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Traders and industrialists bemoan the time it takes for goods to pass through the country‘s ports, while bankers are unable to offer more sophisticated services due to deficiencies in telecommunications.
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Given that Algeria‘s post-independence planners were facing a country one-third the size of the United States with very limited infrastructure, significant levels of state investment were directed toward infrastructure during Algeria‘s boom years of the 1970s and early 1980s. As a result, Algeria has a relatively well-developed transport and telecommunications infrastructure. However, most sectors have deteriorated steadily due to insufficient maintenance budgets as the government – the only supplier of infrastructure services – was forced to implement an increasingly tight fiscal policy beginning in the mid-1980s.
In a move that signals good news for investors, Mr. Boutefika‘s government is opening Algeria‘s infrastructure development needs to non-budgetary financing in a bid to rapidly improve its services and repair the damage caused by neglect and sabotage. |
The Minister of Transportation, Mr. Hamid Lounaouci, is clear on this point. “Algeria is about 2.4 million km2, and with such a big surface its infrastructure needs are huge. But the public treasury cannot afford to construct the roads, to buy the machines, to modernize the customs services, to construct highways linked to the airport etc., when all the other sectors, such as agriculture and public health, also require funds. That is why we need to reorient the strategy of the country and mobilize alternative sources of financing via creating partnerships and offering concessions and other kinds of investments.”
As a prelude to this, Mr. Lounaouci has been busy changing the ministry‘s regulations in order to allow the participation of local and international capital in infrastructure investments for air, rail, and maritime transportation. The nation‘s legal framework already permits private investment in Algeria‘s transportation sector, but the law is limited, specifying that 51% of the shareholders of the investing company have to be Algerian. The ministry is seeking to amend the law to allow 100% foreign investment. Parliament is expected to approve the law by September 2000.
Algeria‘s transportation sector has also faced significant deregulation in recent years in order to open up large state firms to competition and promote private sector investments. Air Algérie, the country‘s third-biggest company in terms of annual turnover, now faces four local, privately owned airlines that were established after the sector was opened up for competition in late 1998. Air Algérie itself, which is undergoing restructuring and an expensive upgrade of its fleet, might also need to look for private investment.
The ministry is also set to implement an organizational rehaul of country‘s maritime sector by separating commercial operations from the country‘s port authorities. “We will introduce a law,” says Mr. Lounaouci, “that will make the port authorities responsible for all that is related to security, control, and supervision. The commercial activities, which are now under the ports‘ jurisdiction, will be separated and opened to competition.”
As with transportation, the government is committed to a swift opening up of the telecommunications sector. The Minister of Posts and Telecommunications, Mr. Mohamed Maghlaoui, has initiated this process by preparing legislation - recently passed by parliament - that separates the regulatory role of the ministry from the commercial activities of the sector. The postal system and the telecommunications network will be split into two separate commercial entities.
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Although the postal system will remain public for the time being, the ministry is planning to rehabilitate the telecommunications network – which will include the increase of the number of lines from six to 20 per 100 people and the transfer of the network to 100% digital lines – and then progressively deregulate and privatize. The process began when the ministry issued a public tender to private investors for a second GSM license. “This,” says Mr. Meghlaoui, “is just the first step. Once an international audit office validates the first results of the future telecommunications company, we will immediately open up one part of its capital, maybe between 25% and 30%, to a strategic investor(s) that will bring technology, management expertise, and financing to develop the network. We are also planning to tender licenses regarding rural telephony and we will open the exploitation of international and local telecommunications. So the objective is to free the entire market by 2005. Different stages of privatization will be followed up from today to 2004 to create competition in the market under the control of the regulatory authority.” |
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In the meantime, the minister will be concentrating on modernizing the telecommunications network within the next 12 to 18 months. The ministry is preparing a telecommunication network specialized for the banking sector to be implemented next year, and is also developing a reliable network for the convergence of voice, image, and data.
“In the past,” says Mr. Meghlaoui, “we were talking about who has money and who doesn‘t. Today, we talk about who knows and who doesn‘t, who is on the Web and who isn‘t. So when bankers and businessmen say that telecommunication is a priority for development, they are right. Therefore it is our mission to give the country a communication network that can cope with all business and investment activities. The investor is not interested in coming to Algeria unless we provide a good network.”
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For such a large country, infrastructure rehabilitation is going to require a lot of money and effort. The government is looking to the private sector to take the leading role
