Algeria’s week—politics, gas, water, and trade shifts

Government reshuffle and political stability

The reshuffle follows months of protests over water shortages, unemployment, and inflation. The government’s response has included subsidies for basic goods and a 10% salary increase for civil servants, announced in May. The budget deficit widened to 12.3% of GDP in 2023, up from 9.8% in 2022, according to the IMF.

Political parties remain fragmented. The ruling National Liberation Front (FLN) holds 164 of 407 parliamentary seats. Islamist parties, including the Movement of Society for Peace (MSP), control 65 seats. No party has proposed structural economic reforms.

Energy and trade: gas contracts and pipeline projects

The Trans-Saharan Gas Pipeline (TSGP) broke ground on 10 June. The 4,128-kilometre project will connect Nigeria to Algeria via Niger, with a capacity of 30 billion cubic metres per year. Total investment is estimated at $13 billion. Sonatrach holds a 51% stake; Nigerian National Petroleum Corporation (NNPC) and Niger’s government hold 29% and 20%, respectively. First gas is expected in 2028.

Algeria’s gas exports to Europe reached 54 billion cubic metres in 2023, up 12% from 2022. The country is Europe’s third-largest gas supplier after Norway and Russia.

Agriculture and food security

The government signed a $455 million deal with Italian firm Bonifiche Ferraresi on 14 June. The project covers 10,000 hectares in the Hodna region for wheat, barley, and olive cultivation. Irrigation systems will use treated wastewater, reducing groundwater dependence by 30%.

Kenya will export 250,000 sheep to Algeria ahead of Eid al-Adha. The deal, finalised on 13 June, is worth $40 million. Algeria imports 80% of its red meat, spending $1.2 billion annually.

Water scarcity and infrastructure

The Hamma Seawater Desalination Plant in Algiers won the Overseas Private Investment Corporation (OPIC) Impact Award on 11 June. The plant produces 200,000 cubic metres of water daily, supplying 25% of Algiers’ needs. Total desalination capacity in Algeria reached 2.1 million cubic metres per day in 2024, up from 1.5 million in 2020.

Libya and Algeria agreed on a water cooperation roadmap on 13 June. The plan includes joint management of the North Western Sahara Aquifer System (NWSAS), which spans both countries. Algeria will invest $200 million in water infrastructure along the Libyan border.

Diaspora and South-South trade

The Western Mining Railway, a 1,050-kilometre line connecting Tindouf to the Mauritanian border, entered its final construction phase on 14 June. The $1.8 billion project will transport iron ore from Gara Djebilet, one of the world’s largest untapped deposits. Annual capacity is 20 million tonnes. First shipments are scheduled for 2026.

Algeria’s trade with sub-Saharan Africa reached $3.2 billion in 2023, up from $2.1 billion in 2020. Key exports include refined petroleum ($1.4 billion), cement ($300 million), and pharmaceuticals ($250 million).

Foreign relations and economic implications

Algeria’s foreign exchange reserves stood at $62 billion in May 2024, down from $68 billion in December 2023. The central bank imposed stricter import controls in April, limiting letters of credit to essential goods. Non-essential imports fell by 22% in Q1 2024 compared to Q1 2023.

The government approved a new investment law on 10 June. Key provisions include:
– 10-year tax exemptions for projects in renewable energy, agriculture, and digital sectors.
– 30% local content requirement for manufacturing projects.
– Simplified land acquisition procedures for industrial zones.

Gender and economic participation

The government launched a $50 million fund in May to support women-led startups. Criteria include:
– At least 51% female ownership.
– Minimum 10 employees.
– Annual revenue below $2 million.

The fund will provide grants of up to $100,000 per project. Applications close on 30 September.

Week’s balance

Key takeaway for entrepreneurs
Algeria’s $13 billion Trans-Saharan Gas Pipeline and $1.8 billion Western Mining Railway offer long-term supply chain opportunities. The new investment law provides tax exemptions for renewable energy and digital projects, but local content rules apply. Water scarcity and import restrictions remain operational risks. Women-led startups can access $100,000 grants until September.