Greater private sector participation in key Algerian state enterprises

While the state remains a major player in the Algerian economy, recent years have seen an impetus towards the sale of stakes in public enterprises. In the mid-2000s the government had plans to privatise a majority stake in the state-owned bank Crédit Populaire Algérie (CPA) and a minority holding in fixed-line telecoms operator Algérie Telecom, but these were dropped in 2007 and 2008 respectively.

Plans To List

In 2013 the State Holdings Council approved plans to list eight state-owned firms – namely, mobile telecoms operator Mobilis, bank CPA, insurance firm the Algerian Company for Insurance and Reinsurance, quarry operator Cosider Carrières, water and sanitation firm Entreprise Nationale des Aménagements Hydrauliques, and three cement factories belonging to state-owned cement holding firm Groupe Industriel des Ciments d’Algérie (GICA) – on the local stock exchange, the Bourse d’Alger.

The plan’s main aim was not to bring in extra revenues – it was formulated while oil prices remained high – but rather to boost the under-developed stock market, and the government has said that the stake sales do not amount to privatisations. The listings could have a big impact on the market, with GICA for instance announcing in September 2015 that it intended to sell a 35% stake in the Aïn El Kebira cement factor, in Sétif Province, via the bourse in 2016.

The privatisation of a stake in mobile telecoms operator Mobilis also appears to remain on the card. In October 2015 Iman Houda Feraoun, minister of post and information and communication technologies, told media the government intended to sell a 20% stake in the firm via the bourse, while ruling out any prospect of a stake in Mobilis’s parent company, fixed-line operator Algérie Telecom, which was not sold off due to the firm’s strategic nature. The fall in the oil price has given increased discussions of such stake sales and government efforts to facilitate them. Article 66 of the 2016 Finance Law, passed on November 30, 2015, permits the capital of state firms to be opened to local – but not foreign – investment from private players.

According to local media, the law obliges state-run companies opening up their capital to private investment to retain a 34% stake in themselves; after five years, local shareholders can also seek permission to acquire the remaining 34%. In December 2015 Benkhelfa told media that such sales would require approval from the State Ownership Council and that any proposed sale would need to be accompanied by measures to protect employees at the companies.

Partnerships

Privatisation remains contentious, and companies such as the state oil and gas firm Sonatrach and Algérie Telecom remain off-limits. “There is a need for public-private partnerships for large infrastructure projects, such as partnerships with major companies to develop hydrocarbons mega-projects – such as the development of the $13.93bn Trans Saharan Gas pipeline New Partnership for Africa’s Development programme. This will link Algeria and Nigeria passing through Niger, and has a huge potential to supply gas to the EU market,” Boubacar Traoré, Resident Representative at the African Development Bank, argued.

Rafik Bouklia-Hassane, professor of economics at the University of Oran, echoed the point. “The government’s investment budget could be reduced through the use of more public-private partnerships,” he told OBG. “Private companies have made clear that they are interested in and ready for such partnerships and these should be a priority for the government, though it will need to ensure that the arrangements are transparent and do not become a form of rent for the companies involved.” In October 2015 President Abdelaziz Bouteflika instructed the government to draw up a comprehensive strategy for the development of various sectors including agriculture, industry and tourism through public-private partnerships.