Turkish and Chinese Support Bolsters Algerian Diversification

Algeria is actively promoting economic diversification through a combination of national policies and collaborative efforts with bilateral partners.

Presently, its hydrocarbon industry constitutes a substantial portion of revenue, with oil and gas exports making up 93% of total exports and 38% of budgetary income.

Nonetheless, the Government aims to achieve $10 billion in non-hydrocarbon exports this year. 

By attracting both domestic and foreign investments in non-hydrocarbon sectors, Algeria is significantly advancing diversification, enhancing its resilience to the inherent market fluctuations of the oil and gas industry.

Turkey Stimulates Algerian Manufacturing

Turkey has long been a significant bilateral partner for Algeria, and this economic relationship is poised to strengthen further with diversification initiatives creating fresh avenues for Turkish involvement. Building on shared interests and established trade links, both nations are keen on fostering economic collaboration, with expanded investments targeted towards the textile and steel industries.

In recent years, Turkey has strengthened the manufacturing base in Algeria. In the textile industry, an Algerian-Turkish Joint Venture oversees one of Africa’s largest textile facilities, TAY ALGERIA, providing employment for over 10,000 individuals. The $1.5 billion textile manufacturing complex has an annual production capacity of 60 million meters of woven fabric and 30 million garment pieces, and aligns closely with Algeria’s broader diversification efforts. Additionally, one of Turkey’s leading steel manufacturers, Tosyali, operates a $2.4 billion iron and steel complex in Algeria. The complex employs over 6,000 people and has laid the foundation for a manufacturing-based economic transformation in Algeria.

Going forward, Turkey plans to enhance bilateral cooperation even further, building on a successful 2022 investment target of $5 billion in Algeria. Turkey hit the target with a record 1,400 Turkish companies actively engaged in the Algerian market. The nation intends to double this investment in the coming years, broadening cooperation beyond the energy sector and encouraging trade diversification. As the Algerian manufacturing sector continues to expand, Turkish investment is poised to expand Algerian industrial productivity beyond hydrocarbons.

China Expands Renewable, Infrastructure Investment

China and Algeria have enjoyed a long history of economic friendship, with relations marked by strong ties across the political, trade and investment realms. Under frameworks such as the Belt and Road Initiative (BRI) – a China-led infrastructure project spanning the globe – China has provided investment, expertise and technology that has stimulated the development of various industries in Algeria. The BRI is underpinned by collaboration and win-win partnerships and will serve as a catalyst for Algerian diversification.

China is committed to supporting Algeria’s diversification efforts, with Smail Debeche, President of the Algeria-China Friendship Association, explaining that the country “seeks to enhance the existing strategic partnership in various key sectors, including agriculture, food security, technology, renewable energy, infrastructure development such as roads and ports…”

The BRI is strategic in this regard and has already shown fruitful results. China represents the largest developer of infrastructure in Algeria with several projects spearheaded by Chinese companies. These include the construction of a unit of a 233 MW solar project – the largest in the country – by Power Construction Corp of China; the launch of a 6,000 km railway system; the development of the $7 billion East-West Highway and many more.

More than 1,000 Chinese companies have invested in Algeria’s economy, predominantly in the trade, energy and agriculture industries. Meanwhile, in December 2022, China and Algeria signed an executive plan for the joint implementation of the BRI, laying the foundation for further Chinese investment in Algeria.

Going forward, Chinese investment under the BRI will play an important role in diversifying Algeria’s economy beyond oil and gas. China plans to invest up to $36 billion in various strategic sectors in Algeria while strengthening trade and bilateral business opportunity. As such, China serves as a strong partner amid Algerian diversification.

Source : Energy Capital & Power