OBG talks to Chérif Rahmani, Minister of Industry, Small and Medium-Sized Enterprises (SMEs), and Investment Promotion

Interview: Chérif Rahmani

What projects are being developed in the steel, electronics and textile industries?

CHERIF RAHMANI: To boost these sectors, a programme was initiated for the establishment of a network of technical centres to cover and assist the main industrial activities. A number of areas are in the study stage of profitability and a technical centre for textiles and leathers is being converted into a public establishment of an industrial and commercial nature. Thus, new projects have been undertaken in those sectors and are in the maturation or study stage.

The creation of an incorporated Algerian and Qatari joint venture for a steel complex in Bellara is in the feasibility study stage. It is set to produce 5m tonnes of flat, long and special steel. Additionally, an electronic platform project is progressing in Sidi Bel Abbès, adding to the number of similar projects currently under negotiation and in partnership with foreign companies concerning household appliances. With regards to textiles, an interdepartmental working group was created to review the initiation of cotton cropping projects.

How do you evaluate the policy of restructuring the national agri-food industries?

RAHMANI: The agri-food sector is vital because it is linked to the food security of the nation. The prices of agricultural products experienced significant global increases and the Algerian food bill tripled in five years – from $2.6bn in 2003 to almost $8bn in 2008 – and grew further to $9.8bn in 2011. The idea of a strategic approach to develop the agri-food industries helped define major national objectives through a strategic consensus on the development of agri-food industries and the means of mobilisation for this purpose.

This strategy has also highlighted certain shortcomings. The agri-food sector represents a ratio of 0.28 integration – insignificant when compared to that of building materials, which is about 0.60. The capacity utilisation rate stands at 14%, which makes it an extroverted sector with an underused production potential. To utilise this, an action plan through 2014 has been developed with the integration of each sector’s strategic vision. Sectoral policies for provide only partial solutions. Thus, an overall strategy was necessary.

How could public-private partnerships help create inter- and intra-sectoral integration?

RAHMANI: Partnership contracts have already been signed between the state-owned groups Sonatrach and Sonelgaz, which deal with hydrocarbons and electricity/gas, respectively, and companies that serve as subcontractors to the investment management company SGP EQUIPAG. We are working to expand this type of contract and to involve private companies following the creation, for instance, of export consortiums in agri-food industries developed in February 2012. Our hope is this action will promote competition when SMEs are being subcontracted and address the management and technology gap that has made key groups reluctant to resort to national production.

What would make the auto industry competitive?

RAHMANI: Developing existing industries through subcontracting is necessary to be competitive. It helps control conditions, maximise existing potential, boost gains, increase abroad market shares, create jobs and export services. Algeria needs to create more competitive and resilient SMEs, as they are a vital ingredient of sustainable growth. Large companies and multinational corporations are also very much dependent on SMEs. They all together make up one big supply chain.

However, it should be made clear that if research and development activities are carried out by large industrial groups, SMEs have limited capacities to be engaged or unite their potential in a structured, team-oriented approach. In this regard, clusters, as part of the national SME upgrade programme, represent a more competitive approach; they would promote national subcontracting and integration, particularly when it comes to Algeria’s automotive industry.