Investment in Algeria: a rich environment of opportunities

To this end, a new investment code was promulgated in 2022 to consolidate and improve this attractiveness. This new investment code offers several tax advantages and new measures to facilitate investment in Algeria. A summary of the main features is presented below:

 - Tax benefits:

Under the new investment code, there are three (3) regimes offering a range of tax benefits and financial incentives, including exemptions during the construction and operating phases (reductions in corporate income tax, property tax, VAT, customs duties, etc.), depending on the sector of activity, the investment zone and certain key investments.

Investments in mining and quarrying, agriculture and fishing, industry (agri-food, pharmaceuticals and petrochemicals), renewable energies, tourism, services and technologies benefit from tax incentives linked to the business sector regime.

Investments in :

-localities in the High Plateaux, South and Deep South,
-localities requiring special support from the State,
-localities with natural resources to develop.

Under the structural investment scheme, tax incentives are available for investments with high job and wealth creation potential, or which are likely to increase the attractiveness of the localities where the investments are made and create a knock-on effect for economic activity.

 - Simplification and facilitation of administrative procedures:

Following the provisions of the Investment Code, a one-stop shop has been set up to simplify administrative procedures for investors. The one-stop shop acts as a single point of contact for investors, providing them with the support they need to bring their investment project to fruition, thus facilitating their entry into the Algerian market.

 In addition, to ensure greater transparency in the awarding of contracts and markets, mechanisms have been set up to boost investor confidence and guarantee fair competition. These mechanisms can be summarized as follows:
 

-To ensure wide dissemination and visibility for investors, principals are required to publish all invitations to tender on accessible media,

-For greater clarity, principals must establish clear and transparent evaluation criteria for the evaluation and selection of bids,

-To avoid any risk of favouritism, bid evaluation and selection committees must be set up,

- For all complaints relating to the selection and award of contracts and markets, appeals are provided for.

-Reports on the progress of investment projects and the awarding of contracts are published regularly.

- Investor protection:

To help create a climate of confidence and reassure investors that their assets will last, the new investment code offers guarantees to protect foreign and domestic investments against any form of expropriation or nationalization, except in cases set out by law in return for compensation. The code also provides for

-The free transfer abroad of profits, dividends and proceeds from the sale of assets, in compliance with foreign exchange regulations.

-Legal certainty by guaranteeing the stability of the rules applicable to investments for the period specified in the contract, to protect investors against any change in the legal and regulatory framework governing investments, particularly in tax matters.

-Protection of foreign investors against all forms of discrimination, specifying that they enjoy the same investment rights as domestic investors.

-The possibility for investors to have recourse to various dispute settlement mechanisms, including international arbitration (foreign investors).

-Protection of intellectual property rights (trademarks, patents, copyrights) to guarantee investors, particularly foreign investors, protection of their innovations.

- Encouraging innovation:

Aiming to encourage local innovation, the new investment code includes incentives for research and development (R&D).

As a result of these measures, and given the country's ever-growing economy, Algeria offers attractive investment opportunities, particularly in the energy and mining (hydrocarbons), agriculture, tourism, industry and technology sectors. However, investment opportunities linked to hydrocarbon activities will not be addressed, as these activities are governed by a specific law (Hydrocarbon Activities Act).

- Investment opportunities:

As part of its policy to diversify its economy, Algeria offers real investment opportunities in several fields other than the hydrocarbon sector, particularly with the advent of the new investment code, have to be promulgated in 2022. The following is an overview of the investment opportunities available to investors interested in the Algerian market, particularly in key sectors such as agriculture and agri-food, infrastructure and construction, manufacturing, tourism, information and communication technologies (ICT) and banking.

Agriculture and agri-food industry:

To ensure food security and reduce food import dependence, Algeria encourages investment in these areas through tax incentives, low-interest bank loans, etc.

 The following investment opportunities have been identified:

 -Developing agricultural projects to produce cereals, olive oil, fruit and vegetables in various country's regions.

-Invest in agri-food industry projects for the production of olive oil and dairy products in particular.

Infrastructure and construction BTP:

Given that the infrastructure and construction sector is an important area of Algeria's development plan to modernize its infrastructure, several large-scale projects are included in the construction program:

-housing, renovation of urban districts and modernization of urban infrastructure,

-transport infrastructure (roads, freeways, railroads, ports and airports) and logistics (industrial zones, dry ports).

Many investment opportunities exist in public infrastructure, housing construction and the supply of materials and equipment.

Industry:

Industry is a privileged field of activity in Algeria, insofar as it is listed as one of the important objectives to be achieved as part of its economic diversification policy. Opportunities include

 - the  mechanical engineering industry: This field of activity, to which the State attaches great importance, represents an excellent opportunity for foreign investors in the production and assembly of vehicles, components and spare parts, as well as in manufacturing technology,

-other industrial activities involving the production of components and parts for products and equipment used in the textile, metallurgy, electronics, household appliances and new and renewable energy industries.

Tourism and hotel infrastructures:

Endowed with a diverse tourist heritage (unique tourist sites in the Sahara, archaeological sites, Mediterranean beaches and enchanting landscapes), Algeria presents excellent opportunities for investors in this largely under-exploited field of activity. It should be noted that the tourism sector, to which the State attaches particular importance, benefits from various facilitations and incentives enabling interested investors to build hotels and tourist complexes in various regions of the country (particularly in the South and along the coast).

Information and communication technologies (ICT):

The development of information and communication technologies (ICT) is also an area of activity favoured by the State, as it is central to the country's economic and social development policy, and as such benefits from various tax incentives and advantages. Algeria has made substantial progress in ICT development and has been ranked by the International Telecommunications Union (ITU) as the third most dynamic country in the world in this field.

As the ICT sector is growing rapidly, improving Internet connectivity and making it more widespread for the benefit of the population and economic players is a priority for the public authorities, who will continue to take the necessary steps to achieve the objectives set. There are many opportunities in this area, which can be summarized as follows:

-Investment in the digital economy (creation of digital platforms, development of mobile applications, fintech solutions, telemedicine, database security systems, etc.),
-Provision of infrastructure (e.g. antennas and satellites) and digital technology services (e.g. e-administration),
-Investment in e-learning to train and develop local ICT skills.

Banking and finance:

Algeria has taken some steps to modernize its banking and financial sector, aiming to align with the new regulatory framework governing investment in Algeria and thus attracting foreign investment.

Within this framework, investment in banking and financial services, fintech solutions and online banking services represent real growth opportunities for interested investors.

If you would like a detailed analysis of the investment environment in Algeria for a specific sector, and the challenges you may face as a local or foreign investor, please contact us.