In recent years, the political environment in Algeria has made headlines in international newspapers characterized by social frustration and political unrest. For those outside, the country has interesting, if not troubled, political and economic fundamentals. But instead of ignoring them, the only way to be successful is to own the issues that exist and move forward.
In many ways, at a time when North America, Europe and elsewhere grapple with a new barrage of coronavirus infections or seek an economic recovery from the pandemic, it can be easy to ignore – and big countries to ignore – Algeria’s underlying economic challenges. Much like much of North Africa and the wider Middle East, Algeria’s economic problems are deeply rooted and shared regionally: unemployment, national debt, lack of economic opportunities. and low levels of investment, as widely shared factors.
This is not to criticize Algeria, or anywhere else, but the fact remains that finding winning economic and trade platforms for long-term sustainable economic development has proven difficult. In the same way that a controlled economy in the United States would not work, nor would a fully open Algerian economy – giving and receiving is the key.
There are two economic narratives that surround the country. The first is the one that sums up a situation where Algerians find it difficult to buy food, inflation creeps, oil prices below required levels paralyze public finances and dinar fluctuations make imports more expensive and more imperative exports. At the same time, the country has largely depleted its foreign exchange reserves, jobs are hard to find, and long-term national needs go unanswered.
The second, less explored discourse is that of change, optimism and diversification – something the African Development Bank suggests. The beauty of an economy so dependent on oil and gas revenues is that it doesn’t take a lot of diversification to bring out economic opportunities elsewhere, as long as it matches economic needs and capabilities. In addition, given the geographical and social proximity of Europe, its position as a gateway to Africa at large and present and future infrastructure capacities, Algeria has options: food production , development of financial markets, refining, maritime transport, renewable energies, health care and foreign investment. only a few areas. Low external debt is something to admire, but it should not be maintained at the expense of strategic financing.
Domestically, the need to create an economy resilient to climate change, to which the country is vulnerable, while fostering greater adoption of technology and new businesses is a case to be followed with other emerging countries, and therefore imperative. Fortunately, the Algerian government and opposition leaders don’t have to look far for inspiration from how the UAE has diversified its economy, from the Greek economy recovering from a huge depression, or how China built a capitalist economy under a one-party system. , even if that only tells part of the story.
Perhaps this is “Brand Algeria” where some of the biggest challenges exist as, in layman’s terms, they are lost and complicated by a lack of understanding and clear definition. The country is not alone, with many countries struggling with this, but the consequence is clear: less investment, a more difficult business environment, lower levels of confidence and reduced consumer demand.
Consider: How is tourism in Algiers a richer experience than Barcelona, Palermo or Tel Aviv? After all, the countries around the Mediterranean compete with each other to attract tourism and must position themselves accordingly. If desire and understanding has been shown to achieve anything, it is the power to gravitate to big brands – nations and economies included.
Trust also works both ways, and just as Algeria’s economic policies have generally avoided opening up the economy to foreign investors and businesses, doing it the right way could create many benefits in terms of employment, foreign investment and taxation. How the economy, its sectors, markets and companies are viewed there therefore has a clear influence on what can be achieved.
As a final reflection, the impact of the coronavirus pandemic on economies has placed many countries in positions of great political and economic tension. It has also created an environment conducive to economic renewal and development. Algeria can and should be able to take advantage of these factors to its advantage as long as it meets the underlying social and economic needs.
This article was written by Robert Quartly-Janeiro. Robert Quartly-Janeiro is Director at Black Square International, an agency working with governments and business, and Visiting Fellow at the London School of Economics.