The United States returns to the charge regarding the business climate in Algeria. After the opinion expressed by Ambassador Elisabeth Aubin in June 2022, in a speech at the Algiers International Fair, the State Department made a detailed assessment of the legislation and the reality of investment in Algeria, pointing out certain difficulties that persist.
The report highlights that there are business opportunities in almost all sectors and recalls that the Algerian government regularly encourages American companies to invest in Algeria, particularly in agriculture, new technologies, mining, hydrocarbons, and renewable energies. and health.
Nevertheless, and while the Algerian government is doing everything to welcome foreign direct investments (FDI), ” a difficult business climate, an inconsistent regulatory environment and sometimes contradictory government policies complicate foreign investments”, we read in the report of the US Department of State.
This cites a series of “ challenges” faced by economic operators, such as “ complicated customs procedures, heavy bureaucracy and difficulties with monetary transfers”.
Foreign companies operating in Algeria also complain of legal instability “ because laws and regulations are constantly evolving, thus increasing commercial risks”.
Among the difficulties focused on in the department’s report on the business climate in Algeria, import restrictions have the effect, among other things, of “hindering the possibilities of relying on supply chains international”.
The State Department emphasizes that Algeria continues to pursue protectionist policies to encourage the development of local production, policies that tend to generate ” regulatory uncertainty, supply shortages, increased prices and supply limited range of consumer goods.
Investment in Algeria: what worries American companies
“Some regulations explicitly favor local companies over foreign competitors, and frequent and unpredictable changes in trade regulations have added to market uncertainty,” laments the US government report.
Officially, the Algerian government does not “ screen” FDI, but investments remain subject to approval by a multitude of ministries affected by the proposed project, according to the same report.
“US companies have reported that some high-profile industrial proposals, such as those for automobile assembly, are subject to informal approval by the prime minister,” the report said.
The State Department notes that rule 51-49 on foreign investment in Algeria has been lifted, except for investments in certain strategic sectors, but it has been reintroduced for activities involving the importation of products intended for resale in the state.
This rule particularly affects SMEs, with local authorities being “ more flexible with major investments that promise job creation and significant technology and equipment transfers”.
The State Department reports ” allegations” that Algerian partners sometimes refuse to invest the necessary funds in the company’s activities and put unskilled workers on construction sites. American companies have also highlighted legislation in their country that prevents them from investing abroad without retaining a majority stake, “ for concerns of intellectual property rights”.
Difficulties in the transfer of funds and dividends are also reported. These “ mainly result from transfer procedures rather than legal limitations: the process is bureaucratic and requires nearly 30 different steps from start to finish,” laments the American report.
The State Department recalls that the Investment Act of 2022 establishes “ freedom of investment ” and “ transparency and equality in the treatment of investments ” for residents and non-residents, and recognizes that, apart from certain provisions such as the maintenance of certain activities of rule 51-49, “ there are few other laws restricting foreign investments” in Algeria.
Nevertheless, “ in practice, the numerous regulatory and bureaucratic requirements applicable to business operations provide officials with means to informally advance protectionist policies,” summarizes the State Department in its report on the business climate in Algeria.
