Our comprehensive assessment of Algeria’s operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Algeria, as well as the latest industry developments that could impact Algerian industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Algeria before your competitors.
Algeria Country Risk
As a result of ongoing political violence, a significant degree of productive capacity (both physical and human) throughout the Libyan economy has been lost. Road, housing and utility infrastructure have suffered considerable damage and will take years to repair under even the most stable of political environments. Moreover, given the importance of the hydrocarbon industry, damage to oil production and refining infrastructure will pose significant long-term challenges.
Libya's political climate will remain volatile through 2015, as competing militias compete for control over the country's vast resource wealth.
A lack of institutional capacity will hamper reconstruction efforts. Libya lacks the institutions necessary to carry out much-needed investment projects.
Low oil prices, coupled with...
Algeria Industry Coverage (10)
BMI View: W ith wheat and dairy production falling Â consistently short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on improving food self-sufficiency is helping the grains and dairy sectors to rebound . Increases in government support will be positive for productivity and product quality in the medium term. However, the country will remain a key importer of wheat and dairy products in the coming years. Algeria is increasingly expanding trading links with countries such as Brazil and India,...
In November 2014, Renault is set to officially open its new Algerian production plant atÂ Oued Tielat, with the first Symbol model set to be coming off the production line on November 10 2014, just after this report was written. BMI believes that the commencement of local production by Renault should prove transformative for the local auto production and supply chain sectors and we will report fully on the official launch of local productÂ on in our next quarterly update.
Ahead of the official launch, Renault AlgÃ©rie has been carrying out extensive media promotion activities, including the launch of 'teaser trailers' on its YouTube channel.Â The factory's initial output will stand at 25,000 vehicles per annum, but this will steadily rise to 75,000 vehicles a year, primarily for sale locally.. Recent media reports indicate that there is currently 12% local content being...
Food & Drink
Algeria Food & Drink
BMI View: Â We recently revised upwards our forecast s for economic growth in Algeria , and now expect to see nominal GDP growing at a compound annual rate of 10.9% between 2014 and 2018 (up from a previous forecast of 8.3%), as we are more positive about private consu mption , and expect to see strong growth across the food and drinks sector . W e continue to view inflation and political unrest as the biggest risks to consumption.
Headline Industry Data
BMI View: Algeria's construction sector saw relatively healthy growth in 2014, and with an uptick in GDP growth forecast in 2015 we expect this trend to continue moving forward. The government is launching an extensive new five-year development programme, including wide-ranging investments across a number of public infrastructure projects, with USD262bn due to be allocated.Â Prime Minister Abdelmalek Sellal has also reiterated a commitment to encouraging more foreign investment, indicating a range of opportunities for international firms. Despite a contraction in the oil and gas sector, Algeria's large reserves mean we expect to see public spending continue to rise, supporting our positive growth forecasts for the country's construction sector.
The key trends and developments in Algeria's infrastructure sector are: Â
Construction industry value is expected to...
BMI View : Â We believe life insurance penetration in the North African region will remain low due to the lack of affordability among households . Furthermore, we see an increasingly likelihood of consolidation among the regional markets in the coming years due to the large number of sub-scale insurers which lack capital. We also see an opportunity for the larger insurers to expand beyond their domestic shores into other African markets.Â
Life penetration in all the four countries profiled in this report - Algeria, Morocco, Tunisia and Libya - is low and we expect it to remain so over the coming years due to the low levels of income of many households. However, Morocco is the only country where life insurance hasÂ become somewhat established as a conduit for organised savings. Even then, it is used by...
Oil & Gas
Algeria Oil & Gas
BMI View: Despite Algeria's substantial hydrocarbons reserves, rapid production decline in the country's major producing fields weighs on its longer-term production outlook. Whilst new projects due online in the coming years will offer temporary support to production growth, we grow increasingly bearish towards the end of our 10-year forec ast period. The high prospectivity of Algeria's unconventional and offshore acreage could see this trend reversed, but a poor above-ground environment continues to drag on international investment.
BMI View: Algeria focuses on low added-value production, relying on commodity chemicals that are highly price- responsive to market fluctuations and easily undermined by capacity elsewhere in the world.
The industry is far from competing on equal terms with European petrochemicals producers with regard to product diversification. As such, it will be vulnerable to market fluctuations in the narrow range of products it produces, although the effects on margins should be cushioned by the local availability of competitively priced feedstock.
Key BMI Forecasts
Algeria's petrochemicals market is likely to witness a steady improvement in growth in 2015. This is driven mainly by domestic demand and public investment activity....
Pharmaceuticals & Healthcare
Algeria Pharmaceuticals & Healthcare
BMI View: Â Against a backdrop of economic growth, the Algerian government commitment to expand and upgrade medical coverage and healthcare services in Algeria will translate in growing commercial opportunities for pharmaceutical and healthcare industries over the medium term. Also, the government ' s new five-year investment plan to be implemented in 2015-2019 will focus on diversifying the economy through the promotion of industrial development, including the pharmaceutical industry. In line with such broader investment plan, the Algerian government recently signed an agreement with US multinational firm General Electric to support the modernization of the health system, and will continue promoting investment opportunities and conducting meetings with potential business partners from different countries. However, Algeria ' s weak...
BMI View: Despite Algerian government's efforts to spur the development of renewable energy in the country, conventional thermal sources are expected to remain the dominant fuel for electricity generation in the coming years, with many power projects under construction or planned that will use natural gas. We estimate 2013 total power generation in Algeria was 50.4TWh , having risen 3.8% on the 2012 level. We forecast an average 4.7% annual increase to 60.9TWh between 2012 and 2017. Thermal generation, comprising coal, gas and oil, is expected to grow at a similar pace - by 4.7% per annum and is forecast to reach 60.3TWh during the period to 2017.
We forecast Algeria's power...
BMI View : The strong demand for mobile data services in the North Africa n telecoms markets is driving investments in network upgrade and expansion, with operators in Algeria, albeit from a low base, and Morocco leading the way in capital expenditure ( capex ) spending in 2014. The uptake of 3G network services in this region, aided by the increasing availability of low-cost smartphones, will allow mobile operators diversify their revenue streams away from basic services amid increased regulatory and competitive pressure. Libya is still left out of this development trend, with insecurity and political stability delaying a much - needed liberalisation process in the telecoms sector and...