Algeria’s government responded swiftly to public demonstrations at the height of the Arab Spring by granting a series of reforms that appeased protesters. Elevated international energy prices have bolstered the country's fiscal accounts in the past few years, and we do not expect weaker oil prices to lead to a fundamental turnaround in the government's expansionary fiscal policy. Investments into the oil and gas sector continue to be prioritised by Algeria’s government.
We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 10 of Algeria’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Algeria.
Algeria Country Risk
As a result of ongoing political violence, a significant degree of productive capacity (both physical and human) throughout the Libyan economy has been lost. Road, housing and utility infrastructure have suffered considerable damage and will take years to repair under even the most stable of political environments. Moreover, given the importance of the hydrocarbon industry, damage to oil production and refining infrastructure will pose significant long-term challenges.
Libya's political and security climate will remain volatile through 2016, as competing militias compete for control over the country's vast resource wealth.
A lack of institutional capacity will hamper reconstruction efforts. Libya lacks the institutions necessary to carry out much-needed investment projects.
Algeria Industry Coverage (10)
BMI View: With wheat and dairy production systematically short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on the improvement of food self-sufficiency is helping to revive the grains and dairy sectors. While higher government support is likely to be positive for productivity and product quality in the medium term, Algeria will remain a key importer of wheat and dairy products in the coming years. The country is increasingly expanding trading links with countries such as Brazil and India, away from its traditional suppliers such as France, ...
BMI View: Tougher import regulations and a slowing economy will continue to undermine the Algerian new vehicle sales market in 2016. We expect 3.0% sales growth for the sector in 2016, as demand picks up slightly, aided by the scheduled ending of a six-year government-issued ban on consumer lending. However, this slight growth follows a fall of over 30% in sales over 2015.
|Passenger Car and Light Commercial Vehicle Sales|
Food & Drink
Algeria Food & Drink
BMI View: We forecast positive growth in Algeria's food and drink industry, led by strong growth of 30.0% on average per year to 2019 in the MGR sector. As MGR grows from a low base, we forecast that growth will be fuelled by positive foreign investment and strong domestic players. We forecast modest growth for food consumption as the government plans to hike taxes and import duties to increase local production. In the short-to-medium term we expect growth to be subdued as the government works on freeing up regulations for the private sector.
Headline Industry Data (local currency)
BMI View : Falling global oil prices have had a huge impact of government revenues in Algeria, in turn resulting in delays to major public infrastructure projects and a downturn in private investor interest in the leading oil and gas sector. The country's large infrastructure deficit, particularly in terms of residential and social infrastructure, will ensure some level of growth is maintained over the forecast period. Similarly, government moves to diversify the economy by expanding domestic production/manufacturing capacity and establishing a position as a regional trade hub will attract some level of investment, particularly from increasingly important economic and trading partner China.
Forecasts and Latest Updates
BMI View: We expect solid growth in both the Moroccan and Algerian insurance markets over our current forecast period. Life and non-life premiums are expected to grow steadily, bolstered by wider economic growth and healthy increases in household incomes, which will boost demand for a range of insurance products. Algeria's insurance market is less developed, with limited rates of penetration and density, and will remain dominated by state-led firms in the medium term at least. Morocco's market is more competitive and benefits from the greater presence of local subsidiaries of major multinationals. With premiums growing and both markets becoming increasingly open to competition from abroad, we expect to see further development of new products and distribution platforms and hence increased penetration across both...
Oil & Gas
Algeria Oil & Gas
BMI View: The outlook on Algerian oil production is heavily bearish, due to rapid decline rates at mature producing fields and the small pipeline of projects currently under development. The outlook on gas is slightly more positive, although strong domestic consumption growth will continue to weigh on exports. Reversing longer-term production declines depends on pulling increased foreign investment into the sector. However, the prospects here are clouded by an unattractive fiscal and regulatory regime and the weakened commodity price environment.
BMI View: The Algerian petrochemicals market will continue to come under pressure in 2016 as a result of slowing economic activity caused by falling oil prices. In addition, the local petrochemicals industry is unlikely to expand significantly, with investment largely focused on fertilisers.
In 2015, the fertiliser sector was the focus of expansion in 2015. Production is supported by the opening in H1 of Sonatrach's joint venture with Oman's Suhail Bahwan Holding Group, Al Djazairia Al Omania Lil Asmida (AOA), which was built at a cost of USD2.6bn and produces ammonia and urea for fertiliser. AOA has a capacity of 2.4mn tonnes per annum (tpa), leading to an increase in national production by about one-third. The...
Pharmaceuticals & Healthcare
Algeria Pharmaceuticals & Healthcare
BMI View: Despite a slowdown in the Algerian economy due to low oil prices, the country's pharmaceutical and healthcare markets are expected to sustain their positive growth trajectory over a multi-quarter horizon. The health sector expansion will be supported by long-term drivers such as growing demand for healthcare and treatment, healthcare system modernisation and sustained foreign investment in domestic drug manufacturing. Although we expect foreign investors to continue benefitting from government incentives aimed at boosting domestic pharmaceutical production and technology transfer, operating challenges will continue weigh on the market's full potential.
BMI View: Algeria has ambitious investment programme over 2015-2024, which will be driving strong gas generation growth. Historically strong gas-fired generation growth rates are supportive of further steady capacity growth, additionally the political situation is relatively stable and Algeria brought a sizeable 460MW Biskra gas plant online ahead of schedule last year. BMI considers these to be positive signs to spur the gas capacity growth.
Algerian state-owned incumbent Sonulgaz is aiming to build nearly 28GW of new capacity by 2025. The utility claims that 15.4GW of this capacity has already been allocated and over the next three years 14.2GW of new capacity will come online, most of which will be gas-fired. BMI has a fairly bullish view on this capacity coming online. Despite...
BMI View : North African telecommunications markets are rapidly evolving from voice-centric markets towards ones driven by data consumption, with mobile broadband being one of the core drivers in all markets. 3G services have been launched with success in Morocco, Algeria and Tunisia, and the licensing and rollout of 4G services is on track. Success is dependent on the overall macroeconomic situation, with higher purchasing power helping with the development of the telecoms market, while the security situation is always at the forefront in the region. All markets have a mix of public and private operators, though liberalisation is not present in all sectors, and the competition has always driven greater uptake in the region.
Latest Updates & Industry Developments
The ADSL market grew above 1mn in Morocco, with total 3G...