Algeria’s week—energy reforms, trade growth, digital tax shifts

Algeria’s economic and political landscape shifted this week across hydrocarbons, trade, urban development, and digital regulation. Foreign investment rules in gas expanded. Trade with Tunisia rose 42% in three years. The 2026 Finance Law introduced new tax measures for businesses. Urban infrastructure projects accelerated. Security operations continued in the south. Environmental policies focused on forest management and desertification. Relations with Spain and Morocco remained tense but pragmatic. Digital taxation changes signal regulatory adjustments for startups and foreign firms.

Hydrocarbons: foreign investment rules relaxed, shale gas returns

Algeria amended its hydrocarbons law to attract foreign capital. The government removed the 51% state ownership requirement for upstream projects. Foreign companies can now hold majority stakes in exploration and production ventures. Sonatrach, the state energy firm, retains pre-emption rights on discoveries.

Shale gas exploration resumed in the Ahnet and Berkine basins. Sonatrach and foreign partners, including TotalEnergies and ENI, conducted seismic surveys. Estimated reserves: 20 trillion cubic meters. Production costs remain high—$6–8 per million British thermal units (MMBtu), compared to $3–5 for conventional gas.

The government allocated $1.2 billion for shale gas infrastructure in 2025. Delays persist due to water scarcity and local opposition. Protests in Ouargla and Adrar blocked access to drilling sites in June 2024.

Algeria exported 52 billion cubic meters (bcm) of gas in 2023. Pipeline capacity to Europe: 54 bcm annually. Liquefied natural gas (LNG) exports: 12 bcm. Italy and Spain accounted for 70% of shipments.

Trade and regional integration: Tunisia, Spain, Gulf ties strengthen

Algeria–Tunisia trade reached $2.1 billion in 2023, up 42% since 2020. Algerian exports: gas, steel, cement, pharmaceuticals. Tunisian exports: textiles, agricultural products, machinery. Joint industrial zones planned in Tébessa and Gafsa.

Algeria–Spain trade rebounded to $11.5 billion in 2023 after a 2022 diplomatic dispute over Western Sahara. Spain resumed gas purchases at $12/MMBtu, above the 2021 average of $8.50. Algerian officials confirmed no new gas contracts signed in 2024.

The Gulf-Maghreb alignment deepened. Saudi Arabia pledged $500 million for Algerian infrastructure projects. UAE firms signed agreements in renewable energy and logistics. Qatar Investment Authority explored investments in Algiers’ port expansion.

Algeria’s trade deficit narrowed to $4.8 billion in the first half of 2024, down from $7.2 billion in the same period of 2023. Non-hydrocarbon exports rose 18% to $3.1 billion.

Urban development: housing and industry expand

The government launched 1.2 million housing units in 2024, up from 800,000 in 2023. Target: 3 million units by 2027. Public spending: $25 billion. Private sector participation required for 40% of projects.

Industrial zones expanded in Sétif, Oran, and Annaba. The Sétif zone, covering 1,500 hectares, attracted 42 companies in 2023. Sectors: automotive parts, pharmaceuticals, food processing. Investment: $1.8 billion.

Port capacity increased. Djen Djen Port’s container handling rose to 1.2 million TEUs in 2023, up from 800,000 in 2020. Algiers Port’s expansion added 500,000 TEUs of capacity. Target: 5 million TEUs by 2030.

Population growth: 1.5% annually. Urbanization rate: 73%. Housing demand: 300,000 units per year.

Digital and tax reforms: 2026 Finance Law targets businesses

The 2026 Finance Law introduced changes for foreign and domestic companies:

– Corporate tax rate unchanged at 26%.
– Value-added tax (VAT) on digital services: 19%, up from 9%.
– Withholding tax on foreign digital service providers: 15%.
– E-commerce platforms must register with Algerian tax authorities.
– Startups in tech and renewable energy eligible for 5-year tax exemptions.

The law also tightened transfer pricing rules. Companies must submit documentation for intra-group transactions exceeding $500,000.

Algeria’s digital economy grew 12% in 2023 to $3.2 billion. E-commerce accounted for 18% of retail sales. Mobile penetration: 110%. Internet users: 32 million.

Security and justice: crackdowns, arrests, regional stability

Security forces arrested 12 suspected militants in Tamanrasset and Illizi. Five support elements surrendered in Adrar. No major attacks reported in 2024.

Protests in Algiers and Oran led to 47 arrests. Charges: unauthorized assembly, defamation. Two journalists detained since May 2024 remain in custody.

The government extended emergency measures in southern provinces until December 2024. Military checkpoints increased along borders with Mali and Niger.

Environment: forest management and desertification

Algeria lost 220,000 hectares of forest to wildfires in 2023. The government allocated $300 million for reforestation in 2024. Target: 1 million hectares by 2030.

The Agadir Commitment, a 2019 forest management pact, saw limited progress. Algeria and Türkiye pledged $50 million for joint projects. No new funding announced in 2024.

Desertification affects 60% of Algeria’s land. Annual economic loss: $1.5 billion. The government submitted a $2 billion proposal to the UN Convention to Combat Desertification.

Africa and Europe: energy competition, diplomatic tensions

Algeria positioned itself as an alternative to Gulf gas for Europe. Pipeline capacity to Spain and Italy: 32 bcm annually. No new contracts signed in 2024. European demand fell 8% due to mild winter and LNG imports.

Morocco–Algeria tensions reshaped North Africa policy. Spain and Italy increased diplomatic engagement with both countries. No resolution to the Western Sahara dispute.

Algeria–Ghana trade reached $200 million in 2023. Joint ventures in pharmaceuticals and agriculture. Ghanaian firms invested $50 million in Algerian agro-industry.

Diaspora: repatriations, visa issues

Algeria repatriated 120 students stranded in Morocco after border closures. No timeline for reopening.

Visa delays affected foreign entrepreneurs. UK and Canadian business visas took 45–60 days, up from 21 in 2023. The government cited security checks.

Algerian community in Canada: 200,000. Remittances: $1.2 billion in 2023, up 15% from 2022. No new diaspora investment incentives announced.

Week’s balance

– Hydrocarbons: foreign investment rules relaxed, shale gas exploration resumed.
– Trade: Algeria–Tunisia trade up 42%, Spain relations stabilized.
– Urban development: 1.2 million housing units launched, port capacity expanded.
– Digital: 2026 Finance Law introduced VAT and withholding tax changes.
– Security: arrests in the south, protests suppressed.
– Environment: $300 million allocated for reforestation.
– Africa/Europe: no new gas contracts, Morocco tensions persist.
– Diaspora: repatriations completed, visa delays reported.

Key takeaway for entrepreneurs
Algeria’s 2026 Finance Law imposes new taxes on digital services and tightens transfer pricing rules. Foreign investors can now hold majority stakes in hydrocarbon projects, but shale gas costs remain high. Trade with Tunisia and Spain offers growth opportunities, while urban infrastructure projects create demand for construction and logistics services. Visa delays may affect business travel.