Download logoAs the first light breaks over the Port of Algiers, cranes hum to life above stacks of containers. "A decade ago, 90% of these ships carried oil and gas,"remarks aport worker, gesturing toward vessels being loaded with fertilizers, steel coils, and crates of dates. "Now, you can see the change in what we exportits more than just oil products. Its our future."Long reliant on hydrocarbons, Algeria is now charting a bold course toward economic diversification. With over 90 percent of its export revenue historically coming from oil and gas, the country is undergoing a profound shift to reduce this dependency and attract foreign investment. Recent measures supported by the World Bank, are beginning to yield tangible results, as highlighted in theAlgeria Economic Updatefor the second half of 2024.Non-hydrocarbon exports have tripled since 2017, reaching $5.1 billion in 2023, representing just 2 percent of GDP. Key exports include fertilizers, steel products, and cement, signaling early successes in broadening Algerias economic base. At the same time, this portfolio remains limited and underscores the importance of further expansion and diversification efforts.Central to this transformation is the Algerian Port Community System (APCS), launched in July 2021 and developed with World Bank expertise, this digital platform connects all port stakeholders and reduces cargo clearance times by linking customs, shipping lines, and exporters on a single interface. The World Banks technical assistance also included establishing a legal framework, fostering stakeholder dialogue, and organizing study visits to global ports like Barcelona. "The APCS marks a turning point for Algerias trade sector," emphasizesMeriem Ait Ali Slimane, a Senior Economist at the World Bank. "It demonstrates how targeted reforms can drive transformative economic impact."Algeria's 2022 Investment Law is a key element of these efforts and is designed to attract domestic and foreign investors. The law offers incentives such as tax exemptions, customs duty waivers, and streamlined administrative procedures through the newly established Algerian Investment Promotion Agency (AAPI). The AAPI has rolled out an online platform to simplify investors journey, facilitating access to land, information, and incentives digitally. The World Bank supported AAPI through training and policy recommendations, including guidance on attracting foreign direct investment (FDI) and developing export-oriented sectors.Algerias agricultural sector has also made strides, particularly in exporting fresh food products. World Bank technical assistance facilitated market studies, value chain assessments, and public-private dialogues. A 2018 World Bank-backed campaign collected over 800.000 sheepskins, unlocking new opportunities for the leather industry. This campaign was the first of an ongoing series of solutions to environmental issues. Similar efforts in the industrial sector focused on value chains such as cork and precision mechanics. Capacity-building initiatives, including study tours and training programs, have enhanced knowledge and coordination among sectoral players.To ensure Algerian products meet international standards, the National Accreditation Agency (ALGERAC), a key player in ensuring export product quality, has expanded its reach. The World Bank assisted ALGERAC in developing a five-year strategic plan and building staff expertise through in-person and online training on international standards. By July 2024, the number of accredited laboratories rose to 135 from 77 in 2021, a 75 percent increase in three years. Accreditation is vital for aligning Algerian products with global standards, a crucial advantage for entering new markets.Despite advances, Algeria continues to encounter challenges in productivity and bureaucracy. The global shift toward decarbonization poses challenges, particularly for carbon-intensive exports like fertilizers and cement, under the EUs Carbon Border Adjustment Mechanism (CBAM). To sustain export growth, Algeria must boost productivity, attract more FDI, and green its industrial processes. World Bank recommendations include adopting carbon pricing, diversifying export markets, and strengthening value chains in high-potential sectors like renewable energy and IT."Algeria holds significant potential to diversify its exports and integrate into global value chains," notesKamel Braham, the World Banks Resident Representative in Algeria. "The challenge now lies in building on this momentum by addressing structural barriers and enhancing competitiveness."Algerias collaboration with the World Bank will continue to inform its economic transformation. By digitizing trade processes, strengthening institutional capacities, and diversifying export portfolios, the country is laying the groundwork for sustainable growth. As the sun rises over the Port of Algiers, the sight of containers filled with steel, cement, and agricultural productsrather than just oil and gassymbolizes a new chapter in Algerias economic story.Distributed by APO Group on behalf of The World Bank Group.
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