skepticism

Algeria: Ambitious Goals, Investor Skepticism

Africa’s largest country offers opportunity for investors willing to navigate heavy bureaucracy and an unpredictable business environment.

In July, Baladna, a Qatari firm famous for raising cows in the desert, signed a $500 million deal with Algeria’s National Investment Fund to launch the first phase of a $3.5 billion agro-industrial project in the Adrar region. Spanning 117,000 hectares and housing 270,000 cows, the mega-farm aims to cover half of Algeria’s demand for powdered milk and create 5,000 jobs.

The landmark project, held 51% by Baladna and 49% by Algeria’s Ministry of Agriculture, perfectly embodies what Algiers wants: to boost local production with the help of foreign partners while retaining substantial government control over the economy.

With a population exceeding 46 million and roughly a million new births every year, Algeria is one of Africa’s biggest consumer markets—and Africa’s largest country by land area. Investors looking to enter can count on cheap labor, relatively high purchasing power compared to the rest of the continent, low energy costs thanks to state subsidies, and limited competition.

“Just go to any Algerian supermarket and check how many brands of yogurt you will find—there is maybe three,” says Kamel Haddar, an Algerian serial entrepreneur. “In Morocco or Egypt there are 10 times more. So, you’ve got a big market, little competition, low costs … what more do you want? It’s basically like an open bar.”

Over the past decades however, Algeria has struggled to attract overseas capital. A civil war in the 1990s and the restrictive 49/51 ownership law introduced in 2009, which forced foreign investors to take on a local majority partner, have kept many potential investors reluctant to take a chance.

The ownership law was repealed in 2020 (except in “strategic” sectors like hydrocarbon, mining, large transportation infrastructure, pharmaceuticals, and defense) and the government has pledged to open the economy, but FDI remains lower than the authorities might have hoped. According to the International Monetary Fund, inward FDI has averaged just 0.4% of GDP over the past five years.

That leaves Algeria’s economy largely state-led and dependent on hydrocarbons, which made up 92% of exports and half of fiscal revenues last year. Following global energy prices, growth is expected to slow slightly to 3.4% in 2025, down from 3.6% in 2024. State-owned enterprises control key parts of the economy while a sprawling system of subsidies, including for basic goods, housing, and pensions, absorbs the bulk of public spending.

Algeria knows its model is unsustainable. Falling energy prices and mounting fiscal pressure have pushed the authorities to accelerate reforms to diversify the economy and encourage private-sector growth. In 2023, new land and procurement laws were enacted to improve business clarity while a one-stop digital platform for investors that provides key information on how to invest in some sectors and lists the investment incentives, tax exemptions, etc. was launched.

Algiers has set itself ambitious goals: to boost non-hydrocarbon exports to $29 billion by 2030 from $5.1 billion in 2023 while introducing new logistics platforms and simplified trade procedures. The government aims for 30% to 40% of electricity to come from renewables by then as well.

Despite still being subject to the 49/51 law, the energy sector remains the most attractive to foreign investors. US oil majors ExxonMobil and Chevron are reportedly finalizing a major agreement with the Algerian national oil company, Sonatrach, to explore shale gas, potentially unlocking the world’s third largest reserves.

Beyond hydrocarbons, the government is pushing for diversification in agriculture and manufacturing under a “Made in Algeria” policy.

“Everything related to imports is complicated because the state wants to favor products made in Algeria, but for those who produce locally, there are big margins and strong growth ahead,” Haddar says. International names including Coca Cola, Nestlé, Heinz, Pepsico, Danone, Carrefour, Orange, and car makers Renault, Peugeot, and Volkswagen have already established local operations.

“Companies have been setting up for the past 20 years, but it is still not enough,” says Rachid Sekak, financial consultant and former CEO of HSBC Algeria. “The potential for import substitution is everywhere. In terms of consumer goods, a lot remains to be done in sectors like food, agriculture, automobiles.”

Vital Statistics
Location: North Africa
Neighbors: Morocco, Tunisia, Mauritania, Mali, Niger, Libya, Western Sahara
Capital City: Algiers
Population (2024): 46.8 million
Official Languages: Arabic and Tamazight (French is also widely spoken)
GDP per capita (2024): $5,631
GDP growth (2024): 4%
Unemployment Rate (2024): 11.4%
Currency: Algerian dinar
Investment promotion agency: Algerian Agency for Investment Promotion (AAPI)
Corruption perception index rank (2024): 107th
Pros
Dynamic demography
Reform plans
Tax incentives and subsidies
Proximity to Middle East and African markets
Little corruption
Big opportunities in all sectors of the economy
Cons
Heavy state bureaucracy and public sector
High level of corruption and arbitrary decisions
Economy heavily dependent on energy and exposed to global commodity prices
Exposure to climate risks
Large informal sector
Black market exchange rate
Low level of advancement in digitalization
On FATF gray list since October 2024

Sources: World Bank, IMF, Transparency International

While Europe remains Algeria’s primary trading partner, ties with the Global South are expanding. China is now Algeria’s largest supplier, accounting for 22.9% of imports, and Chinese companies including Huawei, Sinopec, and ZTE have opened shop.

Turkey is another major partner, with more than $21 billion invested across 600 projects. Over 1,700 Turkish companies currently operate in Algeria and bilateral trade between the two countries is expected to reach $10 billion this year. To support the growing business ties, Ziraat Bankasi became the first Turkish bank licensed to operate in Algeria early this year.

Algiers has also joined the African Continental Free Trade Area (AfCFTA); it hosted the Intra-African Trade Fair in September, signalling growing regional ambitions south of the Sahara.

Financial Sector Reform

There is also reform momentum in the financial sector. The establishment of a Startup Ministry and a state-backed venture capital fund in 2020 marked a turning point. The government aims to welcome 20,000 startups by 2030.

“It’s a fast-growing market that is supported by both the state and by the private sector,” Haddar observes, “but we are still at the beginning. The next step will be for international VCs to set up a presence.”

A new Monetary and Banking Law passed in 2023 smooths the way for development of Islamic and digital financial products. Islamic finance currently represents about 3% of total assets, but new entrants including Tunisia’s Bank Zitouna, owned since 2018 by Qatar’s Majda Holding, are expected soon. On the digital front, opportunities are opening for fintechs and online banks, but digital banks face strict conditions. They can only offer payment services, must have a 30% local banking partner, and must require minimum capital of 10 billion dinars ($75 million).

Despite the reforms, public banks still dominate the market, holding about 85% of deposits. Privatization through IPOs has begun, with listings of Banque du Développement Local in March and Crédit Populaire d’Algérie last year, but the process remains mostly symbolic.

“It doesn’t change things fundamentally,” Sekak argues, “because newcomers don’t have the capacity to bend board meeting decisions. It has, however, had important effects on transparency and disclosure.”

From a foreign investor’s perspective, while Algeria seems willing to enact some reforms, deep-rooted barriers persist.

“The potential is huge,” says a foreign investor who has supported multi-million projects in Algeria for over 10 years but is now exiting the market. “There are very few countries like this left in the world. The market is practically virgin and there is a lot of money. But unfortunately, the authorities are not open to business. Big companies have opened—car factories, for example—but sometimes the authorities decide to ban imports of certain raw materials or some spare parts, and that makes local production impossible.”

Investing in Algeria can yield substantial returns, but there are risks. The market is unpredictable, with the authorities often making unliteral decisions that can reshape entire industries overnight.

“Working in Algeria means you must be able go to sleep with one law and wake up with a different one,” the investor says. “So you enter a market that has a certain legal framework, and then things change completely. It’s a big problem you must factor in.”

The IMF echoes these concerns, pointing to a lack of clarity in bidding processes. In its latest review, it suggests, “Addressing issues related to transparency, institutional independence, and enforcement of rules could help improve public trust and institutional effectiveness. Ensuring that legal and regulatory frameworks are applied fairly and efficiently would also support private-sector development, investment, and overall economic resilience.”

Another concern is Algeria’s vast informal sector and cash economy: one of the reasons it landed on the global Financial Action Task Force’s Gray List last year.

While Algeria’s economic potential is significant, its institutions have yet to catch up with its ambitions. The country’s greatest challenge is not capital or capacity, but governance. Until transparency improves, the state further loosens its grip on the economy, and the rules of the road become more stable, investors will continue to face uncertainty.

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Trump’s worldwide tariffs run into sharp skepticism at the Supreme Court

President Trump’s signature plan to impose import taxes on products coming from countries around the world ran into sharp skepticism at the Supreme Court on Wednesday.

Most of the justices, conservative and liberal, questioned whether the president acting on his own has the power to set large tariffs as a weapon of international trade.

Instead, they voiced the traditional view that the Constitution gives Congress the power to raise taxes, duties and tariffs.

Trump and his lawyers rely on an emergency powers act adopted on a voice vote by Congress in 1977. That measure authorizes sanctions and embargoes, but does not mention “tariffs, duties” or other means of revenue-raising.

Chief Justice John G. Roberts Jr. said he doubted that law could be read so broadly.

The emergency powers law “had never before been used to justify tariffs,” he told D. John Sauer, Trump’s solicitor general. “No one has argued that it does until this particular case.”

Congress has authorized tariffs in other laws, he said, but not this one. Yet, it is “being used for a power to impose tariffs on any product from any country for — in any amount on any product from any country for — in any amount for any length of time.”

Moreover, the Constitution says Congress has the lead role on taxes and tariffs. “The imposition of taxes on Americans … has always been a core power of Congress,” he said.

The tariffs case heard Wednesday is the first major challenge to Trump’s presidential power to be heard by the court. It is also a test of whether the court’s conservative majority is willing to set legal limits on Trump’s executive authority.

Trump has touted these import taxes as crucial to reviving American manufacturing.

But owners of small businesses, farmers and economists are among the critics who say the on-again, off-again import taxes are disrupting business and damaging the economy.

Two lower courts ruled for small-business owners and said Trump had exceeded his authority.

The Supreme Court agreed to hear the appeal on a fast-track basis with the aim of ruling in a few months.

In defense of the president and his “Liberation Day” tariffs, Trump’s lawyers argued these import duties involve the president’s power over foreign affairs. They are “regulatory tariffs,” not taxes that raise revenue, he said.

Justices Sonia Sotomayor and Elena Kagan disagreed.

“It’s a congressional power, not a presidential power, to tax,” Sotomayor said. “You want to say tariffs are not taxes, but that’s exactly what they are.”

Imposing a tariff “is a taxing power which is delegated by the Constitution to Congress,” Kagan said.

Justice Neil M. Gorsuch may hold the deciding vote, and he said he was wary of upholding broad claims of presidential power that rely on old and vague laws.

The court’s conservative majority, including Gorsuch, struck down several far-reaching Biden administration regulations on climate change and student forgiveness because they were not clearly authorized by Congress.

Both Roberts and Gorsuch said the same theory may apply here. Gorsuch said he was skeptical of the claim that the president had the power to impose taxes based on his belief that the nation faces a global emergency.

In the future, “could the President impose a 50% tariff on gas-powered cars and auto parts to deal with the unusual and extraordinary threat from abroad of climate change?” he asked.

Yes, Sauer replied, “It’s very likely that could be done.”

Congress had the lawmaking power, Gorsuch said, and presidents should not feel free to take away the taxing power “from the people’s representatives.”

Justice Amy Coney Barrett said she was struggling to understand what Congress meant in the emergency powers law when it said the president may “regulate” importation.

She agreed that the law did not mention taxes and tariffs that would raise revenue, but some judges then saw it as allowing the authority to impose duties or tariffs.

Justices Brett M. Kavanaugh and Samuel A. Alito Jr. appeared to be leaning against the challenge to the president’s tariffs.

Kavanaugh pointed to a round of tariffs imposed by President Nixon in 1971, and he said Congress later adopted its emergency powers act without clearly rejecting that authority.

A former White House lawyer, Kavanaugh said it would be unusual for the president to have the full power to bar imports from certain countries, but not the lesser power to impose tariffs.

Since Trump returned to the White House in January, the court’s six Republican appointees have voted repeatedly to set aside orders from judges who had temporarily blocked the president’s policies and initiatives.

Although they have not explained most of their temporary emergency rulings, the conservatives have said the president has broad executive authority over federal agencies and on matters of foreign affairs.

But Wednesday, the justices did not sound split along the usual ideological lines.

The court’s ruling is not likely to be the final word on tariffs, however. Several other past laws allow the president to impose temporary tariffs for reasons of national security.

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