May 2023 ABBC Monthly Business Environment Round-Up

Saharan agriculture projects pick up the pace

In May, the Ministry of Agriculture announced that the Office for the Development of Industrial Agriculture in Saharan Lands (ODAS) had launched a new online platform for project holders to apply for land. The ministry called on all investors interested in accessing land to undertake strategic agricultural investments in the southern wilayas to register via the platform.

Meanwhile, a number of projects that were launched as part of previous invitations to invest began to bear fruit. The private Algerian company VESCO Algeria signed two Memorandums of Understanding with the UK-based company Elite Capital & Co. Limited to finance both a dairy farm and an agro-industrial farm project. The dairy farm will house 4,000 milking cows and will ultimately expand to include the on-site production of cattle feed as well as a cheese, yogurt and UHT milk processing plant, a slaughterhouse and training centre. The second project involves the creation of an agro-industrial farm covering 500 hectares which will include greenhouses, nurseries, a logistics centre as well as facilities for handling and storing the products.

In early May, the harvesting campaign in the far southern Wilaya of Adrar was officially launched from a farm belonging to the Turkish company Dunaysir. The project, which covers a total of 4,000 hectares, was launched in March 2022, and has now produced its first crops of wheat, barley and animal feed. The cost of the investment is estimated at 25 mns USD and it is currently 30% operational.

Finally, the private Algerian group Golden Drink announced that it has been awarded the operating permits required to launch a 1,500-hectare farm located between Djelfa and M’sila. The project will feature both fruit processing and animal production. The company plans to produce fruit juice, flavourings and purees for babies as well as eggs and chicks for breeding for a total investment of 70mn EUR (76mn USD).

New projects and company creations gather momentum

In May 2023, it was announced that number of economic operators in Algeria stood at 2,261,000 companies on 30th April 2023. This figure is broken down into 2,031,203 sole traders (90%) and 230,712 companies (10%). For sole traders, between the beginning of January and 30th April of this year, 996,240 were registered in the retail distribution sector (46%), 813,969 in the tertiary sector (38%), 272,866 in manufacturing (13%) and 78,504 in the wholesale distribution sector (4%). For companies, 86,878 are registered in the tertiary sector (33%), 84,043 in manufacturing (32%), 37,484 in the re-sale of manufactured items (14%), 27 752 in wholesale distribution (11%) and 21,585 in retail distribution (8%).

At the same time, the number of investment projects registered by the Algerian Agency for the Promotion of Investment (AAPI) between 1st November 2022 and 30th April 2023 increased by 121% on an annual basis. The number of projects registered by the AAPI over this period reached 2,016 projects with a total value of 922.83bn DZD (6.8bn USD). The overall value of the projects increased by 199% while the number of planned jobs increased by 145% over the same period.

The company creations and investment projects included both Algerian-led initiatives and those partly or wholly owned by foreign investors. However, Algerian authorities are keen to see more British companies involved in Algeria. In early May, Algeria’s Minister of Finance Laaziz Faid expressed a desire to see British companies become ‘more assertively involved’ in the Algerian market, during a meeting with the British Ambassador to Algeria, Sharon Wardle. During the meeting, the two parties welcomed the existing cooperation between the two countries, notably in terms of technical assistance in the financial sector and agreed to extend this cooperation to other areas of common interest. Faid then expressed ‘the wish for a more assertive involvement of British companies in the Algerian market, in particular as a result of changes made recently to create a new framework governing investment that offers more guarantees, transparency and opportunities’.

New monetary and banking law passes as authorities seek to boost

In May, the Council of Nation has unanimously adopted the new monetary and banking law, which is designed to strengthen the governance and prerogatives of the Bank of Algeria as well as modernising the banking system. The reforms are part of overall efforts to boost investment and improve the operating environment for companies in Algeria.

Meanwhile, at the end of the month, the Governor of the Bank of Algeria, Salah Eddine Taleb, held a quarterly meeting with banks and financial institutions focusing primarily on financing the economy. During the meeting Taleb called on banks to ‘strengthen and develop the financing of the economy, especially as they are showing suitable liquidity and solvency, suggesting they have room to manoeuvre in this area’. He suggested that the increased liquidity held by the banks is not yet making it through to the economy as a whole in the form of loans to finance investment projects, and urged banks to ensure that this was the case.

Drought turns to floods creating challenges for farmers and citizens

Throughout the winter and into the spring of 2023, Algeria had seen relatively low rainfall leading to drought conditions in some areas of the country. The conditions affected crops, notably cereals in the north of the country where it is not standard practice to use supplementary irrigation. At the end of April, the Minister of Water Resources, Taha Derbal reported that the water level in reservoirs had fallen from 32% in December 2023 to 29%. However, he said that ‘despite these conditions, drinking water supplies remain acceptable overall, with the exception of certain regions’.

The winter rains did eventually arrive in the country, however they came late and with an intensity that caused flooding across multiple regions including Algiers, Tébessa, Tipasa, Souk Ahras, Oum El Bouaghi, El Tarf, Guelma and Boumerdès. The floods led to the deaths of at least six people including two children as well as causing landslides, housing collapses and road closures. By late May, President Abdelmadjid Tebboune had ordered 10bn DZD (73mn USD) to be set aside to assist those who had lost homes in the floods. Meanwhile, the Ministry of Agriculture set up a committee to assess the damage from both the drought and floods on farmers and agricultural output.