Algeria : reforming the FDI framework for increased attractiveness
Foreign Direct Investments (FDI) in Algeria have experienced a drastic decline in recent years, as confirmed by successive reports from the United Nations Conference on Trade and Development (UNCTAD). In response to this concerning trend, the Algerian government is gearing up to reform the regulations governing investment, particularly concerning the rules governing FDIs.
By the editorial staff
Prime Minister Nadir Larbaoui recently reviewed a draft regulatory text aimed at defining the conditions for the transfer of shares or stakes in the capital of Algerian companies operating in strategic sectors. This initiative falls within the framework of presidential directives to enact the necessary regulatory texts to boost investments, in accordance with Article 52 of the 2020 Supplementary Finance Law.
The 51/49 rule: a hurdle for FDIs
The main measure hindering foreign investments in Algeria is the 51/49 rule, repealed in certain sectors. Enacted in 2009, this rule sets the maximum share of foreign investor participation in an Algerian company at 49%. Since then, the number of foreign projects in Algeria has significantly decreased.
Increased openness to foreign investments
The Algerian government recognizes the urgency to act in creating a favorable legislative environment for FDIs. Article 52 of the 2020 Supplementary Finance Law emphasizes the importance of revising the investment policy, particularly foreign investment, to boost the national economy. This initiative aims to attract more investments in Algeria, in response to the significant decline in FDIs, unlike other countries that saw an encouraging increase in 2019, according to UNCTAD’s World Investment Report.
The reform of regulations governing FDIs in Algeria thus represents a significant step in the quest for economic revitalization and increased openness to foreign investments. By removing regulatory obstacles and creating a more attractive framework for investors, the Algerian government hopes to revitalize the business climate and stimulate economic growth in the country.
