Guidance

Overseas Business Risk - Algeria

Updated 13 July 2015

See below for information on key security and political risks which UK businesses may face when operating in Algeria.

1. Political and Economic

Politically, Algeria is stable. The 2014 Presidential election saw the incumbent, Abdelaziz Bouteflika, re-elected. There were no credible opponents. 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 2014-19, following swiftly from the 2010-14 programme, which aimed to connect the vast country by upgrading transport links, develop Algeria’s human capital by improving education and healthcare and respond to demands for housing by delivering 1.2 million new houses by 2014.

The 2014-19 programme will focus on infrastructure, agriculture, healthcare and tourism.

Energy is the backbone of Algeria’s economy. The hydrocarbons sector accounts for roughly 60% of budget revenues, nearly 30% of GDP, and over 97% of export earnings (US$ 38.3 billion in 2010/11). 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 has historically supplied 5% of the UK’s gas needs, and 2014 marks 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.

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. In 2014, Petrofac won a $972m contract to build a gas production facility at Reggane Nord.

Outside of hydrocarbons there are opportunities across the board, eg in healthcare, education (particularly English language, technical and vocational training), infrastructure (engineering, design and project management), agriculture, retail, and professional services (finance, accounting, legal).

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. However, Algerians are open to the UK, the bilateral relationship is in excellent shape, and companies can rely on HMG support. HMRC figures show that UK – Algeria bilateral trade is increasing. The UK was ranked, for the first time, as 10th largest supplier during 2013. Exports in 2014 reached £479m. Only Nigeria, Egypt and South Africa are significantly bigger markets for the UK across the continent.

Algeria currently ranks 79th in the World Economic Forum’s Global Competitiveness report for 2014-15 (published August 2014). Algeria lies 11th in the macroeconomic environment index, which was cited as the main reason for its overall rise. The report also highlighted ‘improvement in institutions and physical security’.

More information on political risk, including political demonstrations, is available in the FCO Travel Advice.

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 2014 Algeria was ranked 100th out of 175 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. It is important to develop close business relationships with your potential clients but this should not be confused with corruption. A local business partner or agent will be well placed to advise you on normal business practice. 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.

In previous reports, the UN has highlighted some concerns from member countries on Algeria’s position on freedom of assembly, freedom of association (e.g. forming societies), implementation of laws on religion and some forms of 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 (e.g. pharmacists, airline cabin crew etc). There does not appear to be a culture of general strikes. 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.

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 and Hassi Messaoud, Algeria’s petroleum hub: particular logistical and risk management considerations apply due to these remote locations. Hassi itself is 800 km (two 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 a targetted 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 IPR 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.

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.