The Algerian government has recently announced a new investment code, which is termed the game changer for business in the country. However, many experts believe that the investment code is nothing more than a farce introduced to mask the miserable conditions of the Algerian business Arena. Last week, the investment code was introduced at the capital, where a copy of its draft was unveiled. However, by analyzing thoroughly, one can easily conclude that the new code has many similarities with the previous code introduced to attract private investments.
According to the Algerian government sources, the code is designed to assist investments by foreign and local investors in modifying the old-fashioned business structure of the country. In addition, the new code lays out the economic measures for significant investments, which are practically impossible to secure in a government-controlled economy.
Algeria was ranked as one of the most unfriendly countries in the recent ease of doing business index. It stood among the war-trodden countries like Syria and Iraq on the list. Similarly, Algeria is considered the least economically friendly country globally. In 2022, Algeria stood at 185 on the list of the Economic Freedom Index. The only countries that lagged behind Algeria were the war-trodden countries, like the Central African Republic. Another issue that deprives Algeria of investments is political and financial instability. The recent legislation will not halt the ever-declining value of the Dinar because the central bank is printing money to coup up with the fiscal deficit.
Although Algeria has introduced many monetary reforms to liberalize its faltering economy, the state still doesn't manage to find a viable solution for its miseries. As a result, several prominent investors, including Renault's mini-factory, are already planning to leave Algerian soil. Renault mini-factory was established to produce around fifty thousand vehicles per annum. In contrast, it managed to produce merely five thousand units because of the embargo of the Algerian government on the import of auto parts.
Algeria is one of the few countries around the globe whose banks are under strict state control. The rampant corruption in Algeria's banking sector hinders the FDIs (Foreign Direct Investments). The obsolete banking system of the country has also contributed to discouraging investors from making significant investments. The simplest solution for Algeria to come out of its economic woes is to replicate the investment codes of Morocco. However, to compete with Morocco economically, Algeria needs to facilitate its business environment to attract foreign and local investments.