Sixty years after its independence, Algeria is still not in control of its economic destiny.

On the edge of the abyss after the fall in hydrocarbon prices between 2014 and 2021, the state coffers are once again full thanks to the rise in energy prices caused by the conflict in Ukraine.

In 2022, Algeria should thus pocket 58 billion dollars (about 55.6 billion euros) against 34 billion last year, according to forecasts by the International Monetary Fund (IMF).

“Hydrocarbons still make up around 95% of exports today and contribute more than 50% to budget revenues,” says economist Alexandre Kateb, founder of The Multipolarity Report.

Vulnerable to external shocks, Algeria is however struggling to get out of this overdependence on hydrocarbons as the energy transition is announced in many importing countries.

Pending reforms

In September 2020, the head of state, Abdelmadjid Tebboune, pleaded for "a major banking reform, a major tax reform", promising "an economy open to the world", recalls the Middle East Eye site.

But two years later, major structural changes are slow to materialize and the Algerian economy suffers from the same ills: an omnipresent bureaucracy, uncertain taxation, a lack of industrial strategy and an excessive weight of the public sector.

The only major advance to be credited to the government in modernizing the country's economy is the relaxation of the rules for investing on its soil.

Algeria notably abolished the "51/49" rule, which prohibited foreign investors from holding more than 49% of the shares of a company.

A signal of openness intended to promote the business climate while the country has two to three times less foreign investment than its Moroccan neighbor.

Under-exploited "human capital"

However, Algeria has considerable assets to diversify its sources of income: a rich subsoil and "an energy sector which could support the reindustrialization of the country", explains Alexandre Kateb.

"With its exceptional sunshine", Algeria also has a card to play in "the large-scale development of renewable energy projects".

The Algerian power is also counting on tourism to limit its dependence on income from gas and oil exports.

But here again, the sector is struggling to take off and only brings in 300 million dollars (about 288 million euros) per year against more than 13 billion for Morocco in 2019 for example.

In question, the lack of infrastructure, the high prices of plane tickets but also the need to obtain a visa for foreign travelers.

Algeria also has an extraordinary "human capital" which is largely under-exploited, according to Alexandre Kateb, "in particular a young population which benefits from a high level of education compared to countries which have reached the same level of development. ".

An opinion shared by the economist Camille Sari, president of the Euro-Maghreb Institute for Studies and Prospectives, who deplores in Algeria "a system of privileges and pistons which does not give young graduates a chance but allows on the contrary to the system to reproduce" and prevents the emergence of a true "meritocracy".

"It is also one of the consequences of the rentier economy. This human capital finds itself marginalized since the sectors which could employ these young people are insufficiently developed. One can think in particular of the new technologies sector", notes Alexandre Kateb.

According to World Bank data, unemployment among people under 24 in Algeria is around 32% in 2021. Since March, an allowance of 13,000 dinars (about 80 euros) has been granted to unemployed young people, as well as health coverage.

Absence of "political vision"

But while the coffers of the State are once again full thanks to the surge in the price of hydrocarbons, certain economists are worried to see the reformist accents of Algiers falling definitively into oblivion.

"It is surprising that the Algerian power, whatever the economic situation, does not take advantage of these exceptional revenues to inject these surpluses into the real economy", estimates Camille Sari.

"The problem is that there is no political vision", adds the economist, who denounces corruption and the dominating role of the army in the Algerian economy.

"This is the difficulty of an economy which, historically, has been managed vertically. Changing this requires a real cultural revolution", analyzes Alexandre Kateb, who calls for an overhaul of the system of governance and the revitalization of the sector. private.

But, according to Prime Minister Aïmene Benabderrahmane, Algeria is on the right track.

"Non-hydrocarbon exports have reached a level not seen since independence," said the head of government in an interview during the drafting of the 2022 finance law.

In 2021, the country has indeed managed to post the figure of 4 billion dollars (about 3.8 billion euros) of non-hydrocarbon exports and hopes to reach 7 billion dollars (about 6.62 billion euros) in 2022, recalls Courrier international.

"The ball is now in the court of the Algerian leaders and their ability to exploit this windfall to invest it wisely", assures Alexandre Kateb, "rather than using it to buy social peace and perpetuate the model of pension".

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