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Algeria suffering from failure to diversify

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Algeria suffering from failure to diversify


Oil is the lifeblood of the Algerian economy and the engine driving the country’s growth in recent years.

It accounts for 45 percent of Gross Domestic Product and 96 percent of exports. Revenues from this vital resource rose from 43 billion euros in 2007 to 57 billion in 2008. The surge in prices has helped Algeria almost rid itself of debt. Bulging state coffers have enabled President Bouteflika’s government to launch economic development plans worth some 130 billion euros. Under these initiatives, infrastructure is being modernised and new public housing projects are underway. These have spurred growth in the economy. But critics say not enough has been done to encourage diversity. In fact non-oil related industry’s contribution to the economy has shrunk from 18 to five percent in recent years. Algeria moved away from centralised economic planning in the 1990s but an over-wieldy bureaucracy, antiquated banking and poor training have forced non-oil industries into steady decline. Omar Belhouchet, the editor of El Watan newspaper, said: “We have lots of money today. The country has considerable reserves. But when there is money around, you feel more at ease, and we have not felt obliged to carry out reforms.” Perhaps the most worrying trend for Algeria’s long-term prospects is unemployment among the young. The official jobless figure is 12 percent. But some 70 percent of young people are said to be out of work. That makes grim reading for a country with around 70 percent of its population under 30. Instead of boosting manufacturing and agriculture, oil income has been used to pay for imports to meet a growing demand for food, clothes and construction materials. That further undermines employment in the non-oil sector.

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