Algeria’s Corporate Barons Cast Themselves As Saviours Of Economy


Heba Saleh in Algiers

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When Abdelmadjid Tebboune fell out with Algeria’s business elite, he was sacked just three months into his term as prime minister.


His mistake was to call on the country’s entrepreneurs to stop interfering in politics and to criticise Ali Haddad, who is considered the country’s most influential businessman. The tycoon is close to president Abdelaziz Bouteflika and his construction company, ETRHB Haddad, has been one of the main beneficiaries of the government’s huge infrastructure programme.

The dismissal of Mr Tebboune last year was testament to the influence of Algeria’s politically connected corporate barons whose businesses have expanded dramatically under Mr Bouteflika as the president poured hundreds of billions of petrodollars into public works.

Now the private sector is casting itself as the best hope of turning round the stagnant, state-dominated economy after the government responded to a prolonged period of low oil prices by curtailing imports and protecting local industry.

“We have asked the state to give a role to the private sector in all areas,” Mr Haddad told visiting journalists given rare access to the country on a tightly controlled programme of factory visits and meetings.

He and his peers say they want to drive the transformation of the economy to reduce its dependence on petrodollars, develop manufacturing and services and create jobs. Hydrocarbons provide 60 per cent of state revenues and the country suffers from youth unemployment of 28 per cent.

President Abdelaziz Bouteflika has rarely been seen in public since suffering a stroke five years ago © Reuters

“There is real dynamism in the private sector. But there is also a political side,” said Ihsane al-Qadi, editor of Maghreb Emergent, an economic website based in Algiers. “The state may now rely more on private entrepreneurs, but they still have to demonstrate complete loyalty to the president, stay within the limits set for them and consult before launching new initiatives.”

Africa’s largest gas exporter is saddled with an opaque political system and Mr Bouteflika has rarely appeared in public since suffering a stroke five years ago. His absence has led to speculation over who is really in charge in Algeria. Analysts speak of powerful roles for the military and for Said Bouteflika, the president’s brother, who is known to be close to business circles.

Despite his ill health, the governing National Liberation Front party has called on Mr Bouteflika to run for a fifth term next year. If he does, analysts believe it would reflect the inability of cliques within the military and security establishment to agree on a successor.

“The businessmen have been one of the biggest interest groups behind Bouteflika. All made their money under him,” said Riccardo Fabiani, analyst at Energy Aspects, a consultancy. “There is a risk that if he leaves, anyone can take aim at them. They would be in uncharted territory.”

He also pointed out that if oil prices continued to rise, the government’s economic reform drive could lose momentum.

“When the regime is not under pressure any more from falling prices, its commitment to industrial policy may weaken,” Mr Fabiani said.

The north African nation’s economy grew just 1.6 per cent last year, according to the IMF, while the government’s foreign reserves have fallen from $178bn in 2014 to $90bn at the end of May. Algerians complain of the erosion of their purchasing power as prices have risen and their currency has depreciated. This year, thousands of doctors and teachers embarked on lengthy strikes demanding better pay and working conditions.

Doctors and dentists demand better pay and working conditions during a protest in Algiers earlier this year © AFP

But analysts caution that economic liberalisation remains selective, tightly managed and potentially reversible if oil prices rise or if Mr Bouteflika, an ailing 81-year-old who has been in power since 1999, is no longer president.

The protection extended to local industry includes tax holidays, subsidised energy and credit from state-owned banks.

Apart from his construction company, Mr Haddad owns a recently opened factory producing steel pipes and is setting up two cement plants as well as a steel mill. His business empire also includes a private satellite station and a football team.

Mohamed Skander, partner in BH Advisory, a management consultancy in Algiers, likened the government’s protection of local industry to “affirmative action” in the US. His company, he said, had grown 100 per cent every year for the past five years.

“For us there has never been a better time than the last 10 years. [In the past] the private sector was marginal to decision makers, but now there is dialogue,” he said. I really hope it will continue like this.”

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Source : https://www.ft.com/content/4f315ec6-8072-11e8-8e67-1e1a0846c475

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