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Non-hydrocarbon exports

Trade Minister Saïd Djellab recently reported that non-hydrocarbon exports totalled €2 billion in the first 8 months of the current year, compared to only €1.2 billion in 2017. The Minister of Trade believes that this is only the beginning. According to him, the government will provide more resources and facilities for exporters. The Minister of Trade assures that a strategy has been put in place to improve the export of Algerian fruit and vegetables which, thanks to their superior quality, are in high demand on the international market.

A new strategy is born

The Minister of Trade pointed out that the government's policy to diversify exports "is not just limited to agricultural or agri-food products". The policy sets out a comprehensive strategy to encourage all non-hydrocarbon exports. Problems such as those relating to transport and the repatriation of foreign exchange are well on the way to being solved, said the Minister, who is very optimistic about the ability of national economic operators to sell their products on the international market. Saïd Djellab cites a few areas in which Algeria has export potential, such as pharmaceuticals, electronics, household appliances, mechanical engineering, steel, construction materials (cement, plaster, etc.), plastics and agri-food prodcuts. According to the Minister, two major logistics platforms are being finalized in Tamanrasset and Tindouf to sell Algerian products in Africa.

Algeria, which is excessively dependent on hydrocarbon exports, has embarked on a programme to diversify its economy by imposing restrictions on imports of certain products. But, for a multitude of reasons and problems, non-hydrocarbon exports are struggling to take off. To encourage exports, the government introduced last June an "export premium" for economic operators as part of the measures to support non-hydrocarbon exports. This export premium will be offers new support to exporters and will be provided by the Special Fund for Export Promotion (FSPE). This new aid is part of the revision of the procedures for granting State financial support through the FSPE, following an overall assessment of the management results of this fund in recent years. The current aid system is extremely cumbersome (owing to the time required to reimburse transport costs, etc.) and the new system would thus envisage the provision of direct aid to the exporter. The amount of this government aid will be defined according to the quantity exported by the firm, with the aim of enabling it to be competitive in terms of price, in line with what is practised in other countries.

Similarly, the Ministry of Commerce is currently working on other initiatives to promote exports, particularly those from the agricultural sector. These include the creation of a consultative space, called the Export Club, which would allow exporters to express their concerns in an organized manner. In addition, a practical guide, containing all the procedures required for carrying out international trade, has been drawn up for exporters. The ministry also announced that it would grant approved exporter status to agricultural producers, in order to enable them to carry out their export operations in the best conditions. At the same time, Saïd Djellab is working over the medium term (2019-2023) on the identification of themes for a new national export strategy (NES) to promote non-hydrocarbon exports. The NES is being developed in collaboration with all the relevant

ministerial departments and public agencies together with the technical support of international organizations. The content of this strategy, which will focus on agricultural products in its first phase, will be unveiled very soon. Following agricultural products, the working groups will then shift the focus of this five-year strategy onto exports from the manufacturing sector.


Cement, textiles, iron and fertilizers will be exported

Ten million tonnes of cement and 18 million textile cuts, in addition to iron and fertilizers, will be exported to America in the coming years as a result of the production surplus, according to the Industry and Mines Minister, Youcef Yousfi. The Minister explained that the oil price drop in 2014 "was one of the key reasons behind the diversification of the national economy in the manufacturing sector, in a similar fashion to what happened in tourism and agriculture." Taking the manufacture of concrete reinforcing bars as an example, he explained that "the preoccupation with supplying building sites with materials for the construction of 4 million homes meant that we exported 6 million tons of cement and large quantities of concrete reinforcing bars and ceramics. We were able to achieve self-sufficiency before exporting the surplus, which totalled 3 million tons in 2017. The surplus in the future will reach 10 million tons.” The minister disclosed that the Gika group accounts for 50% of the national production while various private producers provide the remaining 50%. The Minister also revealed that Algerian textiles are now sold on the European market following the opening of the Relizane plant whose expansion is due to be completed within the next 4 years. The plant employs 25,000 people and produces 30 million sheets of fabric, 60% of which will be exported.

The Minister stressed the importance of the phosphate transformation project, recently launched in Tébessa (at a cost of 1500 billion DA). The plant will process up to 4 million tonnes of fertilizers, such as ammonia and phosphate, three million of which will be exported via Annaba, a port which will also facilitate the importation of raw materials. Regarding the partnership with the Saudi Arabia, Yousfi said that his ministerial department and Sonatrach will, within the next ten days, hold meetings with Saudi petrochemical giants, such as Saipec, in order to discuss a petrochemical industry project as well as joint private projects. "In order to conquer markets, it is imperative for national exporters to have access to financial support abroad," he said.

These official statements are supported by those made by the president of the National Association of Algerian Exporters (Anexal), Ali Bey Nasri, who spoke on the national radio (Channel III): "Winning contracts abroad requires the fulfilment of certain requirements relating to the state", the president said. He added that Algerian exporters "are in the process of putting themselves in order, explaining to the government the role it must play in synchronising, coordinating and facilitating a logistics and banking support policy, which is very much needed by economic operators to be able to invest in foreign markets on a sustainable basis".

Turning to the deployment of economic operators on the African continent, he said that Algeria's recent organization of a trade fair in Nouakchott, the capital of Mauritania, "was a good start to acquire the African market", describing Algeria's contribution as "very successful", highlighting the participation of 170 Algerian companies from all sectors. He pointed out that, during the event, "many contacts had been established with Mauritanian partners", adding that it had led to the creation of an Algerian-Mauritanian Business Council. In a similar vein, the President of L'Anexa added that the inauguration of this fair had enabled the Mauritanian market, "which we had lost a long time ago", to be regained.

For him, the strong presence of national exporters at this trade show "reflects their great interest in promoting their products, both to Mauritania and to other countries on the continent". According to him, the success of this challenge depends on political will. The question that needs to be asked is:

how do we win international markets, if the law does not help exports? "There are a number of prerequisites to be met", he added, stressing the need for a "reform of exchange regulation". The presence of Algerian banks in countries open to Algerian products "is vital to win markets, and it is imperative for national exporters to have access to financial support abroad". Ali Bey Nasri pointed out that Algeria "only exploits 10% of its borders (which total 6,300 km) with the rest of Africa". To do this, he proposes to set up three economic platforms in the East, West and Centre regions, from which, he explains, "importers could come to procure domestic products".

In another chapter, it is recalled that during an information day for the promotion of non-hydrocarbon exports held in Constantine, Nasri considered that export diversification "inevitably requires facilitating investment". By way of explanation, he added that "this investment can help the country's development, and diversify its export capacities to better integrate into the global economy. We should not forget that it is essential to update and multiply trade opportunities and establish relations with markets close to Algeria, following the example of the West African Economic Union and the Community of West African States (ECOWAS)". In its latest report on the Algerian economy in crisis, the Crisis Group highlights a dangerous dependence on oil and gas revenues (97% of exports, two thirds of the state's resources) and depleting reserves.

These various factors have made Algeria vulnerable to global commodity price fluctuations, which could turn the economic decline, which began in 2014, into a crisis of political legitimacy. Successive Algerian governments have recognized this. Abdelmalek Sellal, called in 2016 for a "new economic model" to reduce the role of the state and consolidate the private sector, while limiting dependence on oil and gas revenues. Nevertheless, Algeria still has considerable room for manoeuvre to devise a new approach, mainly because of its low external debt, which is less than 2% of GDP.

Translated by James A. Pollard

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