Why invest in Algeria?

This will always be the first question which investors ask themselves. There are several reasons which will attract investors to grab opportunities to invest in Algeria. Attractive investment opportunities, according to ANDI (National Agency of Investment Development), Algeria has US$46 billion of imports on food, pharmacy, metallurgy, mechanical engineering…etc. $286billions for public investments for the period 2010-2014. Availability of important natural resource; According to ANDI Algeria has maintained world top 20 position in oil reservation, gas resource availability and it has solar potential 3000 hrs. of sunshine per year.

Moreover, Algeria has an economic growth and prosperous which makes it a favorable place for investors for more reference quotation from ANDI where Algeria had GDP of $183 billion in 2011 versus a GDP of $55 billion in 2000. Not only that but Algeria has been equipped with professions business counselors and advisors for interested investors which offer trade counseling, business matchmaking. These bureaus of counseling include American Chamber of Commerce in Algiers located at the capital city of Algeria, and World Trade Centre Algeria.

We cannot just stop there but we need to know potential market in which we can invest on. As an investor is time to forecast the output of the fruits from the seeds you have planted. Before making that dream a reality you have to investigate for the best market found in Algeria. As a large and wide country in Africa, she is known for the best markets of Hydrocarbons products. From that point of view, statistics shows that Algeria has maintained its world top ten position as a producer of both gas and oil. Though there are still challenges which Algeria face in reaching its near term production goal such as old and inadequate infrastructure, Algeria need  to construct undersea gas pipeline to Europe so as to facilitate exportation of these valuable and essential products to their clients(France, UK, Spain, Italy)

Depending on the type of investors she also has potential markets in areas of Information and communication Technology. During the last year’s national budget, there was a proposal made by the ministry of communication and science to reform the information system in Algeria. Government ministries, private and public sectors in general are interested in ICT know-how as so far ministries in Algeria want to modernize and digitalize their records as well as to ensure home internet is penetrated at home and in business centers. As informatics investors, it is high time to grab and run away with victory for this project in Algeria.

We all believe that without public works and infrastructure development program life will be considered empty and uncompetitive in the world of 21st century or in other words in the world of today.

Having a health population is one of the essential factors for the national economic growth and development, Algeria is still in high demand for imported medical equipment and disposals so as to improve the population’s standard of living in which statistics show that health sectors are improving at a very slow rate.

We need food so as to live, without eating we can’t produce and hence we can’t consume. Agriculture has been a backbone of the economies of most African countries because of poor technology and little knowledge of how to deal with this economic activity we find ourselves undertreating this essential economic activity in our daily life. In Agriculture sectors there are opportunities for investors in production of food crops because the government is not producing sufficient food to feed the population. According to ANDI local production for cereals for 2010 is 45millions quintals but cereals needed to feed the population of 37, 8 millions of inhabitants is 80millions quintals so the government import the amount of cereals equivalent to $ 2.75 billion.

What a lovely yum products…mmh fish. I love fish and because of that I can’t stop using my little pocket money to buy this expensive product here in Algeria market. We, residents of Algeria who border a Mediterranean sea not only that but also we have plenty of water resources such as river …..Spending more than 10 Euro for a kilo of sardine in the local market, what a shame!!!!Fishing sectors here in Algeria has got a lot of vacancies for project establishment because according to ANDI average exploitation of 2.2 million of HAS over the entire area of under national jurisdiction estimated 9.5 million of HAS.

Before we put our legs into the investment we need to put our brains first to analyze the cost that we can encounter in the investment process starting with the fuel cost. Our forefathers million years ago discovered one of the important things which affected our social and economic situation in the today’s world is the discovery of fire. Most of our lives after fire discovery and at the present are 99% driven by the presence of fuel, as an investor you can’t run machines in the absence of source of fuel here in Algeria, I can’t drive my new Lamborghini car without the presence of petrol.  We are familiar with five fuel products here we speak of premium, gasoline , regular, lead- free  gasoline LPG, Diesel oil their prices at the local Algerian station are 2300 DZD/100litres, 2120 DZD/100litres, 2260 DZD/100litres, 900DZD/100litres and 1370DZD/100litres respectively.

This article writing would not have been possible without a power supply. Charges of electricity in DZD/ month for power designed for high voltage(mainly used in industries) medium voltages  and low voltage(home use) are 21177.73 DZD,  9679- 15048DZD and 100DZD  respectively (taxes included).

 

Algeria is known for her second position in the world after Russia in large gas reserves for that reason gas in Algeria is relative cheap. Charges of gas in DZD/ month for gas designed for industrial consuming high pressure gas, medium pressure gas and household consuming low pressure gas are 6854.55 DZD, 685.42DZD, 28,50DZD (taxes included).Source: ministry of energy and mines at Algiers, 2010.

In the TV adverts I usually come across the phrase which says, “Water is life “. Here in Algeria water basic tariff varies according to territory zone where as the tariff in Algiers, Oran, Constantine, are 6.30 DZD, 6.10 DZD and 5.80 DZD respectively. Also, water basic tariff varies according to categories of consumers for Administrations, Craftsmen and tertiary sector services, Industries and Tourism tariffs are 5.5 DZD, 5.5 DZD and 6.5 DZD respectively.

Effectiveness, efficiency and generation of maximum profit, an investor needs good communication tools. In Algeria for attempting national calls, investors can use fixed or mobile which have the tariff rate per second of 3 DZD and 8DZD respectively. If the investors want to make communication outside Algerian borders, tariffs per second vary according to receiver countries: For Europe calls, tariff per second ranges from [12-21] DZD on fixed operators and [21-26] DZD on mobile operators. For Arabic countries calls, tariff per second is 20DZD and 34DZD on fixed operators and on mobile operators respectively. For Africa, Asia, Oceania and South America calls, tariffs per second range from [34-55]DZD on fixed operators and on mobile operators.

Always Investors will be interested to know how Algerian government favors them by giving different investment incentives. According to the ministry of Trade here in Algeria, there are also several incentive system directed to investors. One of them is general scheme incentive where investors can be exempted from customs duties,  VAT, registration fees during realization period 1-3 years. There is also another form of incentive which is exemption from tax on profits of companies(IBS) and Tax on turnover(TAP) are obtained for a period of 3 years to investments which create at least 100jobs. Moreover, there is also dilatory scheme where investors receive exemptions from transfer tax from real estate, from VAT for goods and services (imported or local) from registration fees. Not only that but also, they receive exemption for ten years during exploitation period on corporate income from property tax or real estate and profession activity tax.

 

 

 

All Investors need to hire factors of production in a way of realizing productivity. According to the C.N.A.S- Database until July 2011, For Sectorial activities in public sectors, we can view that the average salary in Algerian Dinars (DZD) ranges between [25000- 75000] statistics shows extreme salaries of 75000DZD on hydrocarbons, services and oil works, negative extreme salaries of 18000 DZD on fishing, agriculture and hunting, leather industries. In other face of the coin that is sectorial activities in private sectors There is a clear view of the average salary in Algerian Dinars [16000- 86000] whereas extreme values have been noticed in financial establishments example: Banks which shows the average salaries on Algerian Dinars 85300.24 and lowest average salaries of 16618.66 DZD on leather industries. Without forgetting sectorial activities in foreign representatives where their salaries range from [18000- 545000] DZD

Investors need to know both the pros and cons of investing in Algeria. After analyzing the advantages, we need to make a clear evaluation of the limitation which potential investors can probably face. According to the USA embassy Algeria recently Algeria government measures have restricted investors through unanticipated regulations, heavy bureaucracy and comparatively few incentives. Two decade ago Algeria reform its economy and started privatization process which has stopped because of lack of interest among foreign investors and slow economic reforms and lack of banking technology transformation which have left other sectors apart from fuel industry mostly underdeveloped.

According to US embassy in Algeria, though Algeria requested US investors firms on the area of infrastructure development; firms have not shown interest on this opportunity because of inadequate transparency and slow Algerian government bureaucracy.

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About Author: jseni
Jackline John Seni is a native of Tanzania and has lived in Tiziouzou, Algeria since 2011. She visited Macedonia in 2010 where she had her certificate and skills in IT at Ohrid, UIST University. For three years now, Jackline has been a founder of The Society of Young Tanzanian Entrepreneurs not for profit NGO and responsible for the management of its Facebook group until now. Her multi-cultural background and focus on community collaboration has led her to a number of volunteer opportunities with several organizations such as AAE, UNDP, and Tanzania district committee and community leadership roles. Jackline will soon receive her Bachelor of Science in Economic development at University of Tiziouzou, Algeria.