Algeria’s highest court recently upheld prison sentences for two former prime ministers, Ahmed Ouyahia and Abdelmalek Sellal, in a long-running corruption case tied to Sonatrach, the state-owned energy giant. The verdicts, confirmed in August 2024, mark the latest chapter in President Abdelmadjid Tebboune’s anti-graft campaign, which has targeted high-ranking officials and business elites since 2019.
The case centers on allegations of embezzlement, abuse of office, and illicit contracts involving Sonatrach, Algeria’s largest company and the backbone of its economy. Ouyahia received a 15-year sentence, while Sellal was handed a 12-year term, according to reports by africanews.com and Algeria’s state news agency APS. Both men had previously served as prime ministers under former President Abdelaziz Bouteflika and were accused of facilitating corrupt deals during their tenures.
For entrepreneurs and investors, the trials send a mixed message. On one hand, the prosecutions signal a commitment to cleaning up Algeria’s business environment, where opaque deals and political connections have long hindered competition. Sonatrach, which accounts for over 90% of Algeria’s export revenue and 60% of its budget, has historically been a black box for private sector players. The crackdown could, in theory, level the playing field for smaller firms seeking contracts in energy, construction, and logistics.
On the other hand, the focus on high-profile figures—rather than systemic reforms—raises questions about whether the anti-corruption drive will translate into tangible changes for businesses. Algeria ranks 104th out of 180 countries in Transparency International’s 2023 Corruption Perceptions Index, and local entrepreneurs often cite bureaucratic hurdles and favoritism as major obstacles. A 2023 survey by the Algerian Chamber of Commerce found that 68% of small and medium-sized enterprises (SMEs) identified corruption as a barrier to growth, with many reporting that they avoid bidding for public contracts due to perceived unfairness.
The trials also coincide with broader economic challenges. Algeria’s economy remains heavily dependent on hydrocarbons, which generated $45 billion in export revenue in 2023, according to the Bank of Algeria. However, global energy price fluctuations and declining oil production—down 7% since 2019—have forced the government to explore diversification. Tebboune’s administration has introduced incentives for non-energy sectors, including tax breaks for startups and a $5 billion fund to support SMEs, but progress has been slow. The World Bank estimates that non-hydrocarbon sectors grew by just 1.8% in 2023, far below the government’s 4% target.
For the Algerian diaspora, the corruption trials may influence investment decisions. Remittances from Algerians abroad totaled $2.1 billion in 2023, per the Bank of Algeria, but many expatriates remain cautious about committing capital to a market perceived as unstable. A 2024 report by the Algerian-American Business Council found that 42% of diaspora investors cited corruption as a top concern, second only to bureaucratic red tape. The recent verdicts could reassure some, but others may wait to see whether the crackdown extends to mid-level officials and business intermediaries who facilitate graft.
Sonatrach itself has undergone leadership changes in recent years, with Toufik Hakkar appointed CEO in 2020. Hakkar has pledged to modernize the company, including digitizing procurement processes and increasing transparency in tenders. In 2023, Sonatrach launched an online portal for supplier registration, a move aimed at reducing informal deal-making. However, industry insiders say old habits persist, particularly in subcontracting and local content requirements, where political connections often determine winners.
The trials also highlight the risks of doing business in Algeria’s energy sector. Foreign firms, including Italian Eni and French TotalEnergies, have faced scrutiny over past contracts, though none have been charged. In 2022, Algeria’s state audit office accused Sonatrach of overpaying for a liquefied natural gas (LNG) terminal project, leading to a renegotiation of terms with the foreign partners involved. Such cases underscore the need for due diligence, particularly for companies entering joint ventures or bidding for public contracts.
For local entrepreneurs, the key question is whether the anti-corruption push will trickle down to their level. Algeria’s informal economy, estimated at 30-40% of GDP by the IMF, thrives on cash-based transactions and personal networks. Many business owners operate in a gray zone, where compliance with regulations is selective and enforcement is inconsistent. The government has taken steps to formalize the economy, including a 2023 law requiring electronic invoicing for all commercial transactions, but implementation has been patchy.
The verdicts against Ouyahia and Sellal may also deter some officials from engaging in corrupt practices, but they do little to address the structural issues that enable graft. Algeria’s legal system remains slow and opaque, with business disputes often taking years to resolve. A 2024 study by the Algerian Center for Economic Research found that contract enforcement takes an average of 520 days, compared to 395 days in Morocco and 430 days in Tunisia.
Key takeaway for entrepreneurs
The Sonatrach corruption trials reflect Algeria’s efforts to clean up its business environment, but systemic change remains uncertain. Entrepreneurs should prioritize compliance, document all transactions, and seek local legal advice before engaging in public contracts or partnerships with state-linked entities. The diaspora may see increased opportunities in non-energy sectors, but patience and due diligence will be critical in navigating Algeria’s evolving regulatory landscape.
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