Thursday, May 26, 2022

Agriculture in Algeria: a profitable investment and a cornerstone of a sustainable prosperity

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Diplomat Magazine
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DIPLOMAT MAGAZINE “For diplomats, by diplomats” Reaching out the world from the European Union First diplomatic publication based in The Netherlands. Founded by members of the diplomatic corps on June 19th, 2013. "Diplomat Magazine is inspiring diplomats, civil servants and academics to contribute to a free flow of ideas through an extremely rich diplomatic life, full of exclusive events and cultural exchanges, as well as by exposing profound ideas and political debates in our printed and online editions." Dr. Mayelinne De Lara, Publisher

By H.E. Ms. Salima Abdelhak Ambasador of Algeria to the Netherlands

Algeria is the largest country in Africa and in the Arab World with a total landmass of 2.38 million square km. It is rich in natural resources which is still largely unexplored.

Yet, Algeria has deployed relentless efforts, so far, to curb its reliance on imports by speeding up agriculture development and modernization, as means of diversifying the economy and attracting foreign and domestic investment outside the energy sector. The potential of this very field is very likely to contribute in shaping more sustainable and resilient economy.

In fact and in 2020, agriculture accounted for around 14.1% of national GDP and employed 2.6 million people or around 20% of the country’s active population. Production improved between 2007 and 2021, thanks to Government endeavours to get rid of some of the bureaucratic bottlenecks that have traditionally held back the sector’s development, such as legislation, land ownership and financing. Furthermore, Algerian authorities awareness of ongoing economic shift worldwide led different actors to reconsider the importance and structure of the sector and to gradually rely on new approaches such as intensive and large-scale farming. Accordingly, both foreign and domestic investments, private in particular, have been actively encouraged by the Government to achieve these goals.

Indeed, the Government launched a new policy dubbed “The Agricultural and Rural Renewal Policy” (ARRP) aiming to boost foreign direct investment, improve output and reshape market structure. As a result and according to the National Statistics Office (ONS), agriculture output reached 27 billion dollars, during the period 2019-2020, pushing its non-hydrocarbons share in GDP, fisheries and forestry output included, to 16.2 %. Subsequently, a fresh momentum to the previous policy was given by the launch of “the Felaha 2019 initiative” by the Ministry of Agriculture, Rural Development and Fisheries; the strategy revolves around a growing interest in private investment, consolidation and innovation, and it targets average annual growth of 5% (€35.7billion) in output value and 1,5 million new jobs by 2019. It also aims to cut food imports from $9.3 billion in 2015 to $2 billion   and double the value of exports to $1.1 billion by 2019.

Algeria

Since the introduction of “ARRP”, agricultural output has made headway and Algeria since then produces a wider range of agricultural products designed for domestic consumption, with a good level of output achieved particularly in market gardening, for instance vegetable output value reached 5.149 billion dollars in 2020. Potato production value, in particular, has been significant, attaining 1.3 billion dollars in the 2020 harvest. In addition and despite adverse circumstances due to Covid-19 outbreak, the country is still looking forward to launching export operations of approximately 70,000 tons of this product.

These plans are nowadays embed in remarkable trend observed recently to adopt more intensive and innovative farming methods. This move is essential in a sector that has traditionally been dominated by smallholder farmers in a country that is keen to achieve food self-sufficiency and swing to agriculture export-oriented industry. 

At legislative level and as part of comprehensive plan to diversify the economy, incentives to boost private investment in the non-hydrocarbons sector have gradually been introduced. In this regard, a new Customs Code approved in early 2017, has come with new rules to modernise and streamline procedures, in line with international Customs framework. Such reforms are likely to back the New Growth Model strategic vision launched by the Government, which targets a 6.5% annual growth rate in non-hydrocarbons GDP over the 2020-30 period.

2020 Finance Act, published on December 30th 2019, has brought about deep reforms to encourage foreign investment by lifting “49/51 foreign investment cap” which applies, henceforth, to 05 strategic sectors namely national mining domain; upstream energy sector; military industry; pharmaceutical industry;  as well as, ports, airports, railways sector.

Furthermore, agriculture is being promoted in southern Algeria   despite the harsh conditions of the Sahara desert. The Government has been offering cheap loans and concessions to farmers and investors willing to take up the challenge of toiling their farmlands for only 4 hours per day before 9am due to the excessive heat in the desert. These incentives seem to have impressive and promising results, as the sector output in this very huge part of Algeria    continues to grow robustly, contributing significantly in terms of growth in domestic production and in bolstering Algeria’s ambitions to cut food imports by almost $8billion per annum and create employment for the youth. On another hand, Government doubled its efforts to foster collaboration between local farmers, processing industry companies and foreign investors. Integrated projects and joint-ventures with partners such as the US, EU, South Korea, japan and China are underway in the south, providing a stunning example of win-win partnership in the field of agriculture.

At the end, it is safe to conclude without a shred of doubt that the Algerian agriculture sector has recorded steady growth, despite numerous ups and downs. With a huge market of over 45 million inhabitants and in view of an overriding ambition of the President,     Mr. Abdelmadjid TEBBOUNE who asserts several times that Algeria is technically able to produce 30 million tons of cereals per annum and export 21 million tons of it to neighbouring countries, there is definitely rooms for expansion from an investor’s standpoint, at a time when domestic production and value added are key to strengthening the economy and achieving food self-sufficiency. The move towards large-scale farming and win-win partnership with well-seasoned foreign investors like The Netherlands should also help achieving those targets, and potentially drive up exports quantity of locally produced goods at a large scale, especially as Algeria is a prominent member of African Continental Free Trade Area (AfCFTA) and can, therefore, be depicted as an effective gateway to sell goods and products in this tremendous integrated market of 1.2 billion inhabitants.

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