Algeria

Investing in Algeria

FDI in figures | Why you should choose to invest in Algeria | Procedures relative to foreign investment | Finding assistance for further information

FDI in figures

The government remains committed to economic liberalization and continues to seek foreign investment in sectors such as infrastructure, telecommunications, energy and water.

Direct foreign investments in Algeria have had exceptional growth in 2008 and reached euro 6.2 billion. These extremely encouraging figures hide two contradicting trends: a reduction in European investments and a revival of interest by the Gulf investors. In effect, European FDI during this period dropped by 50%, whereas Gulf investors decided to strengthen their position in the country and have invested to the amount of euro 4.9 billion. It is possible to see in this trend a reaction of the European investors when faced with a series of protectionist mesures taken by the Algerian government in December 2008. The results for the year 2009 show a drop of FDI linked to the global economic environment. In addition, we can also see a re-direction of FDI towards the domestic market through the increase of transport and infrastructure development projects.
Sectors that attract the most FDI are energy, followed by telecommunications and tourism.

Foreign Direct Investment	2005	2006	2007
FDI inward flow (millions USD)	1,081	1,795	1,665
FDI stock (millions USD)	8,355	10,151	11,815
Performance Index*, ranking on 141 economies	113	110	118
Potential Index**, ranking on 141 economies	61	68	-
Number of Greenfield investments***	45	50	14
FDI inwards (in % of GFCF****)	4.7	6.3	5.1
FDI stock (in % of GDP)	8.2	8.8	9.0

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest in Algeria

Strong points: - The low cost of energy constituents (gas, fuel and electricity): industrial gas is 22 times cheaper than the European average, electricity is 6 times cheaper. See the summary of factors costs on the ANDI website.

- The workforce is skilled and cheap; it is 10 times cheaper than in France.
- Algeria's proximity to Europe. This motivates the relocation of industrial activities which consume energy.

- A country in the middle of an economic metamorphosis.
Weak points: - Slow administrative procedures are often pointed out;

- The legislation is very complex, especially tax law.
- It is difficult to acquire industrial property.
Government measures to motivate or restrict FDI: To attract and encourage foreign investment, the government has set up various attractive measures. You can consult these mesures on the ANDI website.

At the same time, on the 22^nd December 2008, the Algerian prime minister published a directive which leans towards restricting foreign FDIs. In effect, it has been provided that all new investment projects in Algeria have to have local majority (51%) shareholding. This directive further provides that foreign investors should only revert to local financing. Finally, FDI projects will no longer come under ANDI (National Agency for Investment Develompment) but under CNI (National Investment Council), something which would engender delays in the handling of files. More information on these new mesures is available.
Bilateral investment conventions signed by Algeria: Algeria has signed bilateral conventions with more than thirty countries. See the complete summary on the ANDI website. They define the framework for the protection of foreign investment in Algeria for each of the signatories. For European Union countries, the association agreement signed between the EU and Algeria governs this issue.

Procedures relative to foreign investment

Freedom of establishment: Yes
According to the edict n°01/03 of 20 August 2001, any legal entitiy or natural person, public or private, can invest in economic activities concerning production of goods and services as well as in investments carried out in the framework of granting concessions and/or licenses. It is possible to enjoy certain advantages according to one's projects and their location (Edict n° 01-03).
Acquisition of holdings: Acquiring a majority interest in a local company is authorized in Algeria.
Obligation to declare: An investment declaration is necessary; it must be made to the National Agency for development and investment (ANDI) which depends on the Ministry of participation and promotion of investment (MPPI). Consult the websites of these organizations to find out further details.
Competent organization for the declaration: National Agency for Development and Investment
Requests for specific authorizations: Many products are subject to procedures to obtain prior authorization. See the list of controlled activities on the Register of Commerce website.