Algeria’s economic signals split between reform and inertia

This week’s developments in Algeria reveal two parallel narratives. On one side, government directives push for startup financing, vocational training, and digital infrastructure expansion. On the other, structural economic weaknesses persist—low wages, stagnant diversification, and food security risks. Foreign policy shifts, including gas export threats and rapprochement with Spain, add external pressure. Entrepreneurs face a mixed landscape: new funding opportunities but limited wage growth, improved internet access but logistical hurdles in education, and a tourism rebound without corresponding infrastructure upgrades.

State directives vs. economic realities

Algeria’s government issued two orders with direct business implications. President Abdelmadjid Tebboune instructed continued support for startups and mandated private-sector involvement in financing their projects. No timeline or funding mechanism was specified. Separately, the president attended the African Union’s Continental Conference on Education in Nouakchott, where vocational training reforms were discussed. No concrete policy changes were announced.

These directives contrast with persistent economic strains. The IMF’s latest report on Algeria warned of “deep structural failures in economic management.” The fund highlighted artificial GDP inflation—growth figures not matched by job creation or wage increases. In 2023, Algeria’s GDP grew by 4.2%, but private-sector employment rose by only 1.8%. The IMF recommended diversification, noting that hydrocarbons still account for 93% of exports and 60% of government revenue.

A separate crisis unfolded at El Watan, Algeria’s largest French-language daily. The newspaper, owned by a private consortium, faces financial collapse after years of declining ad revenue and state pressure. Staff reported unpaid salaries for three months. The closure would leave Algeria’s media landscape dominated by state-controlled outlets. For entrepreneurs, this signals reduced independent scrutiny of business regulations.

Labor and migration: Chinese workers, low wages, and passport seizures

A report documented conditions for Chinese workers in Algeria. Over 50,000 Chinese nationals work in Algerian construction, energy, and infrastructure projects. Workers described monthly wages of 12,000–18,000 DZD (90–135 USD), below Algeria’s legal minimum of 20,000 DZD (150 USD). Some employers confiscated passports, a violation of Algerian labor law. The report cited 12 cases of workers stranded after project cancellations.

For Algerian entrepreneurs, this highlights two risks. First, reliance on foreign labor in key sectors may create dependency. Second, low wages suppress domestic consumer spending. In 2023, household consumption grew by 2.1%, below the 3.5% GDP growth rate. Businesses targeting the local market face constrained demand.

Digital infrastructure expands, but gaps remain

Algeria’s broadband market is projected to grow by 12% annually through 2026. The government’s FTTH (fiber-to-the-home) rollout reached 1.2 million households in 2024, up from 800,000 in 2022. Gigabit speeds are now available in Algiers, Oran, and Constantine. State-owned Algérie Télécom remains the dominant provider, with 68% market share. Private ISPs, including Djezzy and Mobilis, hold 22% and 10%, respectively.

For startups, improved connectivity lowers operational costs. However, rural areas lag. Only 35% of households in the Hauts Plateaux and Sahara regions have fixed broadband access. The government’s 2025 target is 60% nationwide coverage.

Tourism data provided a rare positive indicator. Foreign tourist arrivals rose by 10% in 2024, reaching 3.2 million. The increase follows visa relaxations for European and Gulf visitors. However, hotel capacity grew by only 3% in the same period. Occupancy rates in Algiers and Oran exceeded 85% during peak seasons, straining existing infrastructure.

Energy and foreign policy: gas threats, Spain rapprochement, and regional tensions

Algeria remains Spain’s top gas supplier, providing 24% of its imports in the past 12 months. In 2023, Algeria exported 12.8 billion cubic meters (bcm) to Spain, down from 14.1 bcm in 2022. This week, Algeria threatened to halt gas exports to Spain over Madrid’s stance on Western Sahara. No timeline was given. The threat follows a four-year diplomatic freeze between the two countries, which ended in June 2024 without resolution on the Sahara issue.

For energy-sector entrepreneurs, the threat introduces supply uncertainty. Algeria’s gas production peaked at 101 bcm in 2022 but declined to 98 bcm in 2023. The government has not announced new exploration contracts since 2021. Renewable energy projects, including a 2023 plan to install 15 GW of solar capacity by 2035, remain behind schedule. Only 1.2 GW was operational as of June 2024.

Regional tensions with Morocco escalated after Algeria’s acquisition of Russian Su-57 fighter jets. The purchase, valued at 1.5 billion USD, marks Algeria’s first fifth-generation aircraft. Morocco responded by ordering 24 F-35s from the U.S. in July 2024. The arms race has no direct economic impact but raises geopolitical risks for cross-border trade. Algeria-Morocco bilateral trade totaled 120 million USD in 2023, down from 280 million USD in 2018.

Transport upgrades: rail expansion, no aviation progress

Algeria’s national rail operator, SNTF, received 200 new wagons from a Chinese manufacturer. The order, part of a 1.2 billion USD modernization plan, aims to increase freight capacity by 30%. Passenger rail services remain limited. The Algiers-Oran high-speed line, announced in 2018, has not advanced beyond feasibility studies.

In aviation, no new routes were announced in 2024. Air Algérie, the state carrier, operates 52 aircraft, with an average fleet age of 14 years. The airline has not placed new orders since 2018. For logistics startups, rail improvements may reduce shipping costs, but aviation stagnation limits air cargo growth.

Youth and education: English adoption, vocational training, and brain drain

Algeria’s government announced plans to expand English-language instruction in secondary schools. The shift follows a 2023 decree making English mandatory in universities. Implementation faces logistical challenges. Only 15% of secondary school teachers are certified in English. The Ministry of Education estimates a need for 12,000 additional English instructors by 2026.

For tech startups, English proficiency is critical for hiring and international partnerships. However, the transition may disrupt short-term productivity. In 2023, 62% of university graduates reported difficulty finding jobs matching their degrees. Vocational training programs, discussed at the AU conference, have not yet produced measurable outcomes. The government’s 2022 target was to train 500,000 workers annually; actual figures reached 320,000 in 2023.

Brain drain continues. In 2023, 18,000 skilled workers emigrated, up from 12,000 in 2022. The diaspora, estimated at 2.5 million, sent 2.1 billion USD in remittances in 2023, a 9% increase from 2022. For entrepreneurs, this represents both a talent pool and a market for services targeting expatriates.

Food security: drought data and agricultural risks

A study using the ERA5-Land dataset mapped drought characteristics in northern Algeria. The data showed a 22% increase in drought frequency in the past decade. Rainfall in the Tell Atlas region, Algeria’s agricultural heartland, declined by 15% since 2010. Wheat production, a key crop, fell from 3.2 million tons in 2020 to 2.1 million tons in 2023.

The government’s response has focused on subsidies. In 2023, 1.8 billion USD was allocated to food imports, including 5.2 million tons of wheat. For agribusiness startups, this creates opportunities in irrigation technology and drought-resistant crops. However, import dependence limits local value addition. Algeria’s food import bill reached 12 billion USD in 2023, up from 9 billion USD in 2020.

Collective memory and diaspora engagement

France’s decision to mark Algerian war dead on October 17 sparked controversy. The date commemorates the 1961 Paris massacre of Algerian protesters. A separate dispute arose over a statue in France honoring a soldier accused of torture during the war. No diplomatic consequences were reported.

For the diaspora, these events reinforce engagement with Algeria’s historical narrative. In 2023, 45% of remittances came from France, totaling 945 million USD. Entrepreneurs targeting the diaspora may find demand for cultural products, including media and educational content.

Week’s balance

– Positive signals: Startup funding directives, broadband expansion, tourism growth, rail upgrades.
– Negative signals: IMF warnings on GDP inflation, low wages, drought risks, brain drain, media crisis.
– Neutral/uncertain: Gas export threats, English education rollout, vocational training outcomes, regional tensions.

Key takeaway for entrepreneurs
Algeria’s startup funding directives create opportunities, but wage stagnation and import dependence limit market growth. Digital infrastructure improvements reduce operational costs, while drought risks increase input volatility for agribusiness. The diaspora remains a stable source of remittances, but brain drain constrains local hiring. Energy sector instability may disrupt supply chains.