Economic Overview
The COVID–19 pandemic strongly affected Algeria in 2020. Notwithstanding the wellbeing cost, the pandemic added to other unfriendly turns of events, essentially the fall in oil costs, and dove the Algerian economy into downturn.
Genuine GDP shrank by 4.7% in 2020, in the wake of growing a unimportant 0.8% in 2019. The actions set up to contain COVID–19 had genuine ramifications for the assistance and development areas, cut many positions.
The fall in incomes from oil and gas trades added to a further extending of general society and outer shortages. The spending deficiency dramatically increased in 2020 to 13.6% of GDP from 5.6% in 2019 under the consolidated pressing factor of a drop in hydrocarbon incomes, which establish an enormous portion of public incomes, and high open spending to alleviate the monetary impacts of the wellbeing emergency.
The current record shortfall enlarged to 14.8% of GDP in 2020 from 10% in 2019 because of the country’s substantial reliance on hydrocarbon sends out and primarily high imports. Accordingly, the degree of unfamiliar trade holds has step by step declined, adequate to cover just a year of imports toward the finish of 2020, contrasted and 13.6 months toward the finish of 2019.
Main sectors of industry
Algeria, the second largest country in subcontinental Africa and which extends for four fifths into the Sahara desert, registers a large concentration of the population in the northern area and mainly along the Mediterranean coast, where the two main cities are located. the capital Algiers and Oran.
At the end of the 1990s, about 60% of the population was established in urban areas.
The Algerian economy is currently based on the production and processing of hydrocarbons (natural gas and oil); natural gas fields represent a fixed and constant income of the country’s budget in the long term.
Agriculture still occupies a large part of the active population, and the government is working to ensure that this sector, strongly rooted in the culture of the country, can increase its productivity.
In industry, the manufacturing sector and the processing of raw materials prevail.
The service sector is expanding and accounts for around 29% of GDP. The Public Administration contributes to the total growth for about 9.0% of the Gross Domestic Product.
The development of the private sector in Algeria has instead been severely hampered by the security problems of recent years, but also by the poor state of the country’s financial services and excessive bureaucracy. In addition, the regulatory system still remains inadequate and financial intermediation weak. The government is committed to addressing these problems although progress is still slow.
The contribution to GDP training is respectively 9% from the agriculture and fishing sector, 62% for industry and 29% for services.
Algeria is one of the main producers and exporters of oil and gas on the African continent and has significant resources. Oil and gas GDP at around 36% of, 60% of government revenues and 95% of exports.
Taxes in Algeria
The following are subject to global income tax (IRG): natural persons domiciled in Algeria, regardless of Algerian or foreign nationality (i.e. those who own a home as a property or usufruct or are tenants under a lease lasting at least one year; people who have both their main place of stay and the main center of their interests in Algeria; public employees who work abroad and who are not subject to taxation there), people who are not domiciled in Algeria who have income from Algerian sources, persons of Algerian or foreign nationality who have taxable income in Algeria by virtue of an international convention against double taxation, the members of partnerships and companies established for the purpose of exercising associated with arts and professions, members of civil societies (provided that they are not spa) and of associations in participation ion, unlimitedly and jointly liable, the majority managers of the s.r.l. and the managers of the s.a.p.a. by reason of the remuneration received in this capacity, the shareholders of joint-stock companies by reason of the dividends, fees, attendance fees received. Persons with a total net income not exceeding DZD 120,000, ambassadors and diplomatic agents, consuls and consular agents of foreign nationality are exempt from the IRG when the country of which they represent gives a similar advantage to diplomatic agents and Algerian consular posts.
Investing in Algeria
The Democratic People’s Republic of Algeria is one of the most interesting and attractive countries in North Africa and represents a very important business center, both from the point of view of domestic consumption, and as a platform for carrying out commercial penetration programs in the areas of neighboring countries. .
One of the ways of approaching the country is represented by the establishment of agents or distributors, able to effectively support the foreign company that intends to promote the offer of its products or services. The country has an articulated, detailed and stable legal system, in this case, as regards commercial and corporate law, it is inspired by the French Civil and Commerce Codes.
Algeria just amended its foreign investment legislation in 2020, limiting the controversial 51/49 rule to resale without local added value and strategic sectors. The supplementary finance law published on 4 June is a decisive first step to attract FDI (foreign direct investment) and the signal of an expected opening of the Algerian economy. Of course, much remains to be done to improve the business climate. Other regulatory texts are planned to change the image of Algeria and make the country more attractive.
Why Algeria? Because it is a continent country at the crossroads of Europe and Africa, it is a promising market able to offer a series of commercial opportunities. The challenge for the country is relatively simple:
finally build a diversified economy that no longer depends on oil price fluctuations.
successfully complete its energy transition by launching an extensive energy infrastructure program that runs on renewable energy while providing decent jobs and living conditions for its predominantly young population.
Algeria practically imports everything! The time has come for the country to undertake activities of producing goods and services that generate added value both in its domestic market and in exports. Therefore, it needs thousands of innovative and competitive small and medium-sized enterprises, and can only do so with the collaboration of foreign companies ready to invest sustainably in Algeria, transfer their know-how and train skills locally.