Business Forum of Algeria and the UK

Will it allow beneficial cooperation ?

The 2nd Business Forum of Algeria and the UK on trade and investment is expected to be held on May 22, 2016 in Algiers.

Because activism without tangible results is to be avoided, one is inclined to posing the following question:.  Would this Business Forum of Algeria and Great Britain allow a beneficial cooperation based on technology transfer and managerial expertise ?

Would the establishment of a diversified economy in Algeria together with the avoidance of the bureaucratic culture of the past and above all letting of the implementation of business not through Ministerial initiatives but through decentralized networks be conditioning the success of this forum ?

1. For starters, one must have an objective assessment of each country, looking at their real weight in the global economy.

Algeria has a population of about 40 million and a GDP of around $200 billion (down in 2016 according to the IMF), 80% of which are from oil exports revenues.

The United Kingdom of Great Britain and Northern Ireland (UK) with 64 million people, has a GDP of €2231,5 billion in 2014 giving it a GDP per capita of €34.579.  Its economy is split into agriculture: 0.7%, industry: 21.6%, services: 76.9 and has a growth rate of 2.6% and an unemployment rate of 5.8% but 20% for youth.  Great Britain is the 5th world economy with exports of €407.4 and imports of €493,8 billion.  For 2015, general government deficit was estimated at 3.9% and the net debt ratio would decline from its 2015-16 figure to 82.5% of GDP (87.1% for the gross debt as per Maastricht).  Its main customers are: Switzerland (12.8%), United States (10.6%), Germany (8.2%), Netherlands (6.9%), France (5.8%), Ireland (5.2%). and its main suppliers: Germany (13.2%), China (8.3%), Netherlands (8.1%), USA (7.0%), France (5.7%), Belgium (4.7%).

According to British official documents, the country will be facing an unprecedented energy challenge with the closure by 2020 of a quarter of its electricity generation capacity. energy mix mainly fossil.  It has a commitment to an ambitious CO2 reduction (-34% by 2020 and 80% by 2050).  It is committed to replace all of its production from coal generated (29% of the electricity mix in 2014), to gas by developing new gas fed power plants, whose supply will depend on the development of shale gas, production in the North Sea and new nuclear power plants.   The first in Hinkley Point planned to consolidate two EPR of 3rd generation pressurized water reactor (PWR) design, built by EDF Energy.

Note finally that withdrawal of the European Union “Brexit” could cost the economy £100 billio, some 950,000 jobs, which means that the unemployment rate in 2020 could be 2% to 3% higher than if the country remained within the EU, all according to Carolyn Fairbairn, Director General of the CBI.

2. For year 2015 and according to statistics published by the Centre National de l’Informatique et des Statistiques (CNIS), Spain was the main customer of Algeria, with $6.56 billion, followed by Italy ($6.16 billion), France ($4.92 billion), Britain ($2.88 billion), the Netherlands ($2.28 billion) and Turkey ($2.07 billion).

The main suppliers of Algeria are China, first for the third year in a row, with ($8.22 billion), followed by France ($5.42 billion), Italy ($4.82 billion), Spain ($3.93 billion), Germany ($3.38 billion), and the United States ($2.71 billion).

According to other official statistics, these figures reveal also that 63.49% of imports of Algeria come from the OECD countries which are also the destination of 82.64% of Algerian exports.

The members of the European Union are major trading partners of Algeria which imports 49.21% of its products and exports 68.28% of the goods that it produces notably dominated by hydrocarbon oil and derivatives.  Trade with the countries of the Maghreb (UMA) remain very marginal with a decline of 40% in 2015, passing to $2.28 billion against $3.8 billion in 2014.   Trade with Arab countries decreased by 2.68% to $2,54 billion against $2.61 billion.  Trade with Africa is also marginal.

3. Generally, trade was relatively modest, having reached $2 billion made of $1,260 billion Algerian exports and imports valued at $771 million in 2010.  These have increased sharply between 2012 and 2014.  In 2015 and according to the CNIS imports from the UK were $903 million and export $2.883 million; these were $3.8 billion against $2.5 billion in 2012.  It must also be noted the Algerio-British cooperation recently experienced a real boom since the appointment of Lord Risby, who as special envoy of British Prime Minister for economic partnership with Algeria, explored many business opportunities in Algeria.

The United Kingdom is most present not only in the traditional oil and gas sector, notably through BP, Shell and BG, but also in other areas such as education with Linguaphone, in infrastructure with Biwater, in pharmaceutical with GSK, in consumer products with Unilever, in financial services with HSBC, and in transportation with BA.  Not to mention the recent contracts signed with Hospital Group for the construction of a 500 beds University Hospital in Tlemcen.

Petrofac, a London based oil and gas company was awarded a contract of $970 million whilst in association between SONATRACH (40%), Repsol of Spain (29.25%), German RWE (19.5%) and Italian Edison (11.25%), for the construction of a southern gas treatment plant.  In November 2013, Petrofac and the Italian oil firm Bonatti partnered on a $650 million joint venture contract for SONATRACH, adding to the firm’s already significant presence in Algeria.

4. Summary

One wonders what would Algeria’s exports be, apart from hydrocarbons and derivatives products and has the country got managerial skills as well as technological capabilities to the required levels in segments outside of those same hydrocarbons so as to induce fair trade to international standards.

The English being pragmatic; what would the Algerians expect out of the UK, supposing Algeria has implemented its long awaited de-bureaucratization, accompanied by consistent visibility and coherence in all socio-economic policies.   Would the Algerian expect implementation of business to be still dependant on Ministers and not on decentralized networks?

In the hope that these meetings will invigorate a win-win partnership, especially for technology transfer and managerial good governance and knowledge economy based development process so as to possibly help densify the Algerian productive fabric.

Whilst not forgetting that any respectable endeavour being guided by the logic of profit, the burden would therefore rest with the state to implement its strategic regulatory mission.   That should be of removing all constraints from any healthy and value-added creative business.  Structural reforms cannot be left only to foreign interests but mostly internal political will if we want to make this transition from that of a losing economy of rentier in loss, to an economy away from oil and in the context of international values.

Dr. Abderrahmane Mebtoul, University Professor, Expert International, ademmebtoul@gmail.com

ADDENDUM

Algeria-UK Investment Forum, 22nd May 2016, Algiers

PROGRAMME

9:00 – 10:30 am :  OPENING PLENARY SESSION

Welcome Addresses
HE Abdessalem Bouchouareb, Minister of Industry and Mines
HMA Andrew Noble, British Ambassador to Algeria

Key Note Addresses
HE Abdelmalek Sellal, Prime Minister of Algeria
Rt Hon, Greg Hands MP, Chief Secretary to the Treasury, UK Government

High-Level Panel Discussion
HE Abdessalem Bouchouareb, Minister of Industry and Mines
The Lord Risby, Prime Minister’s Special Trade Envoy to Algeria
Ali Haddad, President, Forum des Chefs d’Entreprises (FCE)
Ayman Asfari, Chief Executive, Petrofac

10:30 – 11:00 :  REFRESHMENT BREAK

11:00 – 12:30 :  GOVERNMENT INVESTMENT PRIORITIES AND ECONOMIC OVERVIEW

Representative, Ministry of Finance
Mohamed El Aid Benamour, President, Algeria Chamber of Commerce & Industry (CACI)

Representative, National Agency of Investment Development (ANDI)
Yassine Bouhara, Founding Partner, Tell Group

Representative, DLA Piper
Isaad Rebrab, CEO & Founder, Cevital
Didier Lartigue, Director General, Clarke Energy

Questions  and Answers time

12:30 – 13:30 :  NETWORKING LUNCH

13:30 – 15:00 :  BREAKOUT SESSIONS

Financial Sector Development
Co-Chair: Representative, Ministry of Finance.

Healthcare
Co-Chair: Representative Ministry for Health, Population and Hospital Reform
Sponsored by GSK

Renewable Energy
Co-Chair: Representative Ministry of Energy
Sponsored by Renewable Energy Partners

15:00 – 15:30 :  REFRESHMENT BREAK

15:30 – 17:00 :  BREAKOUT SESSIONS

Oil and Gas
Co-Chair: Representative, Ministry of Energy
Representative, SONELGAZ
Representative, SONATRACH

ICT
Co-Chair: Ministry of Post, Information Technology and Communication

Retail and Commerce
Co-Chair: Minister of Commerce and Minister of Habitat

17:00 – 17:30 :  CLOSING PLENARY SESSION

Rt Hon, Greg Hands MP, Chief Secretary to the Treasury, UK Government
HE Abdessalem Bouchouareb, Minister of Industry and Mines

17:30 – 18:30 :  GALA NETWORKING RECEPTION

Sponsored by Algérie Advice

 

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