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A number of sectors in the Algerian economy are experiencing serious difficulties related to the current political crisis and the associated anti-corruption campaign. The result could tip the country into recession by the end of the year.

The Association Générale des Entrepreneurs Algérien (a confederation of Algerian companies) sent a letter to Prime Minister Noureddine Bedoui on the ‘alarming situation of companies’, caused by the unpaid debts of the public companies vis-à-vis their private contractors. Allegedly, 3,200 companies have been closed and 265,000 employees lost their jobs since December 2018.

This alone is causing a slump in a number of sectors, especially in construction. The tourism sector is also being badly hit. According to Lazhar Bounafaa, the CEO of the state-owned Groupe Hôtellerie Tourisme et Therlalisme SPA, the political situation in the last three months has already seen the hotel business shrink by 85% compared to the same period of last year.

Meanwhile, the current anti-corruption campaign is showing signs of having a major impact on business activity and the Algerian economy, especially in the private sector where many of the country’s leading businessmen are in prison. The list of businesses affected has been growing every week.

The public sector is also under threat. Many of the country’s major companies — Sonatrach, Sonelgaz and Algérie Télécom — are already under investigation. Perhaps more worrying is that two former CEOs of some of the largest public banks are imprisoned and that they have been joined in the last few weeks by many executives from the Ministry of Industry.

The result of all this is that business, industry and finance are becoming incapacitated with officials being afraid or unable to make decisions. Lending in particular is becoming increasingly paralysed.

The government is too inexperienced and illegitimate to manage this sort of crisis which could have dire social and political implications for years to come.

This excerpt is taken from Algeria Politics & Security, our weekly intelligence report on Algeria. Click here to receive a free sample copy.

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