2025, down from 4.1% in H1 2024. Non-hydrocarbon GDP expanded 2.8%, driven by construction and services. Hydrocarbon GDP contracted 1.5% due to lower oil prices.

The IMF projected Algeria’s fiscal deficit at 12.3% of GDP in 2025, up from 9.8% in 2024. Public debt reached 68% of GDP, the highest since 2000. Foreign exchange reserves fell to $52 billion, covering 14 months of imports.

Oil prices averaged $78 per barrel in H1 2025, down from $85 in H1 2024. Algeria’s budget assumes a $90 per barrel price for 2025. The government revised its 2026 growth forecast to 2.5%, citing risks from lower oil revenues.

Balance of the week

Algeria’s energy sector dominated investment announcements, with $32 billion committed to hydrogen, petrochemicals, and electricity exports. Digital infrastructure expanded, with 5G coverage reaching all provinces and e-commerce transaction volumes rising. Startup funding declined, while regulatory changes introduced new compliance requirements for businesses. Economic growth slowed, and fiscal vulnerabilities increased due to lower oil prices.

Key takeaway for entrepreneurs
Algeria’s energy transition creates opportunities in hydrogen, solar, and petrochemicals, but delays remain. Digital payment adoption is rising, with fintech and logistics startups expanding. Regulatory changes require businesses to update reporting systems by December 2025. Oil price volatility increases economic uncertainty, limiting non-hydrocarbon growth prospects.