Foreign direct investment (FDI) in Algeria has declined drastically for several years. This trend is confirmed by successive reports from the United Nations Conference on Trade and Development (UNCTAD).
The government wants to face this decline and boost these investments again. It is preparing to reorganize the texts relating to investment, particularly those that concern the aspect governing FDI.
Prime Minister Nadir Larbaoui has examined a preliminary draft regulatory text setting the conditions for the transfer of shares or shares in the capital of companies under Algerian law operating in one of the strategic sectors.
Rule 51/49 a brake on foreign direct investment
The press release from the Prime Ministry indicates that this text is part of the implementation of the directives of the President of the Republic, relating to the completion of the promulgation of regulatory texts relating to investment. This is a new regulatory text that intervenes per the provisions of article 52 of the 2020 supplementary finance law, indicating the services of the Prime Ministry.
The cited article states that “the provisions of articles 66 of the finance law for 2016 and 109 of the finance law for 2020 are repealed”. It should be noted that article 52 of the 2020 supplementary finance law explains that “the recent evolution of the national economy, particularly in the global context, dictates the revision of our investment policy, particularly foreign, in Algeria which is experiencing a significant decline in FDI, compared to other countries which recorded an encouraging increase in diversified FDI in 2019, according to the UNCTAD report on world investment in 2019.
Algeria has therefore decided to act to prepare legislative grounds favorable to FDI. It must be said that the main rule that is an obstacle to foreign investments is rule 51/49, which has been repealed in certain sectors. “Analysis of the statistical database relating to the evolution of projects declared within the framework of investment promotion schemes shows that during the period before the establishment of this rule, i.e. 2007 and 2008, a number significant number of investment projects have been declared to ANDI, i.e. 93 and 86 projects respectively,” indicates the 2020 finance law.
Established in 2009, rule 51/49 set, in fact, the share of participation of a foreign investor in a company governed by Algerian law at a ceiling of 49%. Since then, the number of foreign projects in Algeria has seen a significant decline.
