How to Liberate Algeria’s Economy
Algeria’s economy is growing far too slowly to provide enough jobs for a young, expanding, and increasingly restless population. The country's authorities need to boost competition, spur the creation of a digital economy, and revamp state-owned enterprises.
WASHINGTON, DC – Algeria faces the herculean task of transforming its economy to meet the pressing demands of a young, growing, and increasingly restless population. Despite the country’s favorable demographics, its economy remains almost entirely dependent on oil and natural gas, which account for 95% of merchandise exports. To provide enough jobs for the millions about to enter the labor market, Algeria’s economy needs to grow by more than 6% annually over the next few years. But GDP growth was a paltry 1.5% in 2018, and is projected to stay below 2% for the foreseeable future.
The Algerian authorities must therefore take urgent steps to liberalize and strengthen the economy, and lay the foundations for greater social inclusion. In particular, they need to boost competition, spur the creation of a digital economy, and revamp the country’s state-owned enterprises (SOEs).
Algeria’s economy has been running in place, with most major businesses and banks still in state hands. Moreover, measures to promote greater competition and establish an antitrust framework are in their infancy, and the legal and judicial system has been weak in enforcing them.