Raising awareness: OBG talks to Lady Olga Maitland, Chair, Algeria Britain Business Council
The Report: Algeria 2012 – Country Profile
To what extent is Algeria’s market liberalised in relation to foreign direct investment (FDI)?
MAITLAND: Algeria has a long way to go before reaching full and open liberalisation, which when it happens, would serve as a big invitation for foreign investment. But at the current time it does undoubtedly keep investors out. The 51:49 rule is not as large an obstacle as it is often made out to be, at least based upon our conversations with most firms currently active in Algeria. But other issues, such as the repatriation of profits do certainly complicate things and in some sectors, regulatory mechanisms can be troublesome. Furthermore, while strategic sectors are fairly clear, and while government priorities are made evident, companies nonetheless have difficulties finding out the exact details of what the projects are and how to go about it.
However, it’s far from impossible. Algeria is a new pasture that is certainly worth seeing to, although to an extent things are very opaque, which new investors may find constraining. Yet the country has long-term potential – what people need to do is spend time getting to know the market and build up personal relationships. This unfortunately limits trade and investment from small and medium-sized enterprises (SMEs) – particularly British SMEs, which don’t have as large a support system in Algiers as the French, Germans or Spanish or even the Turkish. UK SMEs lack the capacity to do prospecting to the same extent as larger firms. We now have a trade envoy to Algeria, Lord Risby, but there is a need for a more sustained presence to help smaller investors and firms get information on where the contracts are and who the prospective partners are.
What measures can foreign investors adopt to take advantage of the market’s potential?
MAITLAND: First of all, they have to be prepared to visit the country. And visit again and visit again. Drink the mint tea. A real effort has to be made, which requires an investment of time and manpower to go out and build up their profile and their presence and relationships. Unless they do that, they won’t get anywhere. Starting a new project remotely in Algeria is simply not realistic.
Speaking from the British investor’s perspective, there is a general lack of awareness and knowledge about the country and the market. There’s a lot of educating that needs to be done about the vast potential in Algeria – for the opportunities are there, as has been made clear by the scale and scope of work done in recent years. Firms need to have a long-term approach, but the potential is enormous.
Which sectors offer the most tangible opportunities for foreign investors?
MAITLAND: The most obvious is undoubtedly construction, as Algeria is building like no tomorrow.
Amidst all that construction, there is a need for a host of services to go along with it – maintenance, security, air conditioning, windows, whatever makes a building bustle. Companies from Turkey, China and Korea benefit from cost-competitive advantages, of course, but Algeria is diversifying its investor base.
The same applies in the oil and gas sector. Algeria refurbishing several of its production sites, because in some cases the equipment is 40 years old. And it’s not simply the big equipment, such as wellheads, but all the products that support it, such as steel structures and so forth.
In agriculture, there are huge opportunities given the fairly limited production capacity in certain areas, particularly as Algeria is trying to limit its imports of food products. And frankly, in some segments, the country is reliant on imports even when it has sizeable potential of its own. A portion of Algeria’s milk, for example, is imported from New Zealand, where it is dried and then reconstituted upon arrival here before being re-sold – highlighting the potential for diary companies to establish local facilities.