NORD-SUD VENTURESStrategy & Lobbying Consultants

Building up Confidence: Prospects and Challengesby Arslan CHIKHAOUI

Economic & Political Specialist and CEO

 

Middle East Association Seminar on Algeria

London November 6th, 2008

  Head Office : 3, rue Gara Djebilet (ex. Jean Macé), 16000 Algiers-Algeria

Tel: (+213) (0)21 632 429 / Fax: (+213) (0)21 632 430

E-mail: contact@nsventures.net

Socio Economic Overall view and perspectives  Designation Real 2007

Probable 2008

Prediction 2009

Estimate 2012

World growth of GDP (%) 3.7 2.7 2.1 3.2

MENA growth (%) 5.5 6.1 5.5 5.9

Potential Algeria GDP growth (%) 4.2 2.5 4.7 5.3

Real Algeria GDP growth (%) 4.6 4.2 4,5 6,4

Trade balance (bn USD) 34,3 38,2 34,1 37,9

Population (million) 33,9 34,4 34,9 36,4

GDP per capita (USD at the market exchange rate)

3,880 4,810 5,000 6,220

Household consumption per capita (USD) 1,220 1,460 1,570 1,830

Inflation (%) 3.5 5.4 4.2 3.6

Banks Commercial rate of loan (%) 8 8.1 8.2 7.5

Interest rate at deposit (average %) 1.8 2 2.5 2.5

Labor (million) 9,4 9,4 9,5 9,8

Jobs (million) 8,1 8,3 8,5 9,2

Unemployment rate (%) 11.8 15 12,5 10,1

Net foreign direct investments (bn USD) 1,7 2 2,6 3

Total external debt (bn USD) 4 3 2,7 3,2

Total external debt (% of GDP) 3 1.8 1.6 1.4

Debt/exports ratio (%) 5.7 3.5 3.1 3

 Predictions and estimates: NSV Business Intelligence Unit

Country risks

OECD grading confirms that Algeria is one of the best country risks in the North African region.

The main handicaps for investment is still the banking system and the bureaucratic red tape.  Corruption

Fighting corruption is a priority for the Algerian Government.

In June 2005, an anti-corruption bill was adopted by parliament. The Law reinforces existing legislation to comply with the UN Convention against Corruption which Algeria ratified in 2004.

Nevertheless, a lot of efforts remain to be done in this field.

Money laundering

On January 2005, the Government adopted a Law pertaining to money laundering and terrorist financing to comply with international standards and measures against organized crime.

A Financial Intelligence Unit (CRTF) has been set up.

Transparency International Notationof North African Countries

 

Country 

Rank(out of 180)

Corruption perception index Score

Algeria 99 3,0

Tunisia 61 4,2

Morocco 72 3,5

Libya 131 2,5

Egypt 105 2,9

 

Grading of the security risk in Algeria

General score in 2008  

= 3,25 / 4

Specific scores 

Social climate = 3Terrorism = 3

Criminality = 4Kidnapping = 3

Key: 1: Low; 2: Moderate; 3: Sensitive; 4: High; 5: Very HighSource: NSV

 Evolution of the terrorist acts (executed) in Algeria

from 1992 to Sept 2008

Year Number of actions

1992 02

1993 07

1994 15

1995 26

1996 1889

1997 1424

1998 1082

1999 775

2000 712

2001 373

2002 320

2003 01

2004 01

2005 00

2006 03

2007 09

Jan – Sept 2008 06

Source : NSV Intelligence Unit and National Institute for Defence Studies

Evolution of the terrorist acts (executed) in Algeriafrom 1992 to Sept 2008

0

500

1 000

1 500

2 000

1992

1994

1996

1998

2000

2002

2004

2006

2008

Number of Actions

Overview of the global security situation in Algeriafrom 1992 to Sept 2008

0

50000

100000

150000

200000

1992-2001 2002-2008

Nbr Actions Nbr Dead Nbr Terrorists

PROSPECTS  Algeria is not the dangerous place to do business it once was. The level of overall violence will continue to decrease. Crime and banditry to replace terrorism.

 The aim of the next presidential run is to strengthen the political stability and to move toward a sustainable economic growth.

 Constitutional amendment is seen more as institutional reforms in order to create an environment of political stability. The PM’s role is to be empowered.

 Opening up Algerian economy will progress. No question to go backward.

 The next step forward of economic reforms is to speed up the financial structural reforms.

Opening up new opportunities for private sector and FDI.

  Reform of the army will progress moving to a professional one.