Algeria, as a mature hydrocarbon economy, has shown consistent growth in recent years, with the country’s Gross Domestic Product (GDP) increasing by 3.4% in 2021 and 3.2% in 2022.
The surge in global natural gas prices has more than compensated for the drop in oil prices, resulting in substantial export income, a quick buildup of foreign reserves, and a decrease in the budget deficit. Outside of the oil industry, economic activity accelerated in 2022, supported by a continued rise in private spending.
Also read: Top 5 investment opportunities in Algeria’s energy market
According to the World Bank, non-hydrocarbon industries are likely to lead development in 2023 and beyond, with several sectors spearheading economic growth.
Green Hydrogen Attracts Global Players
Following in the footsteps of Morocco and Mauritania, Algeria is also entering the green hydrogen race. In April 2023, the country unveiled a national hydrogen roadmap aiming to supply Europe with 10% of its clean hydrogen needs by 2040. The plan includes producing blue hydrogen, derived from fossil gas with carbon capture and storage, and green hydrogen from solar and wind power. The roadmap outlines three phases, starting with pilot projects, followed by expansion and market creation, and finally industrialization and market competitiveness.
Italian energy infrastructure company Snam reportedly has plans to pump hydrogen from Algeria to Italy via pipeline and then on to Germany and Austria. As such, this promising industry is bound to attract a strong slate of players eager to tap into Algeria’s renewable energy resources.
Renewable Energy Drives Diversification
Algeria has launched a renewable energy program to solidify its position as a major electricity producer from sources like photovoltaic and wind power, biomass, cogeneration, geothermal, and solar thermal energy. The country plans to achieve 15,000 MW of solar energy by 2035, thereby diversifying its gas-centric energy mix.
Solar kits have been distributed to remote villages and nomadic populations as part of this effort, bringing positive impacts such as lighting, phone charging, and television to users. To meet the national target, the public company Sonelgaz has issued a tender for the construction of 15 power plants that will produce 2,000 MW of photovoltaic solar energy.
Mining Prospects Entice Regional Operators
The Algerian government has placed major mining projects at the top of its agenda. Chinese and Russian operators have traditionally been Algeria’s partners of choice, but Algiers now wants to open up to Western firms, including French companies on the lookout for rare metals. As part of its plan to revive the sector, the government is set to invest between $7 billion – $10 billion in a large-scale mining project: the Djebilet iron ore mine in western Tindouf. Efforts to diversify the economy further through mining have made the country a highly attractive mineral play.
Growing Opportunities in the Agriculture Sector
Algeria regards agriculture as an essential component of the country’s economic growth strategy. According to the country’s Minister of Agriculture and Rural Development Mohamed Abdelhafid Henni, the Saharan region has received 4,000 investment proposals as of July 2023. The Circular Economy and Agriculture Committee is working on a national plan to balance economic growth and environmental conservation by improving agricultural waste management and guaranteeing the prudent use of water resources. This effort will aid in the strengthening of Algeria’s food systems. Investors are invited to help grow this industry.
Also read: Largest gas fields in Algeria by production
Connectivity Strengthens Tourism
The Government of Algeria recognizes the need to invest in new economic areas such as tourism. Strategically located in close proximity to European markets, the nation’s diversified scenery, which includes mountains, coasts and Saharan areas, makes it an attractive tourist destination. The national airline Air Algérie has made great strides towards extending its route network in order to enhance the number of visitors in the country, as seen by its tentative timetable for the Algiers to Addis Abeba route. This connection provides several options for both business and pleasure tourists. In addition, the airline has launched its longest African route, from Algiers to Johannesburg.
As connectively strengthens, Algeria’s tourism industry is poised to make even greater contributions to the domestic economy, triggering a wave of developments across the transportation, hospitality, conservation and events industries.
