Algeria: Investing

FDI in Figures

Rich in natural resources and economically stable, Algeria has historically attracted decent FDI flows. However, inflows have been declining since the outbreak of  the COVID-19 pandemic and reached only USD 89 million in 2022 according to UNCTAD’s World Investment Report 2023, compared to a three-year average of USD 1.3 billion in 2018-20. On the other hand, the stock of FDI increased, reaching USD 34 billion in 2022, around 17.4% of GDP. Algeria witnessed a significant decline in FDI projects in the years following its peak of 28 projects in 2019. The country struggled to recover fully, experiencing only five projects in 2020 during the impact of the Covid-19 pandemic and 12 in 2022. In the same year, renewable and alternative power projects constituted 25% of the total FDI projects, reflecting the influence of Algeria's abundant hydrocarbon resources. Meanwhile, chemicals, coal, and oil and gas each contributed about one-sixth to the FDI projects in the country (data Investment Monitor). According to official data from the Algerian Investment Promotion Agency, the main investors in the country are the United States (29%), Italy (10%), France (10%), Spain (7%), United Kingdom (6%); whereas investments are mostly directed towards the industry sector (especially hydrocarbons), construction, transport, and agriculture.

Economic operators face various challenges, including complex customs procedures, bureaucratic hurdles, issues with financial transactions, and global price competition. Foreign companies in Algeria express concerns about the frequent changes in laws and regulations, increasing commercial risks for investors. Additionally, limited regional integration and import restrictions hinder the utilization of international supply chains. Until 2019, the participation of a foreign investor in an Algerian company was limited to 49% and foreign contractors are forced to find local partners for public tenders. However, the government of President Abdelmadjid Tebboune eliminated the so-called "51/49" restriction that required Algerian majority ownership of all new companies. The requirement is still in force for "strategic sectors", identified as hydrocarbons, mining, defence, the import of goods for resale in Algeria, and pharmaceutical production. In 2022, the government released supplementary regulations tied to the Investment Law issued in July. These regulations stipulate that foreign investors must cover a minimum of 25% of the total investment cost to have unrestricted repatriation of both the invested capital and its associated income. The government has also approved a new hydrocarbons law, improving fiscal conditions and contract flexibility in order to attract new international investors. As a result of the promulgation of this law, major international oil companies signed memoranda of understanding with the national hydrocarbon company Sonatrach. There are two main agencies responsible for attracting foreign investment: the Agence Algérienne de Promotion de l’Investissement (AAPI) and the National Agency for the Valorization of Hydrocarbons (ALNAFT). Algeria ranks 119th among the 132 economies on the Global Innovation Index 2023 and 164th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Algeria

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

According to the edict n°01/03 of 20 August 2001, any legal entity or natural person, public or private, can invest in economic activities concerning production of goods and services as well as in investments carried out in the framework of granting concessions and/or licenses. Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity. In 2019, the government eliminated the “51/49” restriction that required majority Algerian ownership of all new businesses, which remains in vigour only for certain strategic sectors such as hydrocarbons, mining, defense, and pharmaceuticals.

Acquisition of Holdings

Acquiring a majority interest in a local company is authorized in Algeria (with the exception of strategic sectors, including hydrocarbons, mining, defense, and pharmaceuticals).

Obligation to Declare

An investment declaration is necessary; it must be made to the National Agency for development and investment (ANDI). Consult the websites of these organizations to find out further details.

Requests For Specific Authorisations

Many products are subject to procedures to obtain prior authorization. See the list of controlled activities on the Register of Commerce website.

Office Real Estate and Land Ownership

Possible Temporary Solutions

There are several temporary solutions: domiciliation of the company at the private address of the director, domiciliation in a business center, and renting professional premises.

The Possibility of Buying Land and Industrial and Commercial Buildings

Investors can buy industrial and commercial property. There are several possibilities: either buying land from a private owner (the most expensive solution), or making an application to the Government, through the CALPI (Local Assistance and Promotion of Investment Committee), which allows you to acquire land at affordable prices. However, you must have an eligible and reliable project and the government generally prefers to lease land for 33-year terms, renewable twice, rather than sell. The CALPI office can be found in the one stop shop of the ANDI (National Agency for Development and Investment).
Property sales are subject to registration at the tax inspection and publication office at the Mortgage Register Center.  All property contracts must be registered by a notary.

Risk of Expropriation

According to Algerian law, foreign investors are entitled to a just and equitable compensation if they are victims of expropriation. The Constitution of 8 December 1996 provides legally-binding guarantees against expropriation and confers the right to equitable compensation.

Investment Aid

Forms of Aid

There are several types of advantages for setting up a foreign company in Algeria.

The various measures take the form of tax advantages, especially tax exemptions from 3 to 5 years, depending on the kind and the size of the business. Such incentives are subject to the application of a specific request with the ANDI. Companies must make their application when they make their investment declaration. Investors also benefit from the State taking over certain expenses (duty on transfers against payment for all purchases of real estate intended for investment, fixed duty as regards reduced rate registration for charters and increase of capital, etc.).

Privileged Domains

A temporary exemption from corporate income tax is available for investing companies creating 100 jobs or more, as well as for those investing in certain strategic sectors (i.e. advanced technologies, food industry, mechanics, automotive sector). Furthermore, the law provides a five-year reduction of IBS for companies who introduce securities on the stock exchange.

Privileged Geographical Zones

Areas of economic expansion have been established, located on the high plateau and in areas in the south. They allow investors taking part in regional industrial development, to enjoy exemption, for 5 to 10 years, from property tax on real estate purchases intended for economic activity and a reduction of 50% of the reduced rate applicable to reinvested profits.

Free-trade zones

Activities carried out in the Southern regions of the country (Illizi, Tindouf, Bordj Badji Mokhtar, Adrar, Djanet, Timimoun In salah, Tamenghasset, In Guezzam) enjoy a 50% reduction on the paid amounts of corporate income tax for a five-year period (does not apply to the hydrocarbon sector).
There are no special economic zones or foreign trade zones in the country.

Public aid and funding organisations

The FGAR, credit guarantee fund for SMEs/SMIs ( In French)

Investment Opportunities

The Key Sectors of the National Economy

Hydrocarbons, food processing, real estate, chemicals and retailing.

High Potential Sectors

In terms of needs, Algeria suffers from a housing shortage and has extensive needs in the health care sector. Furthermore, manufacturing is underdeveloped: Algeria imports most of its manufactured goods. Many sectors are booming: health, agriculture (nowadays, an important percentage of agrarian products is imported), information and communication technologies (mobile phone and internet), hydrocarbons, renewable energies, tourism, construction industry, infrastructure development (roads, railways, airports, ports, etc.), treatment and water management, banking sector, food processing sector, defence, automobile, mass retail. 

Privatization Programmes

Most public industrial and service companies are eligible for privatisation. Privatisation covers 1,200 economic public companies (EPE) and is a way of opening up the Algerian economy to the free market, legally recognised by the promulgation of a new legislative framework. The Pro investments organisation is available on-line on the website of the Ministry of Industry. In 2016, the government announced that 66% of the shares of a state-owned unprofitable company may be purchased by a private interest, provided that it is predominantly owned by one or several Algerian citizens. However, privatization programs of state-owned companies have been criticized by the public, as it remains a sensitive subject. To date, state-owned enterprises represent more than half of the formal Algerian economy; and privatizations have been limited to the water sector.
Foreign companies have been able to have complete ownership of an oilfield. Shale gas should also be open to foreign investors. Public banks privatisation has been planned for 2022.

Tenders, Projects and Public Procurement

Tenders Info , Tenders in Algeria
DgMarket , Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

In principle, there are no longer any monopolies in Algeria. However, some sectors of activity remain difficult to enter, such as the tobacco and hydrocarbon sectors.

Finding Assistance For Further Information

Investment Aid Agency

National Agency for Development and Investment

Other Useful Resources

Algeria Investment Guide

Doing Business Guides

Algeria Commercial Guide - trade.gov
International Tax and Business Guide from PwC

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