Improving growth in the non-oil sector has long been a focus for Algeria's government, with the most recent push coming in the form of the planned construction of eight pilot industrial zones next year.
The industrial parks represent the first wave of a broader national initiative which will see 42 dedicated zones established in 34 of Algeria's provinces by 2017, part of a drive to stimulate investment and innovation across the manufacturing sector.
The project, led by the Ministry of Industry, Small and Medium-sized Enterprises, and Investment Promotion, has a particular focus on generating industrial activity in sparsely populated and underserved areas, including the Hauts Plateaux and southern regions, to help strengthen employment and revenues outside of the larger urban areas.
Public tender launchedAuthorities launched a series of public tenders in April and May, calling for firms to carry out development studies and prepare the eight designated sites for construction work. Bids for the zones are currently being reviewed by the National Agency for Intermediation and Land Regulation (Agence Nationale d'Intermédiation et de Régulation Foncière, ANIREF), with the first parks expected to be operational early next year.
Developing Algeria's industrial sector represents an economic priority for the government, with agro-industry, mechanics, construction materials and pharmaceuticals among the segments targeted.
The new industrial parks should help ease the shortage of land available for development, which represents a major issue for the sector. Hassiba Mokraoui, the director-general of ANIREF, has indicated that the agency is keen to target partnerships between foreign and local firms for the projects, as part of a bid to encourage knowledge transfers and promote the development of Algerian construction firms and technical consultancies.
The pilot sites cover a total of 2500 ha, with four located towards the north, in Tizi Ouzou, Relizane, Ain Temouchent and Mostaganem. Three of the facilities will be developed in Batna, Médéa and Djelfa, across the semi-arid Hauts Plateaux region, while the eighth park is earmarked for Ouargla, in the desert south, where industrial and other economic infrastructure is least developed.
Long-term plansAround AD88bn (€17.9bn) is expected to be channelled into the industrial zones over a five-year period before the initiative is fully completed, according to the national press agency.
Twenty-seven of the 42 parks will be located in the northern coastal area, close to many of Algeria's large cities, where economic activity is highest. The Hauts Plateaux region will eventually house ten of the industrial zones, while the remaining five will be located in the south. Many of the parks will have an industry-specific focus, such as the Sidi Bel Abbès site, which will target electronics and Blida, earmarked for agro-industry development.
Public tenders for technical studies and land development are expected to be launched in the near term for nine more parks, which represent the next phase of the project. The sites will cover a total of 2526 ha and will be built in M'sila, Sidi Bel Abbès, Jijel, Adrar, Bechar, Biskra, Sétif, Saida and Naama.
Tenders for the remaining 25 facilities will be announced in the coming years as public land is made available. In August, ANIREF officials indicated that the agency may consider expanding the programme beyond the initial plan to build 42 parks in response to growing requests for land, which outnumber the available space in existing production zones.
Demand for land growingUnder the country's industrial strategy, firms apply for land permits at the provincial level from Committees for Localisation Assistance, Investment Promotion and Land Regulation (CALPIREF), which are overseen by ANIREF.
Demand for industrial land has increased in recent months according to the agency. Requests processed by CALPIREF committees in the first half of 2013 reached 4176, marking a rise of 53% over the same period last year. ANIREF said industrial projects examined in the first six months of 2013 could lead to investment totalling AD112bn (€22.81bn), with the potential to create 50,000 jobs.
The anticipated rise in industrial activity bodes well for the government's development plans. However, the National Statistics Office (ONS) industrial production index fell 0.5% in the first quarter of 2013 year-on-year, highlighting the challenges which the sector faces.
An ONS public opinion survey conducted among 740 industrial firms from both the public and private sectors cited a number of problems that may well have contributed to the slowdown. Alongside interruptions to the supply of primary materials and power, a lack of trained human resources and Algeria's restrictive environment for foreign investment were also mentioned as hurdles to development.
The industrial sector will continue to face such challenges in the near term, particularly in central and southern regions. However, efforts to ease access to land for industrial investment should help to create a new outlet for the growing number of projects in the pipeline.
© Oxford Business Group 2013
