Security tensions remain high. Morocco’s military presence near borders is under scrutiny as Algeria’s chief of staff supervised a large-scale exercise in Tlemcen province. In Niger, an Al-Qaeda attack killed 11 soldiers 30 km from Algeria’s southern frontier. Morocco recalled its ambassador from France after President Macron hosted Morocco’s king in Paris. Algeria’s cabinet approved an 8.7 % increase in the 2025 budget, with defence accounting for 12.7 % of state spending.
Geopolitics and Defence Spending
Defence remains Algeria’s top yearly expenditure. SIPRI data show Algeria allocated 9.1 % of GDP to military budgets in 2024, the second-highest share globally after Ukraine. Algeria’s army ranks 25th in Global Firepower’s 2025 index, with 130,000 active personnel and 150 combat aircraft. The government confirmed a USD 1.2 billion contract with Russia for 12 Su-34 strike fighters signed in March 2025. Algeria also received its first Pantsir-S1 air-defence system in June 2025.
France’s defence review published in July 2025 lists Algeria as a “priority partner” in North Africa despite diplomatic strain. France allocated EUR 80 million in 2025 to joint counter-terrorism exercises with Algeria. Algeria’s navy commissioned two Kilo-class submarines in late 2024, increasing Mediterranean patrol capacity.
Infrastructure and Trade
AfDB approved USD 878 million for Algeria’s 1,200 km trans-Saharan railway linking Tamanrasset to Lagos via Kano. The loan carries a 25-year maturity at 1 % interest. Algeria’s transport ministry forecasts a 42 % cut in cross-border haulage time once the corridor opens.
Algeria and Siemens Energy agreed in principle to a USD 350 million green-hydrogen pilot in Hassi R’Mel, targeting 250,000 t/year by 2028. Afreximbank disbursed USD 200 million for phase 1 of Hassi Bir Rekaiz oil expansion, aiming to lift output from 12,000 bpd to 35,000 bpd by 2027.
Diplomatic Frictions
Relations with France worsened after Paris hosted King Mohammed VI on July 15. Algeria summoned the French chargé d’affaires, citing “unacceptable interference.” France’s foreign ministry confirmed no change in bilateral cooperation on migration control and energy security.
Algeria dropped French as the main university language and adopted English starting September 2025. The education ministry replaced 1,600 French-language textbooks with English versions in law, economics and engineering faculties. The shift affects 50,000 first-year students in 22 public universities.
Water and Energy
A peer-reviewed study in Scientific Reports assessed water quality in Oued Souf using an integrated index weighted for arsenic, fluoride and salinity. Results show 68 % of samples exceed WHO limits for fluoride. Local authorities plan USD 45 million in reverse-osmosis desalination units by 2028.
Algeria’s renewable-energy target remains 30 % by 2030. The energy ministry signed a USD 180 million deal with Masdar for a 300 MW solar park in Timimoun, expected online Q2 2027.
Tourism and Cultural Shifts
Nat Geo aired a three-part documentary on the Tassili n’Ajjer and Grand Erg Occidental, the first Western media access since 2019. Morocco’s tourism board reported a 14 % increase in Sahara ultra-marathon entries for October 2025. Algeria’s culture ministry barred Moroccan delegations from UNESCO events after Morocco protested Algeria’s representation of Western Sahara heritage.
Algeria celebrated its 65th independence day on July 5 with military parades in Algiers and Oran. Kazakhstan’s cultural ministry opened a month-long exhibition in Algiers marking 30 years of diplomatic ties.
Economic Diversification
Algeria’s non-oil GDP grew 3.1 % in Q1 2025, driven by construction (+4.8 %) and telecommunications (+5.3 %). The hydrocarbons sector contracted by 0.7 % due to maintenance shutdowns at Hassi Messaoud.
The central bank held its key rate at 3.5 % for the third quarter, citing inflation at 4.2 % year-on-year. The dinar depreciated 2.4 % against the euro in June, reaching 145 DZD/EUR. Foreign exchange reserves stood at USD 59 billion as of May 2025, down from USD 62 billion in December 2024.
Business Implications
Construction firms bidding for the trans-Saharan railway must submit pre-qualification dossiers by September 30. Minimum annual turnover requirement is USD 200 million. AfDB’s procurement rules mandate 30 % local content for civil works.
Oil-service companies investing in Hassi Bir Rekiaz need Algerian joint-venture partners holding majority stakes. Afreximbank’s USD 200 million tranche is secured against future oil sales.
Green-hydrogen investors must register with Algeria’s Energy Transition Agency to access USD 150 million in concessional loans. The pilot plant requires 1,200 hectares of land leased for 30 years at USD 50/hectare/year.
University language reform creates demand for 1,500 English-language adjunct lecturers. The education ministry will hire 800 full-time instructors by December 2025 at salaries of USD 1,100 monthly.
Key takeaway for entrepreneurs
Algeria’s 2025 budget commits USD 14 billion to defence and USD 878 million to rail infrastructure. Green-hydrogen and oil expansions offer USD 730 million in combined investment opportunities for foreign and local firms. The university language shift increases demand for English-language educational services and materials.
💡 Starting a business in Algeria? GlobalStart guides you step by step: procedures, real costs, company forms (SARL, EURL, SPA) and CNRC registration.