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Algeria: Change long overdue | Analyst Picks | RiskMap 2020

Algeria

Algeria risk forcast

Change long overdue

The potential of the vast and largely unexploited Algerian market will continue to be dogged by political uncertainty in 2020. If 2019 was the year of change from the leadership of Abdelaziz Bouteflika, 2020 should be the year of change towards a new system of government – or at least a changed political elite. How much difference this will make to foreign investors looking at Algeria remains highly uncertain.

What is certain is that the military will maintain its influence behind the scenes and ensure that political stability and security are maintained. Also certain is that the protest movement, which forced former president Bouteflika to resign in April 2019, will persist in 2020 and will continue to demand a more radical break with the past. This is especially likely if other anti-establishment protest movements continue to proliferate regionally and globally.

Add to these political pressures the significant economic challenges that Algeria faces and the job of a future president looks decidedly difficult. Any incumbent will likely look to improve parts of the country’s regulatory environment to attract urgently needed foreign investment. The ailing oil and gas sector needs a rapid overhaul to boost production levels that have fallen through lack of investment and faced increasing demand from domestic consumption. The government is also keen to curb the fall in foreign currency reserves by encouraging local production and economic diversification to redress the trade deficit.

However, efforts to improve the regulatory environment for foreign investment will be slowed by resistance from the protest movement and from elements of the state bureaucracy where statism and hostility to foreign investments remain entrenched. The persistence of the protest movement will also fuel uncertainty over how long the establishment will tolerate it and whether violence and disruption to commercial activity will eventually increase.
 

 
 

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