Algeria - Market ChallengesAlgeria-Market Challenges
Starting a business in Algeria remains a lengthy, bureaucratic, and difficult process. An investment policy implemented in July 2009 requires an Algerian majority (51 percent) stake in any new investment or business, often called the “51/49 rule.” Algerian law requires foreign investors to re-invest within four years the value of any investment tax incentives received or face a 30 percent penalty.
The attractiveness of the Algerian investment environment is reduced by commercial laws and measures that are imposed suddenly, without consultation with the business community. This unpredictability underscores the importance of appointing well-established Algerian partners who can alert U.S. firms in advance of such rule changes.
The government pursues many policies meant to favor domestically produced goods over imports. Consumer credit is available only for the purchase of locally manufactured goods. Importation of used construction equipment is also banned. In late 2010, the government retroactively banned commercial loans from shareholders abroad made after July 2009. The government has limited the duration of letters of credit for export transactions by Algerian firms to 60 days.
Algeria’s licensing of generic pharmaceuticals and lack of clear coordination between the Ministry of Health and the Patent and Trademark Office exacerbates the uncertain landscape for the registration and sale of brand-name consumer and health products. The Algerian government has banned the import of over 360 medicines and medical devices to stimulate domestic pharmaceutical production. The Ministry of Health previously implemented a policy encouraging foreign pharmaceutical firms to settle in Algeria while simultaneously promoting generics to reduce the import bill (USD 1.7 billion in 2018). The government is reviewing this policy in an effort to increase domestic production of pharmaceutical products.
Legislation that would regulate franchising in Algeria remains pending. It is currently difficult for franchisees to pay royalties and, as a result, foreign franchises are limited in Algeria.
While official estimates vary, it is estimated that Algeria’s informal economy accounts for approximately 45% of GDP and employs over 4 million people; approximately AD 5 trillion (USD 48 billion) circulates outside the banking sector. The Ministry of Finance has been prioritizing attracting at least a fraction of these amounts into the formal banking sector, which has been challenging given wide distrust of the banking system.
Staff, skilled and unskilled, can be difficult to recruit, manage, and retain in Algeria, despite high unemployment. Most employees speak French and/or Arabic but not English.
Companies routinely face delays of multiple weeks or months for customs clearance. Companies that find themselves in this situation are encouraged to contact the Commercial Section of the U.S. Embassy in Algiers for assistance.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
The attractiveness of the Algerian investment environment is reduced by commercial laws and measures that are imposed suddenly, without consultation with the business community. This unpredictability underscores the importance of appointing well-established Algerian partners who can alert U.S. firms in advance of such rule changes.
The government pursues many policies meant to favor domestically produced goods over imports. Consumer credit is available only for the purchase of locally manufactured goods. Importation of used construction equipment is also banned. In late 2010, the government retroactively banned commercial loans from shareholders abroad made after July 2009. The government has limited the duration of letters of credit for export transactions by Algerian firms to 60 days.
Algeria’s licensing of generic pharmaceuticals and lack of clear coordination between the Ministry of Health and the Patent and Trademark Office exacerbates the uncertain landscape for the registration and sale of brand-name consumer and health products. The Algerian government has banned the import of over 360 medicines and medical devices to stimulate domestic pharmaceutical production. The Ministry of Health previously implemented a policy encouraging foreign pharmaceutical firms to settle in Algeria while simultaneously promoting generics to reduce the import bill (USD 1.7 billion in 2018). The government is reviewing this policy in an effort to increase domestic production of pharmaceutical products.
Legislation that would regulate franchising in Algeria remains pending. It is currently difficult for franchisees to pay royalties and, as a result, foreign franchises are limited in Algeria.
While official estimates vary, it is estimated that Algeria’s informal economy accounts for approximately 45% of GDP and employs over 4 million people; approximately AD 5 trillion (USD 48 billion) circulates outside the banking sector. The Ministry of Finance has been prioritizing attracting at least a fraction of these amounts into the formal banking sector, which has been challenging given wide distrust of the banking system.
Staff, skilled and unskilled, can be difficult to recruit, manage, and retain in Algeria, despite high unemployment. Most employees speak French and/or Arabic but not English.
Companies routinely face delays of multiple weeks or months for customs clearance. Companies that find themselves in this situation are encouraged to contact the Commercial Section of the U.S. Embassy in Algiers for assistance.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.