Diplomatic tensions between Algeria and France have put French companies in a challenging position. As political relations between the two countries face turbulence, key economic sectors, especially those tied to investment, are significantly affected.
French businesses, which have long played a vital role in Algeria’s economy, now face major obstacles. The ongoing crisis threatens not only economic partnerships but also long-term investments critical to maintaining ties between the two nations.
The recent detention of an Algerian consular agent in France has escalated tensions, leading to the expulsion of 12 Algerian and French diplomats. This has created a climate of mistrust, undermining the economic cooperation that has linked France and Algeria for years.
This incident follows a brief period of warming relations initiated during talks between Presidents Abdelmadjid Tebboune and Emmanuel Macron. However, the renewed dialogue now appears strained, directly impacting French companies operating in Algeria.
Economic Challenges for French Companies
French businesses are under significant pressure. The Algerian-French Chamber of Commerce and Industry (CCIAF) recently warned about the negative impact of this diplomatic crisis, highlighting its effects on investment projects and trade partnerships. “The Algerian-French relationship has faced renewed tensions in recent days, unfortunately affecting economic collaboration, particularly investment and the development of prominent French companies in Algeria,” said CCIAF President Michel Bisac in a statement.
Key sectors such as automotive, agri-food, and maritime transport are seeing projects stalled or canceled. For instance, French investors like the CMA CGM group, a leader in maritime transport, had their investment plans scrapped due to political tensions. The CCIAF urges economic stakeholders to “unite efforts to advance value-creating investments in a spirit of mutual benefit, separate from current political tensions.”
Resilience of Trade Exchanges
Despite diplomatic challenges, trade between Algeria and France shows mixed results. In 2024, French exports to Algeria grew by 6.6%, reaching €4.8 billion, driven by sectors like transport equipment, mechanical, and electronic goods. However, a decline in Algerian exports, mainly hydrocarbons, led to a 4.3% drop in overall trade compared to 2023.
French foreign direct investment (FDI) in Algeria remains substantial, totaling €2.8 billion in 2023. These investments are primarily in the financial, industrial, and extractive sectors, where French companies continue to play a major role.
Future Outlook for French Companies in Algeria
French businesses must navigate cautiously amid these challenges. The CCIAF has called for maintaining economic partnerships despite political conflicts. The Chamber emphasizes the importance of preserving investments in strategic sectors to secure the future of bilateral relations.
