Algeria
Algeria country profile
Basic facts
| Official name | People's Democratic Republic of Algeria |
| Country code | DZ |
| Government type | Republic |
| National day | November 1 |
| Area | 2,382,000 km² |
| Population (m) | 35,980,193 (2011) |
| Neighbouring states | Morocco, Western Sahara, Mauritania, Mali, Niger, Libya, and Tunisia |
| Language | Arabic (official), Berber (national language), and French |
| Religions | Islam 99%, Judaism, and Christianity |
| Currency | Algerian Dinar (DZD) |
| Exchange rate | 1 DZD = 0.012177 USD |
| Main industrial products | Oil and Gas |
| Most important export goods | Oil, gas, and animal products |
| Most important import goods | Consumer goods and food materials |
| Most important export countries | USA, Italy, France, and Spain
|
| Most important import countries | France, Italy, Germany, USA, China, and Spain |
| Main natural resources | Petroleum, natural gas, iron ore, phosphates, uranium, lead, and zinc |
| Tax rates | Income Tax 0%-40%, Corporate Tax 25%, and VAT 17% |
| Level of corruption | In Transparency International's comparison, Algeria ranks 112th among 180 countries (higher the rank, lower the corruption) |
| Competitiveness | In World Economic Forum's Global Competitiveness Index 2011–12, Algeria ranks 87th among 142 countries (higher the rank, better the competitiveness) |
Source: Ministry for Foreign Affairs of Finland, Economy Watch
Algeria economy
Main Economic indicators during 2008-2013
|
| 2008 | 2009 | 2010 | 2011 | 2012e | 2013f |
| GDP at current prices (billion USD) | 171.4 | 138.1 | 162.0 | 206.0 | 224.9 | 254.8 |
| Per capita GDP at current prices (USD) | 4,950.0 | 3,910.0 | 4,500.0 | 5,670.0 | 6,060.0 | 6,860.0 |
| GDP (% change) | 2.9 | 2.0 | 3.2 | 2.4 | 3.0 | 3.4 |
| Gross fixed investment (% change) | 11.8 | 8.5 | 5.2 | 6.5 | 5.7 | 5.0 |
| Private consumption (% change) | 4.9 | 5.8 | 5.6 | 5.1 | 3.7 | 4.4 |
| Exports (% change) | -2.9 | -10.7 | -1.7 | -0.6 | -0.6 | 4.1 |
| Imports (% change) | 17.7 | 15.6 | 2.4 | 2.2 | 3.6 | 5.3 |
| Consumer price index | 6.7 | 5.7 | 3.9 | 4.5 | 8.5 | 3.4 |
| Unemployment rate (%) | 11.3 | 10.2 | 10.0 | 10.0 | 10.8 | 10.0 |
| Exchange rate (yearly average) DZD /1 USD | 64.58 | 72.65 | 74.39 | 73.00 | 76.09 | - |
| Exchange rate (yearly average) DZD /1 EUR | 94.97 | 101.22 | 98.75 | 101.63 | 97.94 | - |
Source: Economist Intelligence Unit
Trade between Algeria and Finland
Trade between Algeria and Finland during 2007–2011
| Million EUR | 2007 | 2008 | 2009 | 2010 | 2011 |
| Finnish Exports | 149.5 | 115.4 | 108.5 | 167.3 | 139.6 |
| Finnish Imports | 0.0 | 0.1 | 0.1 | 0.0 | 0.2 |
| Trade Balance | 149.5 | 115.3 | 108.3 | 167.3 | 139.4 |
Source: Finnish Customs
Top ten Finnish Export products (SITC 2 level) in 2011
| Product | Value of Exports (million EUR) |
| Cork and wood | 81.8 |
| Cereals and cereal preparations | 16.7 |
| Machinery for specialized industries | 15.5 |
| General industrial machinery | 8.1 |
| Paper, paperboard, and articles thereof | 7.1 |
| Office and ADP machines | 3.0 |
| Electric machinery and parts | 1.2 |
| Power generating machinery and equipment | 1.2 |
| Pulp and waste paper | 1.0 |
| Plastics in primary forms | 0.7 |
| Total exports to Algeria | 139.6 |
Source: Finnish Customs
Top ten Finnish Import products (SITC 2 level) in 2011
| Product | Value of Imports (million EUR) |
| Electric machinery and parts | 0.0240 |
| Vegetables and fruits | 0.0050 |
| Apparel and clothing accessories | 0.0001 |
| Total importsfrom Algeria | 0.29 |
Source: Finnish Customs
Algeria strengths and weaknesses
Strengths
Algeria is the fourth-largest crude oil producer in Africa (0.05 mn barrels per day in 2011) and the sixth-largest gas producer in the world (159 trillion cubic feet in 2010). The country is an important energy supplier for the EU—currently the fourth largest—and its market share in the region would increase as new distribution networks come on line. One of the most ambitious projects is the Trans-Saharan Gas Pipeline (TSGP) planned by the Nigerian National Petroleum Company and Algeria's Sonatrach. Nigeria, Niger, and Algeria signed an agreement to move forward with the construction of this project. According to EU officials, the pipeline could supply 20 Bcm/y of gas to Europe by 2016.
The government has succeeded in privatizing certain sectors of the Algerian economy. In addition, it has encouraged private organizations to form joint ventures with some state-owned and operated organizations. Algeria is in negotiations to join the World Trade Organization (WTO), a step that is considered positive in terms of its implications for domestic business and inward investment.
Algeria is set to offer improved terms for non-conventional energy development as part of amendments to its oil and gas law. The fiscal incentives are aimed at attracting increased foreign investment in the non-conventional sector, including the development of Algeria's vast shale gas resources.
With the export of hydrocarbons, at prices that are likely to remain high, the trade and current account balances would still be in surplus in 2012. These exports would be sustained as operations have already started at the Medgaz gas pipeline between Algeria and Spain in 2011, as well as by the new liquefied natural gas units coming on-stream in 2012.
Real GDP is projected to expand by 3.1% in 2012 and by 3.5% in 2013. Given the continuous decline in oil and gas output, growth reflects the strong cyclical performance of the non-hydrocarbon sector. This is supported by a multiyear $ 286bn Public Investment Program focused on construction, public works, and services.
Weaknesses
The economy is not sufficiently diversified, and the country still largely depends on crude oil export, which has a major share in the country's GDP (30%). With the hydrocarbon sector accounting for one third of GDP, more than two-thirds of fiscal revenues, and 98% of total exports, Algeria is highly vulnerable to the risk of a prolonged lull in international oil and gas prices, which could result from a weaker global economy.
Algeria's excessive dependence on global oil and gas prices poses a serious risk to its economy. This is a mid- to long-term challenge that should be addressed by Algerian government.
Algeria's economy suffers from severe structural shortcomings, including a weak and fragmented private sector, an underdeveloped financial market, and low competitiveness (87th). This has contributed to high unemployment rates, especially among the youth (21.5%) and women (19%).
In the 2012, the Ease of doing business index ranked Algeria as low as 148th out of 183 countries making it unattractive for foreign investors.
Algeria had imposed restrictions on imports and foreign investments to protect the country's economic interests and promote national industries. These measures were adopted under the supplementary budget law of 2009 and enacted in full in 2010 and 2011, with some relief in paying for imports using documentary credits. These restrictive measures, coupled with the weakness of bank intermediation, hardly seem conducive to improving the business climate and developing the private sector.
Algeria business culture
Algeria faces the Mediterranean in the north and has a mountainous region, the Ahaggar Mountains, in the south bordering the Sahara desert. The country has a long history linking it with its European neighbors across the sea. The Phoenicians, Romans, Arabs, and the French have all left their mark on Algeria, giving it a rich cultural heritage. Algeria cannot be considered as a homogeneous country, because different regions in the country have varying features: Algiers, where Arab and Western culture converge; Oran, with more Western influence; Kabil, in the North with more traditional influence; and Tamanrasset, in the South (Central Sahara), where enterprises are family-controlled. Algeria's state language is Arabic, but French and various Berber dialects are widely spoken.
Work culture
The working week in Algeria runs from Sunday to Thursday. Most businesses start work between 8:30 and 17:30, with a two-hour lunch break in between. Businesses are closed on Fridays and Saturdays in Algeria because those are the Muslim Sabbath days.
Working hours may be very different during Ramadan, the holy month of fast that starts in summer. In this month, most people fast, the working day is shorter than usual, and many people are on vacation. Therefore, it is important to avoid scheduling important meetings/negotiations during this month.
Business structure
There is a strong sense of authority in the Algerian business culture because most organizations in the country follow a strict hierarchy. Algerians place a lot of importance on titles and seniority, which must be respected and used at all times while conducting business and in written correspondence.
Education is of high importance within the Algerian society, and employers and colleagues respect a good education.
Business meeting and negotiation
Algerians prefer to conduct business within their trusted circle. Hence, the initial meetings are crucial and should be utilized to cultivate a strong working relationship with Algerians. It is advisable to have a representative in the country because business with end users is done face-to-face and not by e-mail or phone.
Postponing or changing meetings at the last moment is quite common. Hence, one should reconfirm meetings and appointments before arriving in the country.
It is advisable to send in advance to clients the details on attendees and meeting agenda. Business presentations should be made in French or Arabic. Business meetings do not follow a strict agenda, and one can be expect to be interrupted frequently. Thus, one should be prepared for long meetings while engaging with potential business partners in Algeria.
Algerians are very status conscious. Therefore, it is advisable for similar ranking officials to meet for business discussions. For instance, the CEO of an Algeria-based company would expect to have discussions with the CEO of a foreign company. In addition, one should build a strong relationship with a company before a meeting with the CEO or senior officials, particularly in the case of public sector organizations.
Gifts
Giving gifts is part of the Algerian culture to cement relationships. The gesture of giving is more important than the gift itself.
Economy
The Algerian government has set a EUR 212 billion, 5-year-program for 2010–2014. Around 40 per cent of this amount is to be used for improving human development parameters such as education and health care. Another 40 per cent is to be used for developing basic infrastructure (roads, railways, airports, and ports) and public services. A credit of EUR 20 billion is to be allocated toward the development of Algerian industries by establishing electrical centers, developing the petrochemical industry, and modernizing public sector companies.
Important goals are job creation, economic development with the help of scientific research, and introduction of ICT in the education sector. There is also a need to design specific strategies for the development of ICT (e-Algérie2013 now re-named e-Algérie), aquaculture, agriculture, and tourism.
Sources: Kwintessential, Communicaid, Executive Planet, Global Negotiator, World Travel Guide, Associated Content