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Algeria Infrastructure Report 2011
Business Monitor International, Jan 2011, Pages: 71
The Algeria Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Algeria's infrastructure industry.
Growth in Algeria’s construction industry will bounce back in 2011 demonstrating the resilience of the sector. Continued revenue from the country’s extensive oil and gas resources has helped to power infrastructure development. Real year-on-year (y-o-y) growth of 6.9% is expected for 2011 as a result of investment in the county’s power sector. This will see construction industry value rise to US$14.8bn for 2011, a positive trend that will continue until the end of the forecast period in 2015 when the industry value will be US$20.8bn.
Recent factors in the forecast include:
- In May 2010, Oil Minister, Chakib Khelil announced plans to produce 5 per cent of the Algeria’s electricity needs from solar energy by 2017. This is in line with the government’s intention to diversify into renewable energy and decrease reliance on fossil fuel.
- New laws passed in Algeria in September 2010 mean that foreign contractors aiming to win a share of Algeria's US$286bn infrastructure budget will need to form joint ventures (JVs) with local firms. The move is the Algerian government's latest attempt to give preferential treatment to local firms and is the latest illustration of the state's growing intervention in the private sector. Bids submitted by local companies for government contracts are now allowed to be up to 25% higher than those submitted by international firms.
Along with the other frontier markets in North Africa (Libya, Morocco and Tunisia) Algeria offers significant opportunities for investors wanting exposure to the region's high growth. The infrastructure sector currently possesses the greatest growth potential over the long term.
Risks to doing business are considerable, with an over reliance on demand from the euro zone, concerns over long-term property rights, and elevated political risk, likely to lead to the region maintaining its high risk profile for the time being. New laws reportedly aimed at reducing unemployment may also have the effect of further reducing investor confidence in Algeria's already uncertain business environment
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