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U.S. Department of State
Algeria Country Commercial Guide
Office of the Coordinator for Business Affairs
Country Commercial Guide
Algeria
Fiscal Year 1996
This Country Commercial Guide (CCG) presents a comprehensive look at
Algeria's commercial environment through economic, political and market
analyses.
The CCGs were established by recommendation of the Trade Promotion
Coordinating Committee (TPCC), a multi-agency task force, to consolidate
various reporting documents prepared for the U.S. business community.
Country Commercial Guides are prepared annualy at U.S. Embassies through
the combined efforts of several U.S. governement agencies.
Table of Contents
I. Executive Summary
II. Economic Trends and Outlook
Principal Growth Sectors
Government Role in the Economy
Balance of Payments Situation
Infrastructure Situation
III. Political Environment
Security Climate
Relations with the United States
IV. Marketing U.S. Products and Services
Distribution and Sales Channels
Use of Agents and Distributors
Franchising, Joint-Ventures/Licensing
Establishing an Office
Advertising and Trade Promotion
Sales Service/Customer Support
V. Leading Sectors for U.S. Exports
VI. Trade Regulations and Standards
Export Controls, Free Trade Zones
Membership in Free Trade Arrangements
VII. Investment Climate
Openness to Foreign Investment
Conversion and Transfer Policies
Expropriation and Compensation
Dispute Settlement
Political Violence
Performance Requirements/Incentives
Right to Private Ownership
Protection of Property Rights
Regulatory System
Bilateral Investment Arrangements
OPIC
Labor
VIII. Trade and Project Financing
Banking System
Foreign Exchange Controls
General Financing Availability, Project Financing
List of Banks with Correspondent Arrangements
IX. Business Travel
Currency Regulations
List of Local Holidays in 1995-96
X. Appendices
I. EXECUTIVE SUMMARY
Algeria is a large market for American exports, but one difficult to
develop because of the ongoing political crisis and widespread
terrorism. U.S. exports to Algeria reached $1.2 billion in 1994, up
over thirty percent from 1993 levels. Grains and petroleum-sector
equipment and services comprise the bulk of U.S. sales. This export
surge came as the Algerian economy is undergoing an immense transition.
The Algerian government over the past 15 months has implemented a broad
array of economic liberalization measures, backed with strong support
from the IMF. It has substantially deregulated foreign trade. In
addition, IMF financing and generous foreign debt rescheduling have made
foreign exchange readily available to Algerian importers. The Algerian
government also has substantially deregulated its investment and product
distribution controls. After several years of disappointing economic
performance, the government projects the economy will grow about four
percent in 1995; the petroleum, agriculture and construction sectors
appear poised for substantial expansion. U.S. exporters targeting these
and other market niches will find substantial opportunities.
The murderous violence plaguing Algeria will challenge U.S. companies
seeking to capitalize on these opportunities, however. The economy
likely will not expand if the political crisis continues. Armed gangs
regularly attack infrastructure and economic facilities. Moreover,
terrorists target both foreigners and Algerians alike. The U.S.
Department of State, therefore, strongly urges American citizens not to
travel to or work in Algeria without substantial armed protection. Any
firm thinking of establishing a new operation or an office in Algeria
will have to make security considerations a priority. Companies new to
the market may find it best to use local distributors or agents able to
undertake all the necessary legwork on the ground.
Country Commercial Guides are available on the National Trade Data Bank
on CD-ROM or through the Internet. Please contact STAT-USA at 1-800-
STAT-USA for more information. To locate Country Commercial Guides via
the Internet, please use the following world wide web address:
WWW.STAT-USA.GOV. CCGs can also be ordered in hard copy or on diskette
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS.
II. ECONOMIC TRENDS AND OUTLOOK
The Algerian economy is now undergoing a wrenching transition from a
state-controlled system to a market economy. The past eighteen months
have witnessed more market-oriented reform measures than any previous
period in Algeria's history. Overshadowing this tremendous progress in
reorienting the economy, however, is the ongoing political violence
wracking the country. Despite substantial help from the International
Monetary Fund and the World Bank, and a generous foreign debt
rescheduling, GDP registered growth of -1.1% in 1994; this followed
negative growth of 2.2% in 1993. This disappointing performance stemmed
from reduced gas export earnings, low agriculture-sector output due to
bad weather conditions and continued public-sector production
inefficiencies. In addition, new investment shied away from Algeria
because of investor worries about the political/security situation. The
government hopes that new investments in the hydrocarbons and
construction sectors, as well as better rainfall, will hike economic
output in 1995 by about four percent. Economic growth is essential to
reverse the trend of rising unemployment. About a quarter of the
workforce is unemployed, a problem with major political implications.
Principal Growth Sectors
Hydrocarbons: The vital petroleum sector so far has remained largely
immune from major security problems, and it is likely to substantially
expand during the next several years. The state-owned hydrocarbons
giant, Sonatrach, plans to invest about $14 billion over the next four
years to raise its export earnings from $8.6 billion in 1994 to $12.2
billion by 1999. The key element in the plan is the doubling of natural
gas exports to 60 billion cubic meters annually. Sonatrach just
completed the expansion of its Trans-Med gas pipeline to Italy. In
addition, the Trans-Maghreb pipeline linking the desert gas field at
Hassi R'Mel with Spain and Portugal via Morocco is under construction
now (with Bechtel participation, among others) and is to be operational
by mid-1996. In the longer term, Sonatrach plans to build another
pipeline from Alrar to Hassi R'Mel (the GR 2 project). Sonatrach also
has a multibillion dollar deal pending with British Petroleum for
development of the Ain Salah gas field. Beyond gas projects, Sonatrach
encourages foreign oil companies to explore the Algerian desert.
Sonatrach then operates production-sharing agreements with foreign firms
to develop producing wells. Several firms, including Anadarko and
Louisiana Land, hope to begin production in Algeria soon. In addition,
the American company ARCO is negotiating to introduce advanced injection
technology to raise output at an older field near Hassi Messaoud.
Agriculture: The agriculture sector is also expected to grow
significantly over the next several years. In 1994 agriculture
accounted for only about 12% of GDP even though it employed nearly a
quarter of the labor force. Production suffered during 1993 and 1994
due to drought conditions. In addition, farmers are delaying
investments until the planned state-owned lands are transferred to
private ownership. Key crops include cereals, dairy products and fruits
and vegetables. The better rains in 1994-1995 should help increase
output. In addition, the Government has increased producer prices for a
variety of cereals to encourage domestic production. The Government is
seeking to channel more state financing into the sector through the
state-owned Fund for Agricultural Cooperatives. The Government also
wants to develop Algeria's potential for dryland farming. Connected to
the agriculture sector, local food processing is one of the few sectors
in which private Algerians are making substantial investments despite
the security situation.
Construction: One of the worst problems faced by young Algerians is the
shortage of housing; the Government estimates Algeria needs over one
million units immediately, as well as an additional 140,000 annually.
Production in 1994 totaled only 80,000 units, however. Large, state-
owned construction enterprises dominate the housing sector. They have
suffered from constant financial difficulties, as well as shortages of
key materials such as cement and steel bars. As part of its economic
reform program, the Government plans to inject 30 billion dinars ($600
million) to improve the firms' balance sheets and improve their access
to bank credits and imported inputs. The Government hopes up to 160,000
units will be built during 1995.
Major Local and Third Country Competitors
Algeria's domestic producers are not in a position to compete with their
American counterparts. While Algeria has a relatively well-developed
industrial base which covers most manufacturing sectors, local
production is largely below international standards in terms of quality
and range. It also is not sufficient to meet local demands. This is
particularly true of consumer products, since basic industrial goods
make up most of what is locally produced. The success in recent years
of the local "trabendo" (contraband) trade in consumer goods
demonstrated that Algerians are prepared to pay world prices for high
quality imported goods.
The U.S. has become Algeria's second largest trading partner following
France. Italy, Germany, Spain, and to a lesser extent Japan, are the
other main U.S. competitors. The four European countries' combined
exports account for an annual average of 40-60% of total Algerian
imports in such sectors as telecommunications, computer equipment,
mining equipment, building products, and water resource equipment.
Suppliers from these countries also have staked out near-monopolistic
positions in some sectors. Examples include France which supplies 70%
of Algeria's pharmaceutical imports; Italy whose market share for food
processing equipment and agricultural machinery has averaged 70% and 40%
respectively in recent years; and Germany, which accounts for 40% of
mining equipment imports. Other competitors have established specific
market niches, such as Finland and Sweden in telecommunications, and
Japan in telecommunications and water resource equipment.
Government Role in the Economy
Trade Liberalization: Although the economy was stagnant in 1994, the
Government laid useful groundwork for the future. It broadly
liberalized the foreign trade sector, abolishing in the summer of 1994 a
list of 80 goods, mostly machinery and foodstuffs produced already by
Algeria's public sector, whose importation previously was illegal. In
January 1995 the Government abolished a second list of goods, mostly
basic food commodities, for which special import permits were required.
In addition, the Government has sought to make foreign exchange more
readily available to importers in both the private and public sectors,
by allowing commercial banks to buy foreign exchange from the Bank of
Algeria (Central Bank). Thes banks' demand for foreign exchange assets
is to determine the foreign exchange rate of the Algerian dinar. Since
this system went into operation in September 1994, the dinar has
depreciated 20%. The Government plans to allow commercial banks to
trading in foreign exchange by the end of 1995. In addition, in June
1995 the Bank of Algeria began allowing Algerians to buy foreign
exchange to pay for medical and educational expenses overseas. By 1996,
the dinar may become fully convertible.
Budget Austerity and Price Liberalization: Beyond the trade
liberalization measures noted above, the Government sought to reduce
inflation, estimated at 30% for 1994, and also bring domestic prices
into line with world prices. The Government has followed a strict
policy of budget austerity in which spending in many categories, such as
infrastructure investment and wages for public-sector workers, fell
after inflation adjustment. As a result, the Government has reduced the
budget deficit to under 3% of GDP, down from about 9% in 1993. In
tandem with the budget restraint, the government has implemented very
tight monetary policy. Interest rates average about 24%. Despite these
tough measures, price inflation remained stubbornly in the thirty
percent range in early 1995. Interest rates are, therefore, unlikely to
fall soon. To restrain consumption and boost domestic production, the
Government also has cut subsidies and lifted controls on prices on
nearly all items and eliminated the previous controls on profit margins
for politically sensitive items such as foodstuffs.
State Enterprise Reform: The reform policies above have had an adverse
impact on the output of Algeria's industrial sector, which produces
about 14% of GDP. Algeria's industry is marked by large, inefficient
state-owned enterprises dependent on imported inputs and easy bank
credits; many operate at only 35-40% of capacity. The dinar devaluation
raised their costs substantially, while the tight monetary policy
largely closed their access to financing. Industrial output during the
first quarter of 1995 slumped nearly 8% from that of the same period of
1994. To remedy this the Government is restructuring companies which
could be made solvent and providing them new financing. It will close
firms which are chronically unprofitable. It also plans to privatize
some firms.
Privatization: The Government recognizes that privatization is a means
of increasing efficiency in state-owned firms. Along with restructuring
of public sector enterprises, privatization will be one of the key
elements of the Government's economic reform program in 1996. However,
in the current security environment, few investors will come forward.
The Government, therefore, will initially privatize smaller scale
companies. In 1995, five state-owned hotels were offered for sale as a
pilot project, but they generated only limited interest. Algeria's
Government-appointed parliament (Conseil National de la Transition) is
reviewing a privatization draft law. The bill provides for an employee
stock ownership plan (ESOP) whereby up to 30% of the capital of a
company being privatized will be offered to the workforce. The bill
targets for sale firms in the agri-business, textiles, public works,
tourism, distribution, and road transport sectors.
Balance of Payments Situation
Algeria's balance of payments has been the key economic challenge
spurring recent government economic policy. As Algeria's industrial
base is uncompetitive, hydrocarbons still represent over 95% of
Algeria's exports. This makes export revenues highly vulnerable to
shifts in world oil and gas prices. Algeria's challenge is to find
enough foreign exchange to import sufficient amounts of food to feed a
fast-growing population, pay necessary installments on the $30 billion
foreign debt and still finance key imports of production inputs and
investment goods.
In 1994 Algeria and its economic partners recognized that the challenge
would be impossible without exceptional assistance over the next several
years. Algeria concluded an IMF agreement, and a subsequent Paris Club
debt rescheduling of $5.3 billion allowed the Bank of Algeria to rebuild
depleted holdings of hard currency. In May 1995 the Bank of Algeria
concluded a $3.2 billion rescheduling of its commercially held foreign
debt. In May 1995 the IMF agreed to back with credits totalling $1.8
billion a broader Algerian reform program projected to last three years.
Algeria planned to reschedule over $5 billion in new debt payments again
with a second Paris Club accord scheduled for July 1995. With this IMF
and Paris Club support, as well as that from other donors, the Algerian
Government projects the economy will have enough foreign exchange to
import needed investment and consumption goods. Imports are expected to
reach almost $12 billion by 1997, up from $9.2 billion in 1994.
Meanwhile, an ongoing program of investments in the hydrocarbons sector
should spur an increase in export earnings from $9.6 billion in 1994 to
$12.6 billion by 1997.
Infrastructure Situation
Algeria, whose territory is one third the size of the U.S., has devoted
significant resources to expanding and modernizing the transport and
telecommunications sectors since the 1970s. Today, Algeria has a
relatively well-developed infrastructure as a result. Unfortunately,
armed groups fighting the Government have often targeted the power and
telecommunications networks as well as rail and road transport lines.
Road Transport: The government launched an ambitious program twenty
years ago to build an extensive main highway and secondary road system.
Algeria now boasts a road network of 90,000 kilometers, of which 26,000
are trunk roads and highways, and 20,000 are wilaya or provincial roads.
Railways: The Algerian railway network covers mainly the North. It
includes 4,500 kilometers of tracks, of which 3,000 kilometers are of
standard gauge, and 1,200 kilometers of narrow gauge.
Air Transport: Algeria has 11 international and 20 domestic airports.
Only a few international airlines still serve Algeria due to security
concerns. The State Department specifically warned against traveling
through airports in Algeria after the hijacking of an Air France plane
revealed serious security lapses at the Algiers airport. The national
carrier, Air Algerie, serves 37 destinations in Europe, Africa and the
Middle East. It carries 30 million tons of cargo, and three million
passengers per year. There are no direct flights between Algeria and
the U.S.
Shipping: Algeria has 12 main ports: eight are general purpose ports,
and four are specialized hydrocarbon terminals. Algerian ports in 1994
handled a total of 82.2 million tons in goods traffic, 63.6 million tons
for exports, and 18.6 million tons for imports. Passenger traffic was
408,400 passengers. Some of the largest ports (Algiers, Oran, Annaba)
are being equipped with container handling installations. By 1995, a
number of businessmen were complaining of difficulty finding shipping
lines still willing to call on Algerian ports; like air carriers, fewer
shipping firms are maintaining their service to Algeria.
Telecommunications: The Algerian Post and Telecommunications Ministry
operates telephone, telex, telegraph, and facsimile networks, a mobile
telephone system, a public data communications network, and a maritime
radio service. All new installations since 1986 use digital technology.
The international telephone network links Algeria to most countries, and
is more reliable than the domestic network; the domestic network also
has suffered from acts of sabotage. Algeria relies heavily on satellite
communications, particularly in the Sahara. DHL was operating services
in Algeria until the PTT without warning or explanation suspended its
operations in April 1995.
III. POLITICAL ENVIRONMENT
Dangerous Security Climate: After the cancellation of parliamentary
elections in January 1992, which the Islamist opposition party, the
Islamic Salvation Front (in French, FIS) was poised to win, the
confrontation between the military-backed government and Islamist
insurgents quickly expanded. Terrorists targeted schools, public
buildings, security service members and a variety of noncombatants,
including journalists, intellectuals, government officials, women and
even children. In addition, some 80 foreigners have been murdered since
December 1993; five were killed in the South in May 1995 and another two
in Algiers in June. Government talks with the now-banned FIS and other
opposition parties have so far failed to conclude any agreement on how
to settle the conflict. Although many Algerians perceived the violence
was receding somewhat by the summer of 1995, fighting and terrorist
incidents erupted regularly; no military solution to the conflict seemed
possible.
The President announced in November 1994 that the Government would hold
a presidential election before the end of 1995 to restore Government
legitimacy. Algeria's opposition parties, which include both secular
opponents of the government and regional (Berber) and Islamist
movements, generally have avoided commiting to participation in this
election. In January 1995 the major opposition parties, including the
FIS, concluded an accord denouncing violence against innocents and
calling for talks with the Government.
Relations with the United States: The United States government has
encouraged Algerians to find a political solution to the crisis gripping
their country. It also has supported Algeria's economic reforms within
the IMF, the World Bank and the Paris Club. Algeria in 1994 was the
fourth largest export market for U.S. products in the Arab World, and
U.S. exports to Algeria climbed nearly thirty percent that year.
However, like other economic observers, Washington has warned Algiers
that the success of those economic reform efforts depends largely on
ending the violence which is precluding adequate levels of investment in
the economy. Due to the widespread terrorism, the Department of State
has advised Americans not to visit Algeria; those who do so are urged to
have substantial armed protection while there.
IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
Algeria has a well-developed distribution system through an extensive
network of wholesale and retail outlets throughout the country, most of
which are run by the private sector. The state-owned wholesale business
handles mainly imported goods, such as foodstuffs, pharmaceuticals and
industrial products. Private wholesalers, however, are increasingly
active in these sectors. The retail trade is almost exclusively
controlled by the private sector. Exceptions are the state-run stores
for hardware (Aswak) and foodstuffs (Souk El Fellah). The Government
plans to privatize the state-owned distribution outlets in 1996.
Use of Agents/Distributors
In the unsafe security climate, using agents, distributors or finding
joint-venture partners is a must for U.S. firms planning to enter the
market. Many Algerian businessmen are used to meeting foreign business
partners in Europe for safety reasons. Foreign suppliers may use local
agents and distributors, or set up their own distribution companies.
Under the Law on Money and Credit, which allowed the use of agents and
distributors, distributors had to invest in manufacturing, or establish
a service organization in Algeria. From 1991 to 1993, when the new
Investment Code was promulgated, the government approved 87 investment
projects and 97 agent/distributor applications. Most investments
originated from France (22 projects), Italy (19 projects), and Spain (12
projects). Another six investment projects came from the U.S. The
sectors that attracted the most interest were chemical and petrochemical
(17 projects); steel, mechanical, and automotive (14 projects);
agriculture and fisheries (12 projects); construction (6 projects); and
hydrocarbon services (6 projects).
As the new Investment Code now governs investments, foreign suppliers no
longer need to invest in Algeria to set up a distributorship.
Franchising
Franchising is not yet widespread in Algeria, but there is increasing
interest, particularly from private firms. Coca-Cola started a
successful bottling operation with a private food processing company in
September 1993.
Joint-Ventures/Licensing
As Algeria's economic situation worsened in recent years, it became
clear to Algerians that since they lacked the resources to modernize the
local manufacturing capability, they needed to attract foreign investors
to help them do so.
Algerian companies are looking for foreign partners in order to acquire
technical expertise, and to gird themselves for the competition they
will face from international companies now that trade is fully
liberalized. Working with local firms will give U.S. firms a better
understanding of the market, and access to well established wholesale
and retail distribution channels.
Establishing an office in Algeria
U.S. firms will need to consider carefully security arrangements as part
of any plan to set up an office in Algeria. Using experienced Algerians
instead of expatriates also is advised. While setting up an office or a
company requires some paperwork, the process has been much simplified.
U.S. businesses here support this view. The speed and facility with
which U.S. oil companies set up operations in Algeria was an example.
Advertising and Trade Promotion
Direct advertising for most equipment and machinery has a limited impact
on local end-users. Since imports are made through international
tender, advertising has no influence on the importing companies as to
brands to be purchased. Advertising will be most effective for consumer
products, now that the Algerian import market is totally open.
Here follows a list of advertising agencies and major Algerian
newspapers. Algerian radio and television also carry advertising.
Advertising agencies
ANEP
1 Avenue Pasteur
Algiers, Algeria
Phone: (213-2) 633083
Fax: 213 2 648994
HIWAR-COM
Maison de la Presse
Place du 1er Mai
Algiers, Algeria
Phone: 213 2 667204
Fax: 213 2 654501
Major newspapers
El Watan (Independent French-language daily)
1 Rue Bachir Attar
Algiers, Algeria
Phone: 213 2 662641
Fax: 213 2 650227
La Tribune (Independent French-language daily)
101 Bd Krim Belkacem
Algiers, Algeria
Phone: 213 2 741529
Fax: 213 2 740991
Liberte (Independent French-language daily)
37 Rue Larbi Ben M'Hidi
Algiers, Algeria
Phone: 213 2 736477
Fax: 213 2 730487
El Khabar (Independent Arabic-language daily)
1 Rue Bachir Attar
Place du 1er Mai
Algiers, Algeria
Phone: 213 2 661931
Fax: 213 2 661927
El Moudjahid (Government-controlled French-language daily)
20 Rue de la Liberte
Algiers, Algeria
Phone: 213 2 737030
Fax: 213 2 642483
Until recently, trade promotion events centered around the Algiers
International Fair, the major annual trade event in Algeria. Normally
held in June, the 1995 Fair has been postponed until October for
security reasons. The Algerian Fair Authority, SAFEX, and a private
exhibition company, Group ABH, have tried to develop trade fairs
focussed on industry sectors. The current economic reforms will
increase interest in such events. The U.S. Embassy in Algeria keeps
informed of such shows and will identify those of potential interest to
U.S. firms if security conditions improve such that U.S. participants
could visit Algeria safely.
Sales Service/Customer Support
Suppliers of capital goods to the Algerian market are required to
provide their customers sales service and customer support, which is
referred to in Algeria as technical assistance. Free sales service is
usually required for a period of one year. Thereafter, suppliers may
enter into an agreement with their customers to provide them with
remunerated technical assistance.
Customer support is also provided by liaison offices established in
Algeria by foreign suppliers. The liaison offices, however, are not
allowed to engage in commercial activities, and thus cannot import and
distribute equipment and spare parts. These must be imported by the
Algerian end-user either directly or through distributors.
Sales service for consumer goods is only beginning to develop in
Algeria. Recent legislation makes it compulsory for distributors of
foreign products to provide a warranty of six to 18 months, depending on
the type of goods, to stock parts in Algeria and to provide their
customers after-sales service.
V. LEADING SECTORS FOR U.S. EXPORTS (AND INVESTMENT)
The Government has now totally liberalized Algeria's import regime.
Given the security situation, best prospects are those markets which
offer U.S. exporters immediate sales opportunities that can be exploited
with minimum efforts to increase their share of the Algerian market.
U.S. Eximbank no longer offers financing assistance for U.S. exporters
beyond short-term financing (under 180 days) for Algerian public-sector
importers. However, supplier financing is no longer required to import
capital equipment if the Algerian purchaser can meet the dinar value of
the imported equipment. The rescheduling of Algeria's foreign debt is
providing foreign exchange to finance Algeria's imports. Algerian
importers now have free access to hard currency to pay for their
purchases, provided they have enough dinars to cover the hard currency
cost of all types of imports.
Best Prospects for Non-Agricultural Goods
1 - Oil and Gas Field Machinery (OGM)
Algeria's foreign exchange is earned almost entirely by its hydrocarbon
sector, which depends heavily on U.S. technology. Current plans stress:
increased exploration, increasing liquefaction capacity to enhance LNG
exports, building additional pipelines, and negotiating contracts with
foreign companies for enhanced oil recovery (EOR) in existing oil
fields. These trends will continue and will provide exceptionally high
market growth rate. Expansion of this sector, which has no domestic
production, will largely benefit U.S. exporters. The latter already
dominate the market, but could still increase their market share in
areas where their French, Italian and German competitors are most
active. Most promising sub-sectors (estimated 1996 market size - US $
millions):
-- Wellhead and down-hole: 200
( equipment and supplies)
-- Drilling machinery: 200
1994 1995 1996
(U.S. $ millions)
A. Total market size 280 340 450
B. Total local production 0 0 0
C. Total exports 0 0 0
D. Total imports 280 340 450
E. Total imports from the U.S. 80 100 180
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
2 - Telecommunications Equipment (TEL)
The Algerian PTT has a long-term plan to modernize and expand its
network and to introduce new services. Implementation will depend
almost entirely upon imports. U.S. manufacturers dominate
the radio communications and satellite equipment market, while French,
Japanese and German suppliers dominate most other markets in which U.S.
presence is very limited. Sales efforts should be directed to
transmission, particularly fiber optics, switching and radio
communications equipment, areas which offer opportunities for U.S.
companies to increase market share. Most promising sub-sectors
(estimated 1996 market size - US $ millions):
-- Transmission equipment: 115
-- Switching equipment: 115
-- Radio communications equipment: 50
1994 1995 1996
(U.S. $ millions)
A. Total market size 180 230 290
B. Total local production 80 100 120
C. Total exports 0 0 0
D. Total imports 100 130 170
E. Total imports from the U.S. 15 22 30
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
3 - Water Resources Equipment (WRE)
Improving water resource supply and increasing agricultural production
are major priorities. The government's irrigation program offers
substantial opportunities for direct sales and licensing arrangements.
Several companies are seeking to develop local manufacturing of
irrigation and waste water treatment equipment. All have indicated
their interest in working with U.S. firms. American suppliers, whose
technology enjoys a high reputation here, sell mostly drilling
equipment, a market which they dominate. They could, however, displace
their French, Japanese and German competitors in most other areas. Most
promising sub-sectors (estimated 1996 market size - US $ millions):
-- Drilling equipment: 118
-- Irrigation equipment: 94
-- Waste water treatment equipment: 47
1994 1995 1996
(U.S. $ millions)
A. Total market size 211 235 295
B. Total local production 16 20 25
C. Total exports 5 6 8
D. Total imports 200 220 280
E. Total imports from the U.S. 50 60 80
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
4 - Computers and Peripherals (CPT)
The Algerian market for computers and peripherals is very large.
Demand is estimated at some $200 million, about three times the amount
of estimated average annual imports, and only lack of Algerian Dinars to
cover the hard currency cost of purchases hampers import growth.
Although U.S. manufacturers dominate this market, they could still
increase their market share through greater availability of financing.
Their main competitors, French and German suppliers, benefit from
government export credits to finance their sales than that for American
suppliers. This is their only competitive advantage over their U.S.
counterparts. Most promising sub-sectors (estimated 1996 market size -
US $ millions):
-- Microcomputers: 32
-- Monitors/printers: 20
-- Minicomputers: 16
1994 1995 1996
(U.S. $ millions)
A. Total market size 57 67 82
B. Total local production 2 2 2
C. Total exports 0 0 0
D. Total imports 55 65 80
E. Total imports from the U.S. 20 30 40
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
5 - Drugs and Pharmaceuticals (DRG)
Pharmaceuticals are one of Algeria's largest import categories and will
continue to be. European suppliers, particularly France, have a virtual
monopoly on this market. However, importers are seeking to diversify
suppliers, and the government encourages them to do so. This sector,
thus, presents a significant opportunity for American companies.
Manufacturers are now allowed to sell their products through
distributors. U.S. pharmaceuticals are sold in Algeria through European
subsidiaries, and are treated as European products, but American
suppliers have ample opportunities to penetrate this lucrative market
for both direct sales, licensing arrangements and production joint-
ventures for local manufacture. Algeria imports the entire range of
pharmaceuticals.
1994 1995 1996
(U.S. $ millions)
A. Total market size 310 360 420
B. Total local production 60 60 60
C. Total exports 0 0 0
D. Total imports 250 300 360
E. Total imports from the U.S. .6 .7 10
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
6 - Food Processing and Packaging Equipment (FPP)
As the Algerian food processing industry is underdeveloped, demand for
equipment and machinery is large and has hitherto remained unfulfilled
for two main reasons: insufficient agricultural production and lack of
foreign exchange for equipment imports. However, the Government's
efforts to develop the agricultural sector and increase food production,
and the ongoing improvement of Algeria's financial situation, should
make this market attractive to U.S. suppliers. Although the market is
dominated by Italy and Germany who account for some 80% of imports, U.S.
companies will have ample opportunities to increase their share of the
import market. The Government's commitment to the long term development
of this industry emphasizes the private sector's role, which is already
very active in this industry. Most promising sub-sectors (estimated
1996 market size - US $ millions):
-- Fruit/vegetable canning equipment: 65
-- Grain mill machinery: 65
-- Controls: 43
1994 1995 1996
(U.S. $ millions)
A. Total market size 162 185 218
B. Total local production 2 5 8
C. Total exports 0 0 0
D. Total imports 160 180 210
E. Total imports from the U.S. 10 15 20
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
7 - Mining Industry Equipment (MIN)
The Government is now promoting this industry, which has been neglected
despite rich mineral deposits. There has been a notable increase in
foreign firms' interest in this sector in 1995. Algeria in 1991
promulgated a mining law which, for the first time, allows direct
foreign participation in this sector. The Government will soon amend
the law to further liberalize foreign investment. Large future
purchases of equipment and machinery, as well as foreign expertise to
exploit and, in some instances, process the country's minerals are
envisioned. Since Algeria's independence, this industry had been
influenced, helped, and equipped by Eastern European communist nations.
With the geopolitical changes that have occured, opportunities are now
open for others, especially for American firms. Their current
competitors are mainly German and French suppliers. Most promising sub-
sectors (estimated 1996 market size - US $ millions):
-- Sorting, screening equipment: 33
-- Crushing, mixing equipment: 33
-- Drilling equipment: 33
1994 1995 1996
(U.S. $ millions)
A. Total market size 80 90 110
B. Total local production 0 0 0
C. Total exports 0 0 0
D. Total imports 80 90 110
E. Total imports from the U.S. 6 7 8
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
8 - Building Products (BLD)
This market offers good sales opportunities for U.S. exporters who are
active in only a few of its many segments. The Government is promoting
the construction sector, particularly road building, partly to create
jobs, because employment is a major problem, and housing to redress dire
shortages. This will call for large imports, particularly for lumber,
wood products, specialty steel products and portland cement, all of
which are currently purchased from various European countries. Also,
companies interested in joint-venture and licensing arrangements will
find markets for building systems and local production of equipment to
manufacture building products. Most promising sub-sectors (estimated
1996 market size - US $ millions):
-- Lumber: 109
-- Specialty steel products: 109
-- Wood products: 62
1994 1995 1996
(U.S. $ millions)
A. Total market size 225 255 312
B. Total local production 30 30 40
C. Total exports 5 5 8
D. Total imports 200 230 280
E. Total imports from the U.S. 6 8 10
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
BEST PROSPECTS FOR AGRICULTURAL PRODUCTS
Grain and Feed (wheat, barley, oats and corn)
Algeria continues to be one of the world's largest grain consumers with
7.7 million metric tons consumed in 1994. Grain imports account for 70
to 90% of total needs, depending on local grain production. The major
suppliers are the U.S., Canada and France for wheat; the U.S. and France
for barley and corn; Italy and Spain for semolina; France, Italy and
Spain for flour. However, the key factors for exporters to the Algerian
market remain credit financing and prices. The decline in GSM programs
from the U.S. have decreased its grain market share from 50% in 1992 to
43% in 1993, and less than 40% in 1994.
1994 1995 1996
(1,000 metric ton)
A. Total market size 7,700 8,100 8,400
B. Total local production 1,000 2,000 2,200
C. Total exports 0 0 0
D. Total imports 6,700 6,100 6,200
E. Total imports from the US 2,600 2,700 2,800
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
Vegetable Oils and Meals (soybean oil, soybean oil, sunflowerseed oil,
rapeseed oil, palm oil)
Algeria remains heavily dependent on oilseeds product imports, i.e.
oilmeals and vegetable oils. The country imports annually 280,000
metric tons of soybean meal which accounts for nearly 100 percent of
all protein meal imports; almost all soybean meal comes from the US with
GSM credit financing. Algeria also imports 350,000 metric tons of crude
vegetable oils divided as follows: 50% for soybean oil, 30% for
sunflowerseed oil, 20% for palm oil (and nearly no rapeseed oil). Major
suppliers of vegoils are the U.S., Argentina and Spain for sunflowerseed
and soybean oils; Malaysia for palm oil. In 1993, the U.S. provided 90%
of Algerian sunflower and soybean oil imports, using GSM programs and
SOAP and EEP subsidies; however, the suspension of the GSM program in
1994 enabled competitors such as Argentina and Spain to penetrate the
Algerian vegoil market.
1994 1995 1996
(1,000 metric ton)
A. Total market size 412 660 675
B. Total local production 20 30 35
C. Total exports 0 0 0
D. Total imports 392 630 640
E. Total imports from the US 272 500 510
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
Dairy Products (non fat dry milk, whole milk powder, butteroil, butter,
cheddar cheese)
Algeria continues to be one of the world's largest dairy product
importers due to low productivity, insufficient forage, rising input
prices and a generally unstable agricultural sector. Although milk
production is expected to increase, especially in Eastern Algeria,
demand for milk will continue to rise because of population growth (70%
of Algerian people are less than 25). Consequently, dairy product
imports are expected to develop significantly. Major suppliers are the
U.S., France, New Zealand and Canada for non fat dry milk and whole milk
powder; the U.S. and New Zealand for butter and butteroil; New Zealand
and France for cheddar and other cheese. The high market share earned
by the U.S. since 1990 is due to GSM financing availability and DEIP
subsidy program. The decrease in GSM credit financing since 1993 ($600
million in 1993, $300 million in 1995) could put U.S. dairy products at
a disadvantage before other competitors like France with its COFACE
financing.
1994 1995 1996
(1,000 metric ton)
A. Total market size 420 460 500
B. Total local production 160 180 200
C. Total exports 0 0 0
D. Total imports 260 280 300
E. Total imports from the US 72 80 90
Algeria does not produce powdered milk. Local production is expressed
in milk powder equivalent.
Notes: 1. Exchange rates (US$1=AD)
-- 1994: 36
-- 1995: 48 (est.)
-- 1996: 60 (est.)
2. The above statistics are unofficial estimates
VI. TRADE REGULATIONS AND STANDARDS
After several years of tight import controls, Algeria has totally
liberalized its trade regime. Import categories still subject to
restrictions are firearms, explosives, narcotics, and pork products,
which are prohibited for security or religious reasons.
Export Controls: The Government hopes to encourage the development of
non-hydrocarbon exports. Consistent with this goal, almost all export
restrictions have been removed. Restrictions remain only on palm
seedlings, sheep and artifacts of historical and archaeological
significance.
Free Trade Zones: The Government has stated its intention to establish
one or more free trade zones in Algeria, but has yet to announce where
these will be located. Several sites are being considered, and it is
likely that one will be established on the international fairgrounds of
Algiers, perhaps in the next year. Foreign investments in any free
trade zone will be exempt from all taxes and customs duties.
Membership in Free Trade Arrangements: Algeria, Tunisia, Morocco,
Mauretania and Libya agreed to form in 1989 the Arab Maghreb Union
(known by its French acronym UMA). The five nations also agreed to form
a Maghreb free trade zone, but did not establish a particular timetable
for doing so. Algeria hopes to establish a free trade zone with the
European Union similar to those that Morocco and Tunisia already enjoy,
but this is not likely to occur before 1996 at the earliest. Algeria is
not yet a member of the World Trade Organization (WTO), but plans to
become a member by 1996.
VII. INVESTMENT CLIMATE STATEMENT
Openness to Foreign Investment
As part of its effort to diversify and modernize the Algerian economy,
the Government is placing increasing emphasis on promoting foreign
investment. In October 1993, the Government promulgated a new
Investment Code which, for the first time, does not distinguish between
investments made by foreigners and Algerians. Conscious that Algerian
investment promotion efforts had lagged behind those of Tunisia,
Morocco, Turkey and others, the Government studied the investment
regimes of these countries, consulted the private sector, and then
developed a composite regime that equals or exceeds many of the
incentives offered by neighboring countries. The code grants new
investors:
-- a three-year exemption from the value added tax on goods and
services acquired locally or imported;
-- an exemption on property taxes;
-- a two to five year exemption from corporate income taxes;
-- the right to pay just 3% in customs duties for 30 different products
(for which duties are between 40-60%); and
-- the right to pay a ceiling of 7% on social security payments for
Algerian employees (the normal rate is 24%).
Finally, the incentives are even more attractive for those companies
which establish export-oriented projects. A sliding scale has been
established whereby those firms exporting 100% of their production
receive a 100% exemption on all taxes, and pay only the 7% employer
contribution to social security. Those exporting 50% of their
production receive a 50% exemption on all taxes and pay the same 7%
social security contribution.
The Government also established in May 1995 a new investment promotion
agency (Agence de Promotion, de Soutien et de Suivi des Investissements,
APSI), attached to the office of the Prime Minister, to register all
investment applications, accord the advantages listed by the Code, and
streamline the investment process. Government officials point out that
all investments are pre-approved; APSI's only role is to determine what
advantages a particular investment should receive under the law.
As part of its investment promotion efforts, the Government issued a
decree in October 1993 which reduced the income tax paid by foreign
technical and supervisory personnel. Whereas most foreign workers
previously paid taxes of up to 70% on their salaries, personnel employed
by foreign companies working in most industrial sectors whose monthly
salaries are in excess of 80,000 Dinars (approximately $1,600) will now
pay a flat rate of 20%.
Investment Registration Procedure: To register a proposed investment
and apply for the advantages listed in the Code, investors must file a
"Declaration d'Investissement" and a "Demande d'Avantages" with APSI.
The U.S. Embassy can provide prospective investors with a list of
Algerian lawyers who can assist in this task. By law, these two
documents must be processed by APSI within 60 days of their submission.
In practice, it normally takes about one month.
In determining what level of advantages to accord a given investment,
APSI considers the following five criteria:
-- whether an investor has a foreign partner;
-- the extent of self-financing (a firm self-financing more than 30% of
the total value of the proposed investment receives the maximum
advantages);
-- the dependence on foreign inputs (investments that use more than 50%
local inputs or import substitution receive the maximum advantages);
-- the extent of technology transfer, and employment creation.
Results Thus Far: Government officials report that during 1994, they
approved 650 investments, representing 33 billion Dinars (about $915
million). 50 of these were foreign investments which represented 6.6
billion Dinars (about $183 million), or 20% of the total. Two, Pfizer
and DHL, were American. Most of the rest were French (16 projects),
Italian (11 projects), Spanish (8 projects), or German (4 projects).
APSI currently receives an average of 30 investment projects per month.
Hydrocarbon Investments: Investments in the hydrocarbon sector are
governed by the 1986 Law Governing Activities of Exploration,
Exploitation, and Pipeline Transportation of Hydrocarbons, and
subsequent amendments. The 1986 law allowed foreign companies to enter
joint-venture partnerships with the state hydrocarbon company Sonatrach,
and remain in a minority position. The 1986 law was amended in December
1991 to allow foreign companies to take up to a 49% share in production
of existing oil fields. It also allows foreign participation in natural
gas exploration, and provides extra tax incentives to stimulate
hydrocarbon exploration. As a result of these incentives, eight
American companies signed exploration and production contracts with
Sonatrach valued at approximately $350 million.
Conversion and Transfer Policies
For investments made in hard currency, the new Investment Code
authorizes the investor to repatriate, within 60 days of a request for
capital repatriation, all capital, revenues, as well as the net proceeds
of the transfer, even if the latter are higher than the original amount
invested.
Expropriation and Compensation
The Embassy is not aware of any recent expropriation cases involving
U.S. firms or any other foreign firm.
Dispute Settlement
Algeria is a signatory to the Convention of the Paris-based
International Center for Settlement of Investment Disputes. Algeria
also ratified its accession to the New York Convention, and adhered to
the Multilateral Investment Guarantee Agency (MIGA). The Algerian Code
of Civil Procedure allows both private and public sector companies in
Algeria to seek international arbitration. Algeria also allows local
contracts to contain international arbitration clauses. Although
foreign investors have full recourse to international arbitration under
Algerian law, the Embassy is not aware of any recent case in which a
U.S. or other foreign company has had to seek such arbitration. DHL was
in mid 1995 trying to reestablish its operations in Algeria after the
PTT closed them suddenly without explanation.
Political Violence
Political violence is a major problem in Algeria; terrorists target both
Algerians and foreigners. Since 1993 over 80 foreigners have been
murdered in Algeria. The State Department strongly urges Americans not
visit or work in Algeria without substantial armed protection.
Performance Requirements and Incentives
As part of Algeria's efforts to develop an attractive investment
promotion regime, foreign investors in Algeria are not subject to any
performance requirements or incentives.
Right to Private Ownership
Foreign and domestic private entities may establish and own businesses
and engage in all forms of business activity.
Protection of Property Rights
Patents: Patents are protected by the law of December 7, 1993 and
administered by the Institut Algerien de Normalisation et de Propriete
Industrielle (INAPI). The December 7 law reaffirms Algeria's
ratification in 1975 of the Paris Convention and its subsequent
revisions. Patents are granted for 20 years from the date the patent
request is filed and are available for all areas of technology. For
further information, please contact Mr. Mohamed Younsi, Directeur de la
Protection Industrielle, 42 Rue Larbi Ben M'Hidi, Algiers (phone: 213-
2-735581).
Trademark Protection: Trademark protection is afforded by the Laws of
March 19, 1966 and of July 16, 1976. In 1986, authority for granting
and enforcement of trademark protection was transferred from INAPI to
the Centre National du Registre du Commerce (CNRC). INAPI sources
indicate that a new law is under consideration which would transfer
trademark authority back to INAPI. For further information, please
contact Ms. Farida Bouzid, Directeur des Marques, CNRC, R.N. 24, BP 18,
Bordj El Kiffan, Algiers (phone: 702303).
Copyright Protection: Algeria ratified in 1973 the 1952 Convention on
Copyrights. The Government also passed on April 3, 1973 a law to
provide copyright protection for books, plays, musical compositions,
films, paintings, sculpture and photographs. The law also considers on
the author the right to control the commercial exploitation or marketing
of the above products. A new law is being drafted to update the 1973
law to include protection for (among other things) videos and radio
programs. Copyright protection is managed by the Office National du
Droit d'Auteur (ONDA). For further information, please contact Mr. Amar
Lakhal, Directeur de la Repartition et de la Documentation, 6 Bd du 11
Decembre 1960 (phone: 921308).
Regulatory System: Laws and Procedures
The Government is in the process of putting in place the framework to
transform the Algerian economy from a centrally-planned economy in which
the public sector generates 60% of GDP to one based on free market
principles. Among the principal goals of the Government's economic
reform program will be reduced controls over the economy, application of
market principles to the management of state-owned firms, and
development of a dynamic private sector.
Efficient Capital Markets and Portfolio Investment
Outside the banking system, Algeria lacks any sophisticated capital
market. In late 1994 the government began selling bonds to finance part
of its deficit, but there is not yet a secondary market for these
instruments.
Bilateral Investment Agreements
Algeria has bilateral investment agreements with France, Italy, Belgium,
and Spain. Agreements with Turkey, Indonesia, and Romania have been
signed but not ratified. It is also negotiating agreements with Canada,
Russia, Portugal, and India. Most of these bilateral agreements contain
double taxation provisions.
OPIC Programs
OPIC since 1990 has offered its services to U.S. companies considering
investment in Algeria. Only one U.S. project has concluded an agreement
with OPIC so far, however. OPIC provides insurance for U.S. equity
investments and loans against the risks of political violence,
expropriation,and currency inconvertibility. OPIC also operates special
insurance programs to encourage petroleum exploration, development and
production in developing countries. Finally, OPIC also insures U.S.
contractors and exporters against: 1) wrongful calling of bid,
performance, or advance payment guarantees; 2) loss of physical assets
and bank accounts due to confiscation or political violence; or 3)
losses due to unresolved contractual disputes with foreign buyers.
Investors are required to register projects with OPIC before the
investment has been made or irrevocably committed. Registration is free
of charge and treated as privileged business information. To register,
please submit a Request for Registration for Political Risk Investment
Insurance (OPIC form 50), available by calling the OPIC Facts Line (202-
336-8700).
OPIC also provides up to $200 million in medium to long term financing
for investment projects involving significant equity or management
participation by U.S. businesses through loan guarantees and/or direct
loans. OPIC will participate in up to 50% of the total project cost for
a new venture, while a somewhat higher participation may be considered
in the case of an expansion of a successful existing business. Further
information on OPIC financing programs may be obtained by calling the
OPIC Info Line (202-336-8700).
For further information on OPIC programs in Algeria, please contact
James Williams, OPIC Insurance Office at 202-336-8575.
Labor
By 1995 Algeria's workforce had grown to about 6.4 million out of a
total population of 28 million because of the predominance of youth in
the age structure of the population, and it was increasing about four
percent annually. 28% of the population is unemployed, according to the
latest Government data. Unemployment is especially serious among
younger, unskilled workers. Wages average only 9000 dinars ($190) per
month reflecting the low average productivity of most Algerian workers.
Technical and basic education have lagged in recent years. About four
percent of the labor force has at least 12 years of regular schooling.
Despite these factors, U.S. companies operating in Algeria have been
able to hire adequately trained technical staff and qualified Algerian
workers, but they are often not familiar with the latest technologies
used in the West. While most speak French, few speak English. Due to
declining purchasing power, Algerian labor unions staged a series of
localized, nonviolent strikes at particular Algerian-owned firms in 1994
and 1995. In general, U.S. firms indicate that they have no problems
with the Algerian labor unions, as the work conditions and salaries at
their companies exceed those of Algerian firms. There are no
restrictions on the number of expatriate supervisory personnel.
Employers must pay a social security tax, which includes both retirement
and unemployment compensation; in 1994 this tax was 24 percent of the
gross salary. As a result of limits on wage increases and dinar
devaluation, Algerian wages have become increasingly competitive. The
following table shows average monthly wages found in the large, state-
owned enterprises, small, local government-owned firms and private
sector:
Upper Supervisors Workers Average
Mgt.
___________________________________________________________
National Ent. 16,071 11,524 9,774 11,268
Local Ent. 12,495 9,222 6,772 7,536
Private Ent. 16,614 10,516 8,079 8,282
___________________________________________________________
Averages 15,685 11,158 8,582 9,945
Salaries are in Algerian dinars: $1 equals 48 dinars (DA)
In addition, some foreign companies operating in Algeria pay a small
fraction of the monthly wage in hard currency as a bonus.
Free Trade Zones
As indicated earlier, foreign investments in any free trade zone will be
exempt from all taxes and customs duties.
VIII. TRADE AND PROJECT FINANCING
Banking System: The Algerian banking system consists of the Central
Bank (Banque d'Algerie), five state banks, one development bank, one
national savings bank, and one private bank that is owned jointly by one
of the state banks and the Saudi Al-Baraka Group. Algeria's first
private bank, Union Bank (UB), set up by a leading local businessman, is
expected to start operating in coming months. UB will also be the
country's first merchant bank. Until 1994, public enterprises long
enjoyed privileged access to credit from Algeria's state banks. As a
result, the banking system in Algeria has been severely handicapped by
the prevalence of non-performing public sector enterprise debt. A key
priority of the IMF-backed reform program is recapitalization and
liberalization of the banking system. The goal is to foster greater
competition and more private sector participation, and develop a
financial market, including a stock exchange.
Foreign Exchange Controls Affecting Trading: The Government has no
foreign exchange controls affecting trading. As mentioned above,
foreign exchange is readily available to Algerian importers, provided
they have the dinar value of the hard currency cost of their purchases.
General Financing Availability: The Government has lifted controls over
access to hard currency, and local importers have free access to foreign
exchange through the five state commercial banks. Following Algeria's
1994 debt rescheduling agreements with the IMF, the Paris Club and the
London Club, and its forthcoming second agreements with the IMF and the
Paris Club, significant additional financing will be available in coming
years for both merchandise and investment imports. Foreign exchange
reserves of the Central Bank now stand at $2.6 billion.
Export-Import Bank Financing: The Board of Directors of the U.S.
Export-Import Bank decided in 1994 to go off cover on medium and long
term loans and guarantees fo Algeria, as well medium term insurance.
ExIm remains open on short term (e.g. repayment terms of 180 days, and
for some commodities, 360 days) transactions involving the five Algerian
state banks and Sonatrach. ExIm is also proceeding with disbursement
under its guarantee program of some $700 million worth of transactions.
With more than $2.2 billion in exposure, ExIm continues to be one of
Algeria's leading creditors. For further information regarding ExIm
programs in Algeria, please contact Hala El Mohandes at ExIm (phone:
202-566-8945).
Other External Financing: France has indicated it will in 1995 provide
five billion French Francs (about $1 billion) for import financing;
Spain has pledged $650 million, and Italy and the European Union also
will provide new credits.
Project Financing Available: The World Bank and the African Development
Bank are quite active in Algeria. Both cover mostly infrastructure and
social projects. The World Bank also finances the government's economic
restructuring program.
List of banks with Correspondent U.S. Arrangements:
Following is a listing of the correspondent banking relationships
that the five Algerian banks have with U.S. banks.
Banque Exterieure d'Algerie Banque Nationale d'Algerie
Bank of New York American Express Bank
BankAmerica International Bank of America
Bankers Trust Bank of New York
Chase Manhattan Bank Bankers Trust
Chemical Bank Chase Manhattan Bank
Citibank Citibank
First Chicago CoBank Denver
First Interstate Bank
Credit Populaire d'Algerie of California
Citibank Mellon Bank
Arab American Bank Pittsburgh national Bank
Chemical Bank United Bank for Africa
Mellon Bank
Banque de l'Agriculture Banque de Developpement Local
et du Developpement Rural Citibank
Bank of America NY Credit Lyonnais NY
CoBank Denver Rabo Bank
Citibank United Bank for Africa
Bankers Trust
First Chicago
Rabo bank
IX. BUSINESS TRAVEL
Passports and visas are required for U.S. citizens traveling to Algeria.
Visas with validities of up to one year are available from the Algerian
Embassy in Washington, 2118 Kalorama Road N.W., Washington D.C. 20008
(202-265-2800).
Currency Regulations: Travelers cheques and credit cards are accepted
in only a few establishments in urban areas. Currently, the Government
requires all foreigners entering the country to exchange $200 into local
currency. Documentary proof of legal exchange of currency is required
when departing Algeria.
List of 1995-96 Algerian Holidays
July 5 - Independence Day April 30 - Aid El Adha
Aug. 9 - El Mawlid Ennabaoui May 31 - Awal Mouharem
Nov. 1 - Revolution Day June 7 - Achoura
Jan. 1 - New Year's Day June 19 - Revolutionary
February 23 - Aid El-Fitr Recovery Day
May 1 - Labor Day
X. APPENDICES
Appendix A: COUNTRY DATA
1994 1995 1996
(est) (proj)
____ _____ ______
Population (millions) 27.2 27.8 28.4
Population Growth Rate (%) 2.4 2.4 2.4
Religion: 99% Sunni Islam
Government System: Republic
Languages: Arabic (official), Berber, French
Work Week: Saturday to Wednesday
Banks and insurance companies work Sunday to
Thursday.
Appendix B: DOMESTIC ECONOMY
Gross Domestic Product (GDP) 47.9 48.4 49.75
(U.S. $ billions)
GDP Growth Rate -1.1 3.8 5.0
GDP Per Capita (U.S. dollars) 1760 1741 1751
Inflation (%) 38.5 20 10
Unemployment (%) 24.3 25.7 N/A
Foreign Exchange Reserves 2.6 2.3 2.9
(U.S. $ billions)
Average Exchange Rate for U.S. $1.00
36 48 60
Foreign Debt (U.S. $ billions) 29.9 30.3 33.6
Debt Service Ratio (%) 49 39.3 48.9
U.S. Economic/Military Assistance 75 N/A N/A
(U.S. $ thousands)
Appendix C: TRADE
Total Country Exports (U.S. $ billions) 9.7 9.51 10.8
Total Country Imports 9.2 9.4 10
U.S. Exports (U.S. millions) 1191 1000 1050
U.S. Imports (U.S. millions) 1664 1800 1800
U.S. Share of Country Imports (%) 12.5 10.6 10.5
U.S. Share of Agricultural Imports (%) 22 22 24
Principal U.S. Agricultural Exports
(U.S. $ millions)
Maize 135 140 150
Wheat 132 130 140
Soybean oilcake 50 55 60
Soybean oil 92 95 100
Durum wheat 110 100 120
Dairy products 62 70 75
Principal U.S. Imports
(U.S. $ millions)
Natural gas condensate 934.7 N/A N/A
No. 6 type fuel oil 198 N/A N/A
Liquified natural gas 108.2 N/A N/A
No. 4 type fuel oil 155.9 N/A N/A
Appendix D. U.S. and Country Contacts
Algerian Ministries
Ministry of Finance
Palais du Gouvernement
Algiers, Algeria
Phone: (213-2) 732340
Fax: 735472
Ministry of Commerce
Palais du Gouvernement
Algiers, Algeria
Phone: 732340
Fax: 733091
Ministry of Industry and Energy
Immeuble Le Colisee
Algiers, Algeria
Phone: 592440
Fax: 604584
Ministry of Small and Medium Size Industry
Immeuble Le Colisee
Algiers, Algeria
Phone: 592232
Fax: 592658
Ministry of Equipment
Ex-Grand Seminaire
Kouba
Algiers, Algeria
Phone: 689503
Ministry of Post and Telecommunications
4 Bd Krim Belkacem
Algiers, Algeria
Phone: 711220
Fax: 711771
Ministry of Transport
119 Rue Didouche Mourad
Algiers, Algeria
Phone: 747506
Fax: 656637
Ministry of Agriculture
4 Rue des Quatre Canons
Algiers, Algeria
Phone: 711712
Fax: 612542
Largest Public Sector Enterprises
Sonatrach (hydrocarbons)
10 Rue du Sahara
Hydra
Algiers, Algeria
Phone: 607000
Fax: 601949
Sonelgaz (power and gas utility)
2 Bd Krim Belkacem
Algiers, Algeria
Phone: 644555
Fax: 611314
ENIP (petrochemicals)
Zone Industrielle
BP 215, Skikda
Skikda, Algeria
Phone: (8) 958862
Fax: (8) 756146
SIDER (steel)
Chaiba, Commune Sidi Amar
BP 342, Annaba
Annaba, Algeria
Phone: (8) 851011
Fax: (8) 838957
SNVI (industrial vehicles)
BP 153, Rouiba
Boumerdes, Algeria
Phone: 851970
Fax: 857345
Chamber of Commerce
CNC
(Chambre Nationale de Commerce)
Palais Consulaire
Place des Martyrs
Algiers, Algeria
Phone: 574444
Fax: 629991
Private Sector Employers Associations
ACE
(Association des Chefs d'Entreprise)
Villa le Minaret
4 Rue Isidore Pouget
Les Tagarins
Algiers, Algeria
Phone: 638929
Fax: 639188
CAP
(Confederation Algerienne du Patronat)
Hotel Aurassi
Niveau C, Bureau 7
Algiers, Algeria
Phone: 647020
Fax: 641041
CGOEA
(Confederation Generale des Operateurs
Economiques Algeriens)
27 Rue Ferhat AEK
Staoueli
Tipaza, Algeria
Phone: 582851
Fax: 814353
CNPA
(Confederation Nationale du Patronat Algerien)
39 Rue Rahmoune Dekkar
El Biar
Algiers, Algeria
Phone: 793795
Fax: 788498
U.S. Embassy Trade Personnel
U.S. Embassy-Algiers
Robert Ford
Acting Commercial Officer
Mahmoud Lardjane
Commercial Specialist
BP 549, Alger-Gare
Algiers, Algeria
Phone: 693973
Fax: 693979
Washington-based Country Contacts
U.S. Department of Commerce
Claude Clement
Algeria Desk Officer
Washington, D.C. 20230
Phone: (202) 482-1860
Fax: (202) 482-0878
U.S. Department of State
Jeffrey Vrooman
Algeria Desk Officer
Washington, D.C. 20520
Phone: (202) 647-4680
Fax: (202) 736-4458
U.S.-based Multipliers
Export-Import Bank (ExIm)
Hala El Mohandes
Project Officer
811 Vermont Ave, NW
Washington, D.C. 20571
Phone: (202) 566-8945
Fax: (202) 566-7524
U.S. Trade and Development Agency (TDA)
John Richter
Regional Director for Africa and the Middle East
Nathan Younge
Country Manager, Africa and Middle East
SA-16, Room 309
Washington, D.C. 20523-1602
Phone: (703) 875-4357
Fax: (703) 875-4009
Overseas Private Investment Corporation (OPIC)
James Williams
Insurance Officer
1100 New York Ave, NW
Washington, D.C. 20527
Phone: (202) 336-8575
Fax: (202) 408-5142
Multilateral Development Bank Operations
Brenda Ebeling
Director
14th and Constitution, NW
Washington, D.C. 20007
Phone: (202) 482-3399
Fax: (202) 482-5179
The Trade Promotion Coordinating Committee
TPCC Trade Information Center
Phone: 1-800-USA-TRADE
U.S. Department of Agriculture
Foreign Agricultural Service
Trade Assistance and Promotion Office
Phone: (202) 720-7420
Appendix E. Market Research
1. Available (IMI's)
-- Algeria's first private bank (09/25/94)
-- Reorganization of the hydrocarbon sector (12/20/94)
-- Petrochemical projects (12/26/94)
-- The agricultural sector is demonopolized (03/01/95)
-- Sonatrach's 1994 results (03/23/95)
-- Algeria's 1994 import statistics (03/28/95)
-- Further liberalization of Algeria's foreign trade (05/22/95)
-- The investment promotion agency is operational (05/22/95)
2. Upcoming (IMI's). Post will submit IMI's to reflect the continuing
economic and political changes taking place in Algeria, as these changes
occur. We will also submit reports covering business conditions and
practices, business leads, commercial opportunities, etc. as they
develop.
Appendix F. Trade Event Schedule
-- Algiers International Trade Fair, Algiers, Algeria, October 11-21,
1995.
Because of the unsettled situation in Algeria, trade promotion
activities will necessarily be limited. Our participation in the
Algiers International Fair, the single largest local trade event, will
depend upon security conditions prevailing at the time the event is
held.
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