Stagnation or Growth? Algeria’s development pathway to 2040

This special report examines the factors influencing foreign direct investment (FDI) and remittances in Algeria, highlighting significant gaps in investment compared to other middle-income countries and the regulatory hurdles hindering growth.

• Algeria's foreign direct investment (FDI) as a percentage of GDP is significantly lower than the averages for lower-middle-income countries (OLMICs) and upper-middle-income countries (UMICs). The investment stock as a percentage of GDP is nearly three times lower than the UMIC average and represents only 42% of the OLMIC average.
• China has recently replaced France as the largest investor in Algeria, focusing primarily on the mining and construction sectors, supported by a strategic partnership between the two nations. Conversely, FDI from Europe into Algeria and the broader region has declined since the Arab Spring, though there is increased interest from Gulf investors.
• Investment in Algeria is constrained by numerous regulatory and practical barriers, including corruption, bureaucracy, protectionism, impenetrable markets, and weak laws regarding intellectual property and the digital economy. Additionally, the promotion of state-owned enterprises (SOEs) that lack accountability and efficiency creates a burden on the national budget.
• The Complementary Finance Law of 2020 introduces measures to attract investment by removing the 51/49 domestic ownership rule for foreign businesses, reducing corporate taxes in specific locations, providing tax exemptions for exporting projects, and allowing land concessions by mutual agreement.
• Remittance inflows to Algeria were valued at approximately €1.6 billion in 2018 (1% of GDP), with December 2019 estimates reaching US$1.792 billion. Research indicates that these remittances, particularly foreign pensions, have reduced poverty and inequality in two Algerian regions, lowering their regional Gini indices by nearly 4%.

APA

Cilliers, J., & Kwasi, S. (2022). Stagnation or Growth? Algeria’s development pathway to 2040. Institute for Security Studies. https://futures.issafrica.org/special-reports/guide.pdf?report=country/algeria&topic=11-foreign

Chicago

Cilliers, Jakkie, and Stellah Kwasi. Stagnation or Growth? Algeria’s development pathway to 2040. Institute for Security Studies, 2022. https://futures.issafrica.org/special-reports/guide.pdf?report=country/algeria&topic=11-foreign.

Wikipedia

{{cite report |last1=Cilliers |first1=Jakkie |last2=Kwasi |first2=Stellah |title=Stagnation or Growth? Algeria’s development pathway to 2040 |publisher=Institute for Security Studies |date=28 June 2022 |url=https://futures.issafrica.org/special-reports/guide.pdf?report=country/algeria&topic=11-foreign |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cilliers2022stagnation, author = {Cilliers, Jakkie and Kwasi, Stellah}, title = {{Stagnation or Growth? Algeria’s development pathway to 2040}}, institution = {Institute for Security Studies}, year = {2022}, month = jun, url = {https://futures.issafrica.org/special-reports/guide.pdf?report=country/algeria&topic=11-foreign}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }