France’s presidential elections impacting Algeria

by | May 9, 2017

And the prospects of mutual cooperation . . .

The two countries  confronted to their specific challenges ought to have a common vision in order to contribute to a prosperous future as based on genuine co-development and not on obscuring the memory of a shared past for long lasting relationships. The recent France’s presidential elections impacting Algeria, are looked at here as positively as they could be in so many years.
The 187 odd years of very close relationship between the two countries will certainly be in the agendas of each as the renewed French leadership confronted to challenges from all around is settling down shortly for business anew.    
It is about preparing the future through mutual respect; a point that I always made during my various meetings with political and economic personalities, and maintained that Algeria should not be considered as a market only. It is in this context that a co-partnership between Algeria and France, far from prejudice and spirit of domination must be inscribed.
We must be aware that the new international relations are no more based on relationships between heads of State, but on custom networks and on decentralized organizations through the involvement of notably business and civil society cooperation, dialogue of cultures, tolerance and the symbiosis of the contributions of the East and the West.

Because it might be unproductive to be and remain locked in distant positions as the latest events should rather make us think of to how avoid antagonising each other beliefs be it religious.  After all Islam, Christianity or Judaism did contribute to the development of civilization.

Future relations between Algeria and France must also concern the Maghreb-Europe space and more generally the Mediterranean-Europe area. Our two countries can be dynamic agents, because southern Europe and the Maghreb cannot escape adaptation to the current global changes (the present crisis already causing upheaval in both socio-economic and geo-strategic) and more generally throughout the Mediterranean region.

Because it is necessary to go beyond narrow chauvinist nationalism insofar as real nationalism will be defined in the future as the ability to together expand the standard of living of our people by our contribution to the global value.

Today’s world is characterized by interdependence. This does not mean the end of the role of the State but a separation of politics and economics which cannot be the vagaries of the economic climate, the State dedicated to its natural role as regulator of macroeconomic and macro-social life.  I firmly believe and after analysis that the intensification of the cooperation between  Algeria and France not forgetting all other cooperation between Algeria and the USA, all emerging countries such as China, Japan, India, the Brazil, Turkey, South Korea and Russia etc…

And in a more comprehensive way between the Maghreb and Europe as based on a genuine co-development, partnership, the introduction of direct investment would upset the bureaucratic behaviour conservative annuitants and enrol them in a dynamic perspective that is beneficial to the peoples of the region thus helping to  turn the Mediterranean into a lake of peace and prosperity.  The Mediterranean can be that place of rational networking to communicate with distant cultures, encouraging the symbiosis of contributions of the East and the West.

This network should facilitate communication links, freedom insofar as the excesses of the collective voluntarism inhibit any spirit of creativity. It is that the Maghreb and Europe are two geographic areas with an opening on the Latinity millennial experience and the Arab world with natural links and overall culture and Anglo-Saxon influences…

It is essential that Europe developed all actions that can be implemented to achieve a desirable balance within this set. In fact the formation of weak regional economic areas is a step of structural adjustment within the globalized economy with for a goal to promote political democracy, – a humanized, competitive market economy – promotion of ideas through social and cultural debates so as to combat extremism and racism – the implementation of common business whilst never forgetting that these are driven by the logic of profit and not emotions.

Thus, it is necessary to pay special attention to the educational action because human thinking and creation should in the future be the beneficiary and the leading actor in the development process. That’s why I would advocate the creation of a Euro-Maghrebine University as a cultural center as well as a central Euro Mediterranean bank as a facilitator for all Exchange.

It is in this context that a realistic approach must be apprehended so as to the co-partnership between Algeria and France taking into account all potentialities.  At the global level, we are witnessing the evolution of a built-up passed based on a purely material vision, characterized by hierarchical rigid organizations, to a new mode of accumulation based on the mastery of knowledge, of new technologies and flexible organizations as networking around the world, with globally segmented supply chains of production where investment in comparative advantages takes place in sub-segments of these channels.

As rightly noted by Jean-Louis Guigou, President of IPEMED (Institute of Prospective Economic of the Mediterranean world, in Paris), it should be that, in the interest of both of the Algerians and of the French, and more generally of the Maghreb and the Europeans as well as all South-Mediterranean populations, the boundaries of the common market of the future, the borders of Schengen in the future, the borders of social protection in the future the borders of the environmental requirements of tomorrow, must be South of the Morocco, the Tunisia and Algeria, South and East of the Lebanon, Syria, of the Jordan and the Turkey, through a lasting peace in the Middle East, Arab and Jewish populations with a thousand-year history of peaceful coexistence.

Specifically, Algeria and France have economically other strengths and potential for the promotion of diverse activities and this experience can be an example of this global partnership becoming the privileged axis of the re-balancing of the South of Europe by amplification and the tightening of links and exchanges in different forms. Per the official foreign trade balance of Algeria in 2016, the countries of the European Union are still its main partners, with the respective proportions of 47.47% and 57.95% of exports and imports.  Italy is the main customer and France the main supplier.

Between France and Algeria, trade can be intensified in all areas, i.e.: agriculture, industry, services, tourism, education, not to mention cooperation in the military field, where Algeria can be an active player, as shown by its efforts to bring stability to the region.

Also, let’s not forget the diaspora with residents of Algerian origin in France that would exceed 4 million, including more than 2 million bi-nationals. This regardless of the numbers is an essential element of reconciliation between Algeria and France, because it holds significant intellectual, economic and financial potential. The promotion of the relations between Algeria and its emigrant community should be mobilized in various stages of intervention initiatives of all the parties concerned, namely the Government, diplomatic missions, universities, entrepreneurs and civil society.

Hence, any intensification of this cooperation won’t possible – whilst not forgetting the duty of memory – if Algeria and France have a realistic approach to the co-partnership for a win-win partnership away from any mercantilism and spirit of domination. The two countries must have a common vision of their future.

Algeria can overcome its current difficulties but the success of national and international industrial partnerships is not feasible without a total renovation of all central and local governance systems with a coherent vision based on both political, social, economic structural reforms including financial market, land and property market, labour and especially reform of the socio-educational system, at the dawn of the fourth technological revolution.

The objective for Algeria is to commit for structural reform, whilst assuming a broad internal mobilization of the social front, tolerating the different sensitivities, in the face of the many challenges in order to allow Algeria to emerge, in the medium and long term.  For this, the dominance of the bureaucratic approach must give way to economic operational approach, with positive social and economic impacts. Also, in the face of the new global changes, Algeria undergoing this transition towards a productive economy closely tied to its energy transition, needs an accumulation of technological and management expertise with assistance from its foreign partners.

In short, Algeria and France are key actors for the stability of the region, and that any destabilization of Algeria would have negative geo-strategic repercussions throughout the Mediterranean and African region, as I pointed out in my interview on December 28, 2016, the American Herald Tribune (3).

And of course, subject to Algeria furthering into the rule of law, democratization of society and that it’s reorienting its economic policy in order to achieve sustainable development. The current tensions between Algeria and France are only temporary, as per information gathered with friends of mine in France.

It is only in this context that cooperation must return for a win-win partnership far from all prejudice and in mutual respect.

Notes : See recent contributions and international interviews of Professor Abderrahmane Mebtoul

  1. -«Wahl in Algerien Der Graben ist tief – wer stimmt ab?» – www.tagesschau.de –ARD-  04/05/2017
  2. -« Après Glavany et Macron… « Dépassionner les relations entre l’Algérie et la France » quotidien financier  français la Tribune .Fr 19 février 2017 – (“After Glavany and Macron…» “Take the heat out the relationship between Algeria and France” by French financial daily la Tribune.fr  19 February 2017)
  3.  – American Herald Tribune 28/12/2016 «  Prof. Abderrahmane Mebtoul: Any Destabilization of Algeria would have Geo-strategic Repercussions on all the Mediterranean and African Space
  4.  -Interviews with the weekly Point Afrique (Paris-24/03/2016) and the Express (07/04/2016, Paris) on the prospects for co-operation Algeria-France.
  5.  -This theme was developed by Prof. Abderrahmane Mebtoul, on 7 April 2016 in Marseille at the Mediterranean Villa

 

Human Capital as the most valuable Resource

 

It has been said that Human Capital as the most valuable Resource that any organisation be it in the  political, economical and / or social domains would require for purposes of progress, growth and development  generally. These organisations to succeed and eventually prosper, or perhaps simply stand their grounds, do need leadership of one type or another.  There is plenty of literature on this very topic but the following essay of McKinsey would not pass unnoticed.   In our series on leadership, refer to Leadership Priorities in Year 2017, we did not cover this aspect of the business of tracking, selecting and ultimately contracting in quality personnel.  This is possibly the most perilous but also the most rewarding operation of selection of an employee, an expert and / or a president of a country.  Excerpts of the McKinsey’s Finding Hidden Leaders are reproduced here.

Finding hidden leaders

By Kevin Lane, Alexia Larmaraud, and Emily Yueh

 

Persistent challenges

The first explanation is size: in large organizations, it’s easy for hidden talent to stay hidden or be drowned out by the noise of complex organizational processes. They could be in a business unit far from the corporate center or in a backroom job away from the action. They might be quiet and reluctant to push themselves forward, eclipsed by more forceful personalities. Yet they may perform exceptionally well in their jobs, collaborate effectively with colleagues, have extensive networks across the organization, or carry informal influence among their peers. In short, they are showing signs of leadership potential, but it remains untapped because they are shielded from senior managers.

Another reason why promising future leaders go unnoticed is bias in the selection process. As Sylvia Ann Hewlett, Carolyn Buck Luce, and Cornel West have shown, bias can be consciously or unconsciously based on race, ethnicity, or gender, or on age, when older employees are seen as past their prime. A language “deficit,” or even a strong accent, has been known to cause people in global organizations to be penalized, as has a failure to fit conventional cultural norms. Sometimes it might be merely a one-off bad experience on a project that taints a high-potential employee’s reputation. Or it could happen to someone who steps off the conventional path for personal reasons—for example, to have a child or care for an ill family member. Managers in most organizations, notwithstanding efforts to encourage diversity and inclusion, still tend to recognize, reward, and promote people who look and behave like them and who have followed similar paths, while neglecting others whose leadership potential may be equally impressive.

Finally, there is the problem of the narrow top-down lens that senior leaders often use when looking for leadership talent. Underlying this is the mistaken assumption that only those at the top of the organization know what great leadership looks like, or a narrow focus on leadership contexts specific to the organization and the particular role. This can crowd out other perspectives, such as what individuals have achieved outside the company or what people lower down in the organization see as examples of effective leadership. A narrow lens can also interact in subtle ways with bias, as was the case for the executive at a large technology company who found it difficult to understand why a female manager wasn’t seizing more opportunities to “demo” the company’s products at major events as he and other senior leaders had done during their rise up the ranks.

Disappointing harvests

Overcoming the obstacles of size, bias, and narrow lens is a management challenge of the first order. In our experience, the most common means of finding leaders in large organizations—what we call harvesting—is not up to the task. Harvesting assumes that the best, often with some help, will organically rise to prominence and can then be plucked and placed into leadership roles. There are many varieties of harvesting, but it essentially involves planting talented “seeds”—new hires—in the organization, giving them increasingly demanding tasks, providing training and support as they develop, allowing them opportunities to demonstrate their abilities, and choosing the best performers for the senior roles. Managers who do this best invest a large amount of time and energy in cultivation activities. There is a lot of value in this, and harvesting should remain a vital part of developing and selecting. But it does little to unearth hidden talent, because hidden talent, by its nature, includes individuals who for some reason are not on the standard advancement path and thus remain invisible to those relying on conventional processes.

How to spot your hidden leaders

Finding employees with the qualities to be tomorrow’s leaders requires more than harvesting talent and should include what we call “hunting,” “fishing,” and “trawling” (exhibit). These approaches are more proactive and involve, for example, turning over more stones than usual, encouraging leaders to identify themselves, and finding new ways to tap into the environments where people live and work.

Exhibit

human-capital-hunting-tracking-and

 

 

 

 

Global Development’s Winners 2016

 

Devex posted this article written by Michael Igoe @AlterIgoe on its online site on December 22nd, 2016.  We are happy to republish excerpts of the global development’s winners 2016 part only and would definitely encourage all to visit and read the whole article by clicking the title below.

Global development’s winners and losers of 2016

2016 has been a tumultuous year. Man-made crises, natural disasters, rising temperatures, and political hostility tested the global development community’s commitment and creativity to forge new solutions for a world in transition. On social media, 2016 has acquired a plethora of memes declaring it the worst year ever, and indeed, at times it has been trying.

But while it is true that real people have suffered and important causes have seen setbacks, the challenges have also reaffirmed the aid community’s commitment to keep moving forward. The tumult imparted costs and uncertainty — but it also provoked leadership and resolve to ensure that decades of progress in combating poverty and disease aren’t lost to the winds of change.

The Syrian conflict continues to produce images and accounts of humanity at its worst. Yet it has also drawn the sharp edge of heroism — health workers who continue to administer care despite the knowledge that the hospitals where they work have been painted with targets; teachers who fight to keep classrooms open amid the bombing.

The global development community will grapple with a new and evolving geopolitical landscape in 2017, but the new year is also a time to take stock. Here are a few of the actors, ideas, and priorities that emerged from 2016 as winners — or losers.

Global development’s 2016 winners:

  1. Cities.

While national and international institutions around the world struggled to keep pace with change, the world’s cities and their leaders took more steps to solidify their status as centers of action for sustainable development. The first Habitat summit in 20 years — Habitat III — brought urban leaders to Quito, Ecuador in October to launch a New Urban Agenda, which endorses an “urban paradigm shift” that “readdresses the way governments plan, finance, develop, govern and manage cities.”

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The “New Urban Agenda” will be the centerpiece of next month’s Habitat III summit and the guiding strategy for sustainable urbanization over the next few decades. A final draft was released this…

See more on devex.com

 

Mayors and local leaders proved critical to sustaining climate momentum at COP22 in Marrakech, after Donald Trump’s surprise presidential victory cast doubts over U.S. national climate policy. “Cities, businesses and citizens will continue reducing emissions, because they have concluded … that doing so is in their own self-interest,” said U.N. Secretary-General’s Special Envoy for Cities and Climate Change and former New York City Mayor Michael Bloomberg.

In 2017 Devex will convene a global conversation about the future of smart cities for global development. Stay tuned.

  1. Solar power.

The cost of solar panels has fallen 80 percent since 2010, according to the International Energy Agency. Solar energy has gotten increasingly cheaper and is now the lowest-priced option for new electricity production in many developing countries.

The last few years witnessed a turning point, with more new energy production happening in renewables than in fossil fuels. New payment and distribution models — such as pay as you go solar panels — have emerged to help enable access to renewable power at the bottom of the pyramid. These trends have led to some bold and hopeful predictions.

The Indian government, for example, said it will exceed its — already very ambitious — Paris climate agreement target for renewable energy by half, generating 57 percent of its electricity from renewables by 2027.

At COP22, the Climate Vulnerable Forum — a group of 48 countries expected to experience the harshest impacts of climate change — adopted a vision to meet 100 percent domestic renewable energy production by 2050.

  1. National development finance institutions.

Development finance institutions received top billing in the new 2030 Agenda for Sustainable Development, which called on donors to leverage aid resources into private sector investment in order to reach the precipitous $2.5 trillion target. Donors across Europe are responding enthusiastically. Finland, Spain, Belgium, Switzerland and France are recapitalizing their DFIs, many increasing budgets by more than 100 percent. The United Kingdom’s investment arm, the CDC, is on track to quadruple its ceiling for investment early next year to $8 billion.

Questions remain about whether DFI capacity for impact evaluation and accountability is keeping pace, but the critiques don’t appear to be slowing growth in the sector. Also in question are DFIs’ frequent use of more obscure financial environments, including tax havens, as revealed in the so-called Panama Papers leaks. Still, private investment is on the rise, and donors are keen to make it work. The Overseas Development Institute and Center for Strategic and International Studies reported in 2016 that private investment funds are on track to outstrip official development assistance in as little as 10 years.

  1. Disaster response and preparedness.

Cyclone Winston, Hurricane Matthew and the Aceh earthquake were just some of the natural disasters that devastated some of the poorest economies in 2016. According to the World Disasters Report, released by the Red Cross in October, climate change will increase the numbers of natural disasters worldwide, with the Asia-Pacific region suffering the greatest impacts in terms of cost and lives lost. But this year also saw strong funding and increased programmatic focus on building communities that will be better equipped to prepare and respond to future natural disasters.

The Asian Development Bank, for example, told Devex about its increased funding to tackle climate-related impacts in the Asia-Pacific: funding for more resilient infrastructure, climate-smart agriculture, innovative technologies, preparedness for weather-related disasters and mitigation programs will be key investments in the coming years.

In Australia, emergency and humanitarian response was among the few winners to garner more financing in the 2016 aid budget. And the Bill & Melinda Gates Foundation gave almost $13 million in grants to emergency response programs in 2016. As Peter Walton, international director for Red Cross Australia, explained to Devex, NGOs are making “pretty significant” shifts toward disaster-related programs particularly in the Asia-Pacific.

 

 

16 events that will shape 2017

AMEinfo came up with this formidable vision of next year titled 16 events that will shape 2017; we could not help but reproduce it here all for the benefit of our readers.  All comments are welcome but we would advise to address direct to AMEinfo with nevertheless a copy to MENA-Forum.  

AMEinfo, is a well known and reliable middle east online medium of information.

Historically as per Wikipedia, AMEinfo.com was initially Arabian Modern Equipment Est., incorporated in Abu Dhabi, in February 1993 by Saif Al-Suwaidi and Klaus Lovgreen. The first version of the AME Info CD-ROM database of 125,000 companies was developed and compiled late 1996 and sold some 10,000 copies.  

The listing of the events as proposed by AMEinfo summed up thus.

  •  Many events of 2016 will have repercussions spilling over into 2017
  •  Positive impacts include Saudi Vision 2030, OPEC deal
  •  The fallout of Trump’s presidency, JASTA law, Italy referendum, etc. remain to be seen

The year 2016 was eventful, to say the least, with the world shaken by several momentous events whose repercussions will spill over into 2017.

Here are 16 events of 2016 that will most probably shape the coming year:

 

Saudi Vision 2030

This vision, announced in April, is one of the top economic highlights of 2016. Its repercussions are yet to be experienced throughout 2017 and beyond. Some of the biggest follow ups to this event are the Saudi Aramco IPO, expected to take place in 2018, privatising Football Clubs in the kingdom and its green card plan.

 

Trump as president of the United States

President-elect Donald Trump filling posts for his administration, getting ready to officially take office in January. This is when his foreign policy is expected to take its final shape and impact the whole world, starting with countries of the Americas, passing through Europe and the Middle East and reaching Asia.  

(Donald Trump wins US elections 2016: What it means for MENA)

 

Brexit

The United Kingdom voted to exit the European Union last June through a national referendum. Since then, the country underwent several months of economic chaos that it tried to keep under control, especially because it had not yet left the European Union. The chaos is expected to continue until the announcement of an exit plan, expected in March 2017.  

(Brexit: Who’s next?)

 

JASTA

The Justice Against Sponsors of Terrorism Act is a law passed by the United States Congress, allowing survivors and relatives of victims of terrorist attacks to pursue cases against foreign governments in the US federal court. The bill raised tensions with Saudi Arabia – when the bill was introduced, Saudi Arabia threatened to sell up to $750 billion in United States Treasury securities and other US assets if the bill is passed. Saudi Arabia is still lobbying the US over the law.

 

Egypt’s floating of the pound

Egypt’s central bank floated the pound currency in November, devaluing by 32.3 percent to an initial guidance level of EGP 13 to the dollar and hiking interest rates by three per cent to rebalance currency markets following weeks of turbulence. According to many observers, Egypt’s floating of its currency comes in a bid to attract more investors to the country.

 

China’s AIIB development bank

China launched the Asian Infrastructure Investment Bank (AIIB), a new international development bank, seen as a rival to the current, US-led World Bank. Countries such as Australia, Britain, Germany, Italy, the Philippines and South Korea agreed to join the AIIB, recognising China’s growing economic strength.

 

Google Alphabet

Last August, Google announced creating a new public holding company, Alphabet. Alphabet become the mother of a collection of companies, including Google, which includes the search engine, YouTube and other apps; Google X, the Alphabet arm working on big breakthroughs in the industry; Google Capital, the investment arm; as well as Fiber, Calcio, Nest  and Google Ventures.

 

Panama papers leak

Roughly 11.5 million documents were leaked in April, detailing financial and attorney-client information for hundreds of thousands of offshore entities. The documents contained personal financial information about famous, wealthy individuals and public officials.

The documents were created by a law firm in Panama, with some dating back to the 1970s.

 

Iran nuclear deal: lifting of sanctions

Although the framework of this agreement was announced in 2015, economic sanctions started to lift only in January 2016. The year saw the beginning of Iran’s return to international markets and more is expected for 2017 as the country has not yet made a full comeback.

 

Samsung Galaxy Note 7

Samsung Galaxy Note 7 phones, released this year, started to heat up and explode, causing some injuries in different markets around the world and killing the model altogether. This created massive chaos for the South-Korean manufacturer, which withdrew all units from the markets and started a gruelling investigation into the rootcause of the issue.

 

King Salman bin Abdel Aziz Bridge

Last April, Saudi Arabia and Egypt agreed to build a bridge over the Red Sea, linking the two countries together. This was seen as a historic move highlighting the excellent relationship between the allies. The bridge would be called “King Salman bin Abdel Aziz Bridge”.

 

OPEC deal

Members of the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members as well, reached their first deal since 2001, to curb levels of oil output to ease a global glut after oversupply pressured prices for more than two years. Long-term market reactions to the deal are yet to be felt and will probably be seen throughout 2017.

 

Pokémon Go

The new augmented reality game, developed by Niantic, quickly became a global phenomenon and was one of the most profitable apps of 2016, with more than 500 million downloads worldwide.

 

Italy referendum

Italy’s government, led by then-Prime Minister Matteo Renzi, held a nation-wide referendum proposing reforms and amendments to the country’s constitution. The referendum failed, leading to the resignation of Renzi, tipping the country into potential political turmoil and the rise of the populist, right-wing movement in the country.

Renzi’s resignation and the country’s instability also brought up concerns over a looming banking crisis in Italy, the third-largest national economy in the euro zone.

(Italy referendum: Step 1 to another Brexit?)

 

Fed raises interest rates

The US Federal Reserve raised interest rates, signalling a faster pace of increases in 2017, with central banks adapting to the incoming of a Donald Trump administration, which has promised to cut tax. The year 2017 will probably see the repercussion of that decision.

 

Turkey’s coup

A coup d’état was attempted in Turkey in July against state organisations including the government of President Recep Tayyip Erdogan. The failed coup was carried out by a faction of Turkey’s armed forces, who attempted to seize control of several areas in the capital of Ankara, Istanbul and elsewhere.

The coup, and other terrorist attacks, disturbed Turkey’s peace and stability and harmed its tourism industry, among others.

 

The Reasons for the Slippage of the Algerian Dinar

In the parallel market,

Economic laws being generally immune to any political slogans and bureaucratic measures; how to explain the reasons for the slippage of the Algerian Dinar that for €1 on the parallel market in this month of December 2016 would fetch about DZD186 and DZD168 for a Dollar.

And most significantly why is there a gap with the official market that is DZD118 a Euro and DZD111 a Dollar?

Are we not moving towards the DZD200 a Euro with the inevitable inflationary impact due to the fact that all prices tend to often line up with those of the parallel market?

Will it not remind us of issues related to the level of the general lack of production and / or weak productivity, to the bureaucratic measures without strategic vision, and to either the monetary illusion or its mechanics interpretations that in the end have increased distrust towards this national currency?

To reply to these queries, let us start with :

A Short history of the the Algerian Dinar (DZD).

Set up in 1964, the DZD was on a par with the French Franc until 1973.  Since 1974, the value of the Dinar has been set following the evolution of a basket of 14 currencies.  We have seen depreciation between 1986/1990 of 150% from DZD4.82 to DZD12.191 a US Dollar, followed by a second one, of the order of 22% in 1991.  With the cessation of payment in 1994 and following the rescheduling and conditions imposed by the IMF, there was a new devaluation of more than 40% followed by its commercial convertibility in 1995/1996.

The evolution of the official exchange rate has evolved from 2001 to December 12, 2016 thus:

  • 2001 – DZD77.29 a Dollar
  • 2005 – DZD73.35 a Dollar
  • 2008 – DZD64. 58 a Dollar
  • 2010 – DZD74.39 a Dollar
  • 2015 – DZD100.46 a Dollar

On December 12th, 2016, the rating of the Dinar got close to DZD111 a Dollar and DZD118/119 a Euro at the official rate, a difference of 57% with reference to the parallel market and a slippage of about 60% from the 2010s.

This accentuates the inflationary process, with the risk of two-digit inflation by end of 2016, due to the fact that 70% of the needs of households and of public and private businesses are met by imports which with the falling price of oil are making the State no longer able to subsidize as it did in the past.  The value of the Dinar that is function of the trust and a productive economy, which in the case of Algeria being an economy fundamentally of a rentier type, will contradict the basic laws of economy where any devaluation should in principle boost exports.  Paradoxically, we see that when the price of the Dollar decline and the rise of the Euro, the Bank of Algeria make the Dinar slide (whilst avoiding to talk of devaluation) for political reasons.

Why then this accounting trick ? The answer or main reason could be that by devaluing the Dinar rate to the Dollar, is the artificial increase in oil tax that fluctuates depending on the price of a barrel, between 60 and 70%.  Because oil and gas revenues are converted into Dinars, together with Customs taxes on hard currency imports being calculated in Dinars, would only lead to a definite devaluation.  All this hide the importance of the budget deficit and thus the effectiveness of the State through its public expenditure budget and artificially inflates the Regulatory Revenue Fund as calculated in Algerian Dinars.

Inflation being the result, a certain distrust towards the Algerian Dinar that is officially administered and therefore disconnected with the real world as represented by parallel market.  In General, both foreign and local investors are wary of an administered low currency.  The real value of a currency, which is only a medium of Exchange could be interpreted as a nominal value adjusted for inflation.

Hoarding would not create value.  It is the work through continuous innovation, whilst adapting to this ever more interdependent world, turbulent and in perpetual upheaval that is the source of wealth of a Nation.  The value of a money depends on the confidence in that economy and all related politics of production and productivity, as shown by the Classics.  In fact, the essence of this situation lies in the dysfunctions of the different structures of the State because of its excessive intervention that distorts the market rules forcing households and operators to circumvent them.

So when the authorities immoderately tax and regulate excessively or by declaring illegal the activities of the free market, it skews the normal relations between buyers and sellers.  In response, buyers and sellers naturally seek ways around all Governments imposed obstacles.

What then are the reasons for the devaluation of the Dinar on the black market?

I count seven and here there are :

First, the gap could be explained by the reduction in the supply due to the fact that the global economy slowdown, combined with the death of many Algerian retirees, has largely paid off savings of the emigration.  This decrease in the supply of currency was offset by fortunes acquired regularly or irregularly by the Algerian community who transfer regularly or irregularly currencies into Algeria. Conversion of money from corruption, playing on the distortion of the official reference exchange rate (you charge me DZD150 a Dollar instead of a commodity bought 100 with the complicity of foreign operators; operations easier and faster in the trade) clearly shows that the parallel currency market is much more important than the savings of the emigration that explain the soaring real estate prices notably in urban areas.

Second, demand comes from traveling ordinary citizens: (tourists, medical tourists abroad and Hajis) because of the weakness of the derisory travel allowance. But it is the travel agencies that failing to benefit from the right to free exchange, they being importers of services also tend to use the black market currencies. They mostly export currencies instead of import as would the tourism logic like in Turkey, Morocco or Tunisia.

Thirdly, the strong demand comes from the informal sphere that controls 40 to 50% of the money supply in circulation  and 65% of the different market segments; fruits &vegetables, red &white meat market, and through imports using small resellers, because it is an informal financial intermediation away from State circuits. This sphere, which is the product of bureaucracy, everything is handled in cash thus promoting dialectical relationships with rentier segments favouring tax evasion and corruption.

Fourth, the gap is explained by the passage of the REMDOC to the CREDOC documentary credit, explaining the easing measures, in 2013 which largely penalized small and medium-sized companies representing more than 90% of the industrial fabric in decline (5% in GDP). There are many SMEs that to avoid supply disruptions use parallel currency market. The Government has in the past increased the allowance upto DZD4 million, but this is not enough, explaining the easing measures in the 2017 budget bill.

Fifth, many foreign businesses including domestic operators use the parallel market for their transfer of currency, since every Algerian is entitled to €7200 per transfer trip, using Algerian employees to increase the amount.

Sixth, the gap can be explained by the weakness of production and productivity; the injection of monies without productive counterparties generating a certain level of inflation and depreciation of the Dinar. According to an OECD report, the productivity of Algeria’s is one of the lowest in the Mediterranean basin. The industrial fabric that some would revitalize without a strategic vision, according to the old mechanical vision, without seeking to take into account new technological changes and global managerial methods is a strategic error that the Algeria might pay dearly in the medium term.

Industry representing less than 5% of GDP and of these 5%, more than 95% are PMI/SMEs  that are uncompetitive, costs indirectly devalue the value of the Dinar. There is no proportionality between public spending and the low impact, the average growth rate not exceeding 3%, is source of inflation and explains the deterioration in the rating of the Dinar (imbalance of supply and demand that is supplemented by a massive importation of goods and services) on the open market against currencies the Bank of Algeria supported artificially thanks to oil revenues.

If foreign exchange reserves tended towards zero, the Euro open market to trade more than DZD300 and the official exchange fluctuate between DZD200/250 a Euro, where the importance of an external targeted debt, only on productive activities, in order to avoid the complete depletion of foreign exchange reserves which take the value of the dinar to over 70%.

Seventh, to guard against inflation, and therefore deterioration of its Dinar, the Algerian citizen does not place only his assets in land, real estate or gold, but would apportion his savings in currencies. Many Algerians benefit from the crisis of real estate, especially in Spain, acquiring apartments and villas in the Iberian Peninsula, in France and some in the USA, Latin America and tax havens. It is a choice of security in a country where the evolution of oil prices is decisive.

Political uncertainty, and a certain psychosis created by financial scandals, is pushing many officials to sell their assets and purchase property abroad. Also many households put in the prospect of a fall in oil, and given the commodities erratic fluctuations revenues, on the decline since year 2O13, buy the currencies on the informal market. (Ref paper by Professor Abderrahmane Mebtoul “Informal Sphere in the Maghreb and how to integrate it into the real sphere” Institut français des relations internationales (IFRI) Paris – Brussels December 2013 – 60 pages)

In summary, distortions between the formal and informal market reflects the weakness of local productive fabric, oil based rentier economy could only give an artificial official rating of the Dinar. An objective an analysis of inflation which has repercussions on the real value of the Dinar, would suppose a serious grasp of the dialectical relationship between development, the distribution of income and consumption by strata models. Subsidies and the distortion of the exchange rate between the official and parallel markets with neighbouring countries are basic explanations of overbilling and the spilling over of a good number of products out the borders. Administrative measures can only be one-off, otherwise an army of controllers would be needed. The solution lies simply in a new type of governance, ideally with new mechanisms of regulation, local production in segments of value-added in internationalised sectors, so of successful companies.

Read more on these 2 previously published here contributions Algeria’s currency rating between 2017 and 2020 and

The Algerian Dinar great slide by