Economic recovery
Algeria's economy was long dominated by agriculture, until the discovery of oil in the Sahara in 1956. The country was then able to count on substantial revenues from black gold, ensuring its prosperity. By the early 1970s, Algeria had become the most developed country in Africa, although it subsequently experienced periods of major crisis.
Today, Algeria's economy is still largely based on the energy sector. After a difficult period in the second half of the 2010s, exacerbated by the COVID-19 crisis, the country's economic activity picked up again from 2021 onwards, and has risen sharply in recent years, partly due to the Russian-Ukrainian war. To limit their dependence on Russia, European countries have turned to new gas producers, including Algeria, which has become one of their leading suppliers. To meet demand, the country has had to increase its gas production, reaching an all-time peak in 2023. In 2022, it is Africa's leading exporter of natural gas and the world's 7th largest. It is also the world's 16th-largest oil producer and 10th-largest natural gas producer.
Thanks to soaring energy prices, the value of Algeria's exports has tripled between 2020 and 2022. As a result, the Algerian economy grew by over 4% in 2023, becoming Africa's third-largest economy, ahead of Nigeria. Its outlook for 2024 remained favorable, with growth set to continue at 4%. It could soon supplant Egypt as the second-largest economy on the African continent in the years to come.
Economic challenges
Despite these positive signs, Algeria faces major challenges in diversifying and decarbonizing its economy. To reduce its dependence on fossil fuels, stabilize its economy, which is correlated to oil prices, and promote the sustainable development of its energy sector, Algeria is beginning to consider new alternatives, in particular investment in solar and wind power. The government has set itself the target of producing 15,000 MW of photovoltaic solar power by 2035 across 40 wilayas. To achieve this, the "Solar 1000 MW" project calls for the construction of five photovoltaic power plants. The ultimate aim is to conserve resources and reduce greenhouse gas emissions. There are also plans to set up a green hydrogen production chain and a wind energy program, with technical assistance from the World Bank.
The place of tourism
Unlike Morocco and Tunisia, where tourism has become a veritable industry, independent Algeria has never really developed the sector. In the 1980s, Algeria, aware of its potential, built quality hotels, particularly on the coast and in the south of the country, and encouraged the development of services to welcome foreign tourists. The momentum was held back by socialist management, the rejection of Western values, the importance of the hydrocarbon market and the need to find one's own economic path, then later by the insecurity generated by the Islamist threat. Since the early 2000s, there has been renewed hope that tourists will return. Although it's hard to believe, hotels are being refurbished, long-neglected state-run establishments are being renovated, and quality private hotels are opening up more and more in Algiers and other major cities.
The Algerian government is stepping up its efforts to revitalize this sector and catch up with its North African neighbors. A total of 14 million tourists visited Morocco in 2023, compared with just 3.3 million in Algeria.
Since October 2022, southern Algeria has been open to foreign tourists once again, after 14 years of closure. The government has also announced 800 tourism investment projects underway in the country by 2024 to boost capacity. A brand-new, ultra-design terminal at Algiers airport opened in 2019, and a state-owned hotel park (HTT Group) has been remarkably well renovated in recent years.
Since January 2023, a new type of visa has been in place. The visa-on-arrival scheme is designed to make it easier to visit the country, particularly the Algerian south, and illustrates the ambition of the Algerian authorities, who are counting on 10 million tourists by 2030.
These efforts to revitalize tourism in Algeria are beginning to bear fruit: 800,000 tourists have already visited the country during the first quarter of 2024, resulting in a 17% increase in tourist arrivals compared to the first quarter of 2019, according to the World Tourism Organization (UNWTO). This is the third biggest increase in tourism in Africa, behind Tanzania (+53%) and Morocco (+32%).
Towards intensive farming
While Algeria is dependent on agricultural imports, particularly for cereals and milk powder, the country is developing projects in a bid to achieve food self-sufficiency and diversify its economy. In the Sahara, for example, large-scale farms are currently being developed. In the El Oued region, several thousand hectares of land are under cultivation, and the area has become a major agricultural hub in just a few years.
A mega-farm project signed with the Qatari dairy group Baladna in 2024 is due to see the light of day in the middle of the desert, in the Adrar region. The gigantic farm, the size of Martinique, will be home to some 270,000 dairy cows, producing 1.7 billion liters of milk for powdered milk. The aim is to reduce imports of this product, which experienced supply tensions in 2022.
Youth and unemployment
Finally, in a country where over two-thirds of Algerians are under 30, youth is a real issue. While a small fringe of Algerian youth lives very comfortably, gaining access to the grandes écoles and senior management positions, 29% of 16-24 year-olds were affected by unemployment in 2019. While 40% of university graduates are unemployed, the lack of prospects, precariousness and instability of the job market are driving many young people to Europe.
Since February 2022, President Abdelmadjid Tebboune has introduced an unemployment benefit for young people aged between 19 and 40. Initially worth 13,000 dinars a month, it was increased to 15,000 dinars in January 2023, and also includes the right to social security. More than two million young unemployed Algerians benefit from this scheme, but more needs to be done to ensure a brighter future for them.
