The African Free Zone .. Does Algeria have the competitive capabilities in the continent's markets?

The Algerian government is preparing to formally join the African Continental Free Trade Area on January 1, 2021, after parliament approved on September 24 the draft law establishing the free trade zone, signed in the Rwandan capital, Kigali, on March 21, 2018.

At that time, Trade Minister Kamal Rezig emphasized that entering this zone would enable Algeria to take advantage of the available potentials and opportunities available on the continent.

Under this agreement, tariffs for intra-African trade will be phased out by 90% of the tariff items, over a period of 5 years for developing countries, and 10% for least developed countries, starting early next year.

Currently, the volume of Algerian trade exchanges with the African region does not exceed 3% of the total exchanges, which puts it in the 20th place out of the total importing countries to the continent, according to Rezig, while the trade balance between Algeria and African countries reached 830 million dollars in 2019, according to official figures.

Therefore, the Algerian authorities have high hopes for benefiting from the size of the African market estimated at 1.2 billion people, and trade exchange around 3 trillion dollars, with a continental GDP of 54 African countries totaling 2.7 trillion dollars.

Algeria expressed, according to its first minister, Abdelaziz Jarad, its hope that the obstacles facing the intra-trade movement will be overcome to open up broad horizons for the development of the countries of the continent.

To the extent that this shift towards the African region is of great importance for foreign trade, as Algeria is trying to establish land outlets across its vast desert, depending on a car road north-south (under construction), waiting to equip the Hamdaniya port in the Tipaza governorate (49 km west of the capital), in partnership with China. It is an African crossing of what is known as the New Silk Road. Experts warn of the unpreparedness of the Algerian economy.

The trade balance between Algeria and African countries amounted to 830 million dollars in 2019, according to the Ministry of Trade (Al-Jazeera)

Strategic choice

A professor at the Higher National School of Commerce, Abdelkader Berich, said that Algeria's accession to the African Free Trade Zone is a strategic option, and an opportunity to diversify exports and axes of economic partnerships according to the "everyone is winning" rule and to achieve the goal of reducing dependency on the hydrocarbon sector.

He explained that the capabilities inherent in African economies are an opportunity for Algeria to devise a strategy to enhance the competitiveness of national institutions, and to acquire market shares, especially in the food processing industries and electronic and home appliances.

Berich confirmed, in a statement to Al-Jazeera Net, that Algeria has commercial relations with only 24 of the 54 member countries of the African Union, while its trade exchanges in Africa represent 3% of its total foreign dealings, as it is mainly concentrated with the countries of the North of the continent, especially with Egypt and Tunisia. .

On the other hand, Berich expected that raising intra-African exchanges, from 15% to 55% after 5 years of the entry into force of the agreement, will contribute to increasing the flow of foreign exchange and reaching $ 5 billion in non-hydrocarbon exports during the year 2021, which is the goal set by the President Abdul Majeed Tebboune for the government.

Paper against the European Union

Berich considered that going to the African market is a card in Algeria's hand to ease the pressure exerted by the Europeans and to renegotiate the association agreement with the European Union.

Berich stressed that the Union remains the first partner to Algeria, and its establishment of partnerships and dealings with other partners, such as the African market, China and Turkey, is not an easy process in the short term, and he justified the proximity of the distance and logistical readiness, in addition to the economic strength and the diversity of the economies of the European Union countries and technological superiority.

This is what made it raise the challenges posed by the African market, especially the problems of readiness and professionalism in export, the removal of bureaucratic procedures and customs and banking obstacles.

He also warned that Algeria is not a member of 12 economic blocs in Africa, which are linked by agreements and special preferential advantages, not covered by the African Free Trade Agreement, and this may hinder its continental competitiveness, as he put it.

Berish considers the African Free Zone a strategic option to diversify exports (Al Jazeera)

Lack of readiness

On the other hand, the economist Abdel Rahman Aya does not expect Algeria to achieve its full economic goals in Africa, because the region is the subject of a quiet struggle between powerful countries, such as European countries, the United States of America, then China, and even developing countries such as Turkey and Brazil, and others such as the UAE and Saudi Arabia. And Egypt, Morocco and Lebanon.

Aiyeh said that American and Chinese funds in particular are the biggest incentive for African countries to prefer establishing an economic and trade partnership outside the continent.

He explained to Al-Jazeera Net that there is neither on the list of customers nor the financiers of Algeria any African country that has a commercial exchange worth mentioning, except for Tunisia with a value of 0.7 billion dollars, and even the export of cement does not exceed 100 million, which is also a raw material like petroleum.

Aiyeh stressed that the partnership agreement requires first of all the development of national production outside of oil and gas crude, which is the opposite of what we find in Algeria, whose petrochemical industry is witnessing a major deterioration due to the aging of production machinery.

He added that public and private economic companies outside the hydrocarbon sector are experiencing unprecedented financial difficulties, and even the auto installation units are unknown.

With regard to agricultural products, Algeria lacks self-sufficiency in basic food commodities, such as wheat, milk and grains, and a huge number of industrial food commodities, as their import bill is estimated at about $ 9 billion annually.

And he added that the export of fresh agricultural products requires storage and cooling capabilities that are not sufficiently available in Algeria, and due to the Corona pandemic, the prices of dates, for example, recorded a historic collapse in 2020, as a result of weak export logistical capabilities.