Algeria’s Week: Startups, Energy, and Policy Shifts

Algeria’s business and economic landscape saw multiple policy and sectoral shifts this week. The government advanced digital ambitions with new tech hubs, while renewable energy investments surged amid international partnerships. Startups gained institutional support, though financing constraints persisted. The hydrocarbons sector attracted foreign interest, while the upcoming elections introduced regulatory uncertainties. Below is a breakdown of the key developments by sector.

Institutional Push for Tech and Startups

Algeria’s technology ecosystem received three government-backed initiatives this week. CERIST, the country’s IT research center, inaugurated a Deeptech Innovation Hub to bridge the gap between academic research and commercial AI and cybersecurity ventures. The facility will provide startups with mentorship, prototyping labs, and access to CERIST’s 300 researchers. Separately, the National Agency for Investment Development (ANDI) opened a new public-sector-focused tech hub in Algiers, targeting digital transformation projects for government agencies. A third hub, launched in Oran, is part of the Digital Algeria 2026 plan, which aims to double the number of registered digital startups from 1,200 to 2,500 by 2026.

Funding mechanisms for entrepreneurs expanded as well. The Innovation, Commerce and English Language Collaboration program opened a call for proposals, offering grants of up to €50,000 for projects combining innovation with export readiness. Algeria’s state-backed fund for tech startups, TASDIC, also issued a guide detailing eligibility criteria for grants ranging from DZD 5 million to DZD 20 million (€35,000 to €140,000). Applicants must demonstrate scalability, with preference given to teams with at least one foreign collaboration.

Solar and Wind Energy: Mixed Progress

Algeria’s solar sector saw two major developments. The government reaffirmed plans to increase solar capacity to 15 GW by 2030, up from the current 1 GW, as part of its energy transition strategy. However, the country remains reliant on hydrocarbons for 98% of its electricity generation. International partnerships are critical: Algeria and Germany discussed a joint green hydrogen pilot project involving a 100 MW electrolyzer, capable of producing 20,000 tons of hydrogen annually for European markets.

Wind energy also received a boost, with a tender launched for 1 GW of new wind capacity in the south of the country. The projects, to be developed by state-owned Sonelgaz, will be tendered in phases starting Q3 2024. Total investment is estimated at DZD 200 billion (€1.4 billion). Despite these moves, challenges persist, including grid instability, land tenure disputes, and delays in foreign investment approvals.

Hydrocarbons: Foreign Interest Grows

Algeria’s oil and gas sector attracted renewed attention from international majors. US companies ExxonMobil and Chevron are in advanced talks with Algeria’s Sonatrach to explore unconventional shale resources in the Berkine Basin. The region holds an estimated 5.4 trillion cubic feet of recoverable shale gas, though extraction remains technically complex and politically sensitive due to environmental concerns.

The Ministry of Energy launched Algeria Bid 2026, opening seven exploration blocks in the Sahara and offshore Algeria. Total surface area of the blocks is 45,000 km², with initial commitments requiring investment of at least DZD 10 billion (€70 million) per block. The tender closes in June 2024, with results expected by September. Algeria aims to increase oil production from 1.2 million barrels per day to 1.5 million by 2027.

SME Financing: Banking Sector Under Pressure

Algeria’s banking sector faces tightening liquidity, with non-performing loans rising to 12.8% of total loans as of Q3 2023, up from 11.2% a year earlier. The central bank (Bank of Algeria) attributed the deterioration to delays in government payments to contractors and a slowdown in SME lending. In response, the government announced a DZD 500 billion (€3.5 billion) emergency fund to support SMEs, with loans carrying interest rates capped at 6%. Priority sectors include agribusiness, textiles, and renewable energy.

Freelancing and Migration: Regulatory Cracks

A scandal involving BLS International, the agency managing Schengen visa services in Algeria, emerged this week. Spanish authorities opened an investigation into reports that Algerian applicants paid up to €25,000 to bypass waiting times, with intermediaries allegedly exploiting the system during Spain’s migration crisis. The case highlighted vulnerabilities in Algeria’s freelance and outsourcing ecosystem, where digital workers often face visa hurdles despite growing demand for remote services in IT, design, and translation.

Geopolitical Shifts: Sahel and Energy Security

Algeria’s potential return to a more active role in Sahel security gained attention after French President Emmanuel Macron stated that Algeria could play a “pivotal” stabilizing role in combating Islamist insurgencies. Algeria has historically avoided direct military engagement in the Sahel but has offered logistical and intelligence support. Meanwhile, Algeria’s push for green hydrogen exports aligns with Germany’s strategy to reduce dependence on Russian gas. A joint feasibility study, conducted by German energy firm RWE and Algerian state company Sonatrach, is due by June 2024.

Elections: Policy Uncertainty Looms

Algeria’s presidential elections, scheduled for September 2024, are unlikely to see significant policy shifts. The ruling coalition has ruled out structural reforms, and opposition groups have called for a boycott, citing restrictions on civic space. The Ministry of Interior reported that 23 civil society organizations have faced closures or legal challenges in 2024, including groups focused on economic transparency. Business associations have privately expressed concerns over potential policy continuity, particularly in energy and foreign investment regulations.

Weekly Highlights in Numbers

– Tech Hubs: 3 new hubs opened (Algiers, Oran, public-sector-focused), targeting 2,500 startups by 2026.
– Solar Capacity: Current 1 GW target revised upward to 15 GW by 2030.
– Wind Tender: 1 GW capacity tendered, with €1.4 billion investment expected.
– Hydrocarbons: 7 new exploration blocks tendered (45,000 km² total), with minimum investment of €70 million per block.
– Shale Gas: Berkine Basin holds 5.4 trillion cubic feet of recoverable gas; US majors in talks to explore.
– SME Fund: €3.5 billion emergency fund announced, with 6% interest rate cap on loans.
– Banking Sector: NPL ratio reached 12.8%, prompting government intervention.
– Freelancing: €25,000 visa fraud scandal involving BLS International exposed.
– Elections: 23 civil society groups restricted in 2024; boycott calls continue.

Key takeaway for entrepreneurs: Algeria’s tech sector is gaining institutional support through new hubs and grants, but founders must navigate financing delays and visa constraints. In energy, untapped opportunities exist in solar, wind, and hydrocarbons, but regulatory hurdles remain. SMEs should prioritize sectors with government-backed financing, while startups targeting export markets should align with the Innovation, Commerce and English Language Collaboration program.