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This publication is available at https://www.gov.uk/government/publications/overseas-business-risk-algeria/overseas-business-risk-algeria
This page provides information on important security and political risks which UK businesses may face when operating in Algeria.
1. Political and economic
Unlike many other countries in her region, Algeria is stable. The 2014 Presidential election saw the incumbent, Abdelaziz Bouteflika, re-elected. Algeria’s violent civil war of the 1990s still marks the population; Arab-spring style unrest is very unlikely.
The Algerian government launched a 5 year investment programme worth US $262 billion for 2014 to 2019, following swiftly from a 2010 to 2014 programme. The 2014 to 2019 programme focuses on infrastructure, agriculture, healthcare and tourism. 2014 and 2015, however, saw some programmes scaled back, as the effect of the fall in the price of oil had a knock-on effect on the Algerian budget and much time was spent treading water. During 2017, we saw green shoots of recovery and new projects announced. We believe this trend is set to continue as the government pushes forward industry diversification plans via their economic reform ‘Action Plan’.
Energy is the backbone of Algeria’s economy. The hydrocarbons sector accounts for roughly 40% of budget revenues, nearly 30% of GDP, and over 9% of export earnings. Proven crude and natural gas reserves are estimated at 12.2 billion barrels and 4.5 trillion cubic feet, respectively the 14th and 4th largest in the world. Algeria is Africa’s 4th largest producer of oil and the world’s 6th largest producer of gas. Historically, Algeria has supplied 5% of the UK’s gas needs, and 2014 marked 50 years since the first LNG shipment to Canvey Island. Algeria’s renewable energy and energy efficiency programme envisages installing 22,000 MW of generating capacity from renewable sources by 2030 – with 10,000 MW destined for export to Europe. A $60 billion programme has been launched to make this happen.
UK IOCs and EPC contractors have been working in Algeria for many years. Their projects, like Petrofac’s US$ 1.2 billion El Merk site, create supply chain opportunities for everything from safety systems to cable ties.
Outside of hydrocarbons there are opportunities across the board, e.g. in telecommunications, financial services, education (particularly English language, technical and vocational training), infrastructure (engineering, design and project management), agriculture, healthcare, retail and mining. Algeria also has a substantial defence budget of around $10 billion a year, which attracts the UK defence sales industry.
Doing business in Algeria can be challenging. Bureaucracy means that decision making can be slow and complex. Competition is stiff; companies from other EU countries and from further afield like China and Turkey are already very active. But Algerians are open to the UK: the bilateral relationship is in excellent shape, and companies can rely on HMG support. Total trade in goods and services (ie exports plus imports) between the UK and Algeria totalled £1.4 billion in 2016 a 39.7% decrease from 2015, the drop is largely due to the fall in oil/gas prices.
In 2016, UK exports to Algeria amounted to £595 million (a 35.8% increase from 2015) while UK imports from Algeria were £789 million (a 57.5% decrease from 2015).
In 2016, Algeria was the UK’s:
- 71st largest trading partner (accounting for 0.1% of total UK trade)
- 72nd largest export market (accounting for 0.1% of all UK exports)
- 64th largest import market (accounting for 0.1% of all UK imports)
Algeria currently ranks 166th in the World Economic Forum’s 2017 Ease of Doing Business Report.
More information on political risk, including political demonstrations, is available in the FCO Travel Advice for Algeria.
2. Bribery and corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
In 2016 Algeria was ranked 108th out of 176 in Transparency International’s corruption perception index. Government tendering follows strict guidelines to reduce the risk of corruption in the awarding of contracts. Numerous British businesses report successful business operations in Algeria free of corrupt practices. However, there are still some isolated anecdotal reports of low level corruption. Any UK company encountering what is believed to be corrupt practices should contact the DIT team at the Embassy, who will explain how to take forward complaints.
You should familiarise yourself with British bribery legislation which, since 2002, also applies to UK registered companies and UK nationals committing acts of bribery wholly outside the UK.
Read the information provided on our Bribery and corruption page.
3. Human rights
Algeria has acceded to the seven major United Nations conventions on human rights and the eight International Labour Organization (ILO) conventions on human rights, with some reservations. Details of the specific conventions, accession dates and reservations are available on the Arab Human Rights website.
The UN’s third Universal Periodic Review of Algeria took place in 2017. The review highlighted concerns from member countries on Algeria’s position on freedom of assembly, freedom of association (such as forming societies), implementation of laws on religion and some forms of sexual and sexuality discrimination. Companies can mitigate this by implementing their own equal opportunities policies internally.
The UGTA (l’Union générale des travailleurs algériens) is the only union officially recognised by the state. It has around 4 million members and is part of the International Trade Union Confederation.
Worker strikes to demand higher wages are common but usually small scale and isolated to a particular sector or a particular company (for example pharmacists, airline cabin crew). There does not appear to be a culture of general strikes although austerity measures have seen more occasional outbursts of discontent in both urban and rural locations. For public sector employees, oil revenue allows the government to respond favourably to demands for wage rises in many cases.
4. Terrorism threat
The Centre for the Protection of National Infrastructure also provides protective security advice to businesses.
There is a threat of terrorism in certain areas of Algeria, notably the southern and eastern border districts. Please refer to the FCO Travel Advice for the most recent guidance.
Read the information provided on our Terrorism threat page.
5. Protective security advice
Companies active in the oil and gas sector may need to work in desert locations, including the hub of Hassi Messaoud: particular logistical and risk management considerations apply due to these remote locations. Hassi itself is 800 km (2 hours by air) from Algiers. Algerian security forces are very active to ensure security, and forces have been increased since the attack on the BP/Statoil/Sonatrach joint venture at In Amenas, Tiguentourine (a further 700km SE), in January 2013. Otherwise, foreign businesses have not been targeted by terrorism, however, most companies take preventive measures such as engaging private security firms for guarding of property.
Read the information provided on our safety and security page.
6. Intellectual property
Hi-tech manufacturing industry and R&D facilities are virtually nonexistent in Algeria. Intellectual Property Rights (IPR) infringements associated with technology transfer is not an issue currently. IPR abuses may become a problem in the future as Algeria advances and enters the technological age.
Counterfeit consumer products sourced from third countries - particularly China - is a major problem as is piracy of music and films. Black markets trading in counterfeit goods ranging from toiletries, over the counter medicines, branded clothing and household electrical goods exist in almost every area. The government is active in combating counterfeit goods and has invested heavily in improving Customs controls. The International cooperation department and customs invites foreign companies to work with them in developing their ability to detect counterfeit products. In addition, recently introduced legislation on imported goods requires specific quality and conformity certification. Foreign exporters should contact Algerian Customs and the Ministry of Commerce for advice on the appropriate certification of their goods.
6.1 Intellectual Property Rights protection in Algeria
Algerian law adheres to NAFTA and the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). IPR laws in themselves are robust but the difficulty is in lax enforcement. Specialist legal advice on IPR matters is difficult to find. The cumbersome judicial system based on French and Islamic Sharia law is complicated to understand; therefore legal proceedings can be lengthy and expensive.
High-level lobbying via the Embassy and industry representative groups such as the Algeria Brand Protection Group has proved to be a more popular and effective route to resolving major disputes.
6.2 Copyright protection
Algeria has signed up to the relevant international IPR and copyright agreements. However, piracy remains a major problem. Pirated films and music recordings are available often on the same day as their official release in Europe and elsewhere.
Read the information provided on our intellectual property page.
7. Organised crime
There are no specific threats to foreign companies as a result of organised crime.
Read the information provided on our organised crime page.