Algeria Emerges from the Shadows: Algeria's Economic Development Took a Serious Hit When Civil War Broke out in the Early 1990s. with Domestic Tensions Easing, the Country Has Launched a Bid to Diversify Its Oil- and Gas-Dependent Economy, Unveiling Ambitious Plans to Open Up the County to Foreign Visitors
Kan, Charlotte, The Middle East
Algeria has the eighth-largest reserves of natural gas in the world, is the fourth-largest gas exporter and ranks 16th in oil reserves according to OPEC. Hydrocarbons are the backbone of the economy, generating around 60% of budget revenues, more than 30% of GDP, and over 95% of exports. In order to lessen its reliance on global oil and gas demand, the government has made greater efforts since the mid-1990s to diversify the economy by attracting foreign and domestic investment outside the energy sector.
In 2010, Algeria launched a five-year, $286 billion development programme to update the country's infrastructure and boost employment levels by encouraging local business development, as well as education and housing projects. The Ministry of Transport in Algeria has allocated a budget of $9.6 billion for large transport infrastructure projects such as the modernisation of airports, ports and railways, and will invest a further $8.2 billion on larger projects such as the east-west motorway. Overall, public spending has increased by 27% annually during the past five years.
These initiatives are slowly bearing fruit, and GDP growth, which stood at 2.5% in 2011, is accelerating. The International Monetary Fund (IMF) forecasts GDP growth to reach 3.1% in 2012 and 3.4% in 2013. Thanks to its hydrocarbon exports, Algeria owns around $170 billion of foreign currency reserves, which puts it in 10th place globally, even ahead of former colonial power France. Moreover, the country benefits from very low debt, which stands at a meagre 2% of its $180 billion annual GDP: Algeria is a "rich" country.
However, Algeria's wealth is poorly distributed and a third of the population lives on less than $2 a day. The government still employs nearly a third of the workforce. Food price inflation is creeping, as in other North African countries, and has led to protests and riots. At more than 10%, unemployment remains high, in particular amongst the youth, where it stands at around 21% on paper, though it is said to be closer to 30-40% in reality. The young, jobless population is often described as a "timebomb", and in a paper entitled Unemployment and Labour Market Issues in Algeria, issued in April this year, the IMF warns this is a problem the country should tackle, or risk facing unrest in the street, as was seen in neighbouring Tunisia, Libya and Morocco.
"Despite several years of sustained growth, the unemployment rate in Algeria remains high compared to other emerging economies. In addition, while growth performance in the last 10 years was accompanied by a significant reduction in the overall unemployment rate, youth joblessness has proven more difficult to tackle as evidenced by the fact that the ratio of youth unemployment to overall unemployment has steadily increased over the recent period," the IMF notes.
Ambitious development plans for tourism
Given the popularity of tourism in the region, developing the local industry is seen as a way to answer many of Algeria's economic and social woes.
Algeria definitely has potential, with 1,200 kilometres of Mediterranean coastline and a mild, sunny climate. It offers a great variety of landscapes, from mountains to the dunes of the Sahara desert, which covers four fifths of the land. It shares borders with Morocco, Libya, Tunisia, Mauritania, Mali and Niger, and has several national parks and natural reserves with stunning scenery. According to various travel guides including the popular Lonely Planet "Algeria is one of the most fascinating countries in North Africa".
"In the dramatic Unesco-listed Tassili N'Ajjer and Hoggar regions, near the town of Tamanrasset, tribal culture is very much alive, and the day-to-day hassle common to many Arab countries is conspicuously absent. Algiers contains a vivid mix of tradition and modernism, its colonial past maintaining a presence. Timimoun embodies the storybook oasis town of the Sahara, and the welcoming town of In Salah is split in two by a creeping sand dune", the guide notes.
The country's history is rich and diverse: initially populated by Berbers, it was conquered by Muslim Arabs in the 7th century; and it became part of the Ottoman Empire by the 16th century. The French captured Algiers in 1830, and a long conflict for conquest of the rest of the country followed. Algeria fought a bloody war with France over its independence, which was gained in 1962. There are still remnants of Algeria's colonial past in the capital and throughout the country, and ancient sites are abundant: UNE SCO-inscribed Djemila, Al Qal'a of Beni Hammad, Timgad and Tipasa to name a few.
Sea, sun, stunning landscapes, desert, history, culture: Algeria has it all and sounds like the perfect holiday destination.
Unfortunately, due to the civil war that broke out in 1992, Algeria's natural beauty has remained mostly unseen for decades. The conflict between the military-based government and various Islamist rebel groups that ravaged the country until 2002 led to the death of 150,000 individuals. In the 1990s, whilst neighbours Morocco and Tunisia were investing heavily in expanding the numbers of international tourists to the region, the Algerian tourism industry was ignored. It remains underdeveloped and suffers from a lack of any decent facilities. The majority of visitors are members of the Algerian expatriate community returning to the homeland to visit family during holidays.
Only too aware of its untapped potential as a major holiday destination, Algeria is trying to catch up. It has launched a strategic framework for the development of tourism with a 2025 horizon called the "Schema Directeur d'Amenagement Touristique" (SDAT).
Tourism Minister Smail Mimoune announced in April that authorities would implement 700 projects either renovations of existing hotel facilities or new hotel constructions--raising the accommodation capacity from 94,000 beds currently to 160,000 beds in three years. Public-private partnerships are particularly sought after to finance the construction of tourism facilities.
Noting that Algeria earned some $70 billion from oil and gas revenues last year, compared to $400 million from tourism, Mimoune said he hoped his plans would help the country welcome 3.5 million visitors annually by 2015, increasing income from the sector to $600 million in the same period.
He has also called for the creation of a national union of tourism traders in order to unify the development of tourism throughout the country, explaining that "no one will be able to do it on their own".
The World Travel & Tourism Council (WTTC) forecasts the total contribution of travel and tourism to GDP to increase by 4.6% annually to 2022. Last year, travel and tourism directly supported nearly 378,000 jobs (3.6% of total employment). The WTTC expects it to rise by 2.8% per annum to reach 497,000 jobs (3.7% of total employment) by 2022.
These targets are obviously only achievable if the political situation remains calm. An 'Arab Spring' has not blossomed in the country yet, but cannot be excluded. Notwithstanding the threat of terrorism, which, despite government efforts, remains a concern.
The terrorism risk
During the UNWRA regional tourism conference on the Mediterranean in Djerba, Tunisia, in April, Algeria's tourism minister said that Al Qaeda in the Islamic Maghreb poses no threat to local tourism.
However, despite considerable improvements in the security situation, many countries are still urging visiting nationals to exercise caution when travelling in Algeria, particularly in remote areas.
Like Canada, the US and EU counterparts, the UK Foreign and Commonwealth office says there is a high threat from terrorism in Algeria. "You should exercise extreme caution at all times. Although major cities are heavily policed, terrorist attacks could still potentially take place and could be indiscriminate, including in places frequented by expatriates and foreign travellers such as restaurants, hotels and shopping centres", it says on its website.
Attacks by Al Qaeda in the Islamic Maghreb (AQ-M) have occurred across a wide area of the Sahel region, including Algeria, and since 2008, AQ-M has taken over 25 hostages of a variety of nationalities in the region, primarily European. In April this year, a suicide bomber crashed an explosives-laden car into a police station post near Tamenrasset in the south of the country: 23 people were injured. The Movement for Oneness and Jihad in West Africa, an affiliate of Al Qaeda in the Islamic Maghbreb, claimed responsibility for this attack.
Algeria's Prime Minister Ahmed Ouyahia, vowed to eradicate terrorism in the wake of the event. The fight against terrorism "will be pursued until it is eradicated," he said. However, reports of attacks and kidnappings will clearly give tourists food for thought.
Nevertheless, the region as a whole, despite being plagued by political instability, is proving attractive to tourism. According to Robert Lanquar, author of a July 2011 report on Tourism in the Mediterranean: Scenarios up to 2030 published in the context of MEDPRO (Mediterranean Prospects), a three-year project funded under the Socio-economic Sciences & Humanities Programme of the European Commission, for the last two decades, the 11 countries of the Southern Mediterranean--which includes Algeria, but also Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Occupied Palestinian Territory, Syria, Tunisia and Turkey--have recorded the highest growth rates in inbound world tourism.
"The economic performance of tourism in these countries has been astonishing, given the security risks, natural disasters, oil prices rises and economic uncertainties in the region.
Even the last financial crisis had no severe impact on this growth, which confirmed the resilience of tourism and the huge potential of the so-called 'MED 11' countries in this sector."
If Algeria's neighbours were able to tap into the tourism Eldorado, then there is no doubt that this country can too.
The end of an era
An era ended in Algeria with the death, aged 95, of Ahmed Ben Bella, the country's first president and one of the leading figures in its bloody struggle for independence against France.
The death of the Algerian statesman in April, at the family home in Algiers, came just weeks after the country had celebrated the 50th anniversary of gaining independence.
A former decorated soldier, he fought with distinction with the Free French Forces in Italy during World War II and won five French decorations including the prestigious Military Medal, but turned against French rule after the war. He fled to Cairo where he was among the architects of the 1954 uprising which began Algeria's war of independence.
Ben Bella was a key figure in the Algerian revolt against the French and served time in prison for his revolutionary fervour. He was released in 1962, when Algeria won independence, to become his country's first president in 1963.
Overthrown in a military coup in 1965 by Colonel Houari Boumedienne, and kept under house arrest until 1980, he then lived for a decade in exile in Switzerland before his eventual pardon in 1990, when he returned to Algiers.
Despite being imprisoned by the French, he was the acknowledged head of the independence movement throughout the revolution and became an icon for the global anti-colonial movement.
Until Boumedienne's death 13 years later, Ben Bella was persona non grata in Algeria, with no public mention of his name allowed in Algeria's state-controlled media. Although during his short time in office he did little to deserve great accolades, his treatment at the hands of the military government in power during his incarceration and exile, together with his earlier revolutionary exploits, were to gain him legendary status.…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Algeria Emerges from the Shadows: Algeria's Economic Development Took a Serious Hit When Civil War Broke out in the Early 1990s. with Domestic Tensions Easing, the Country Has Launched a Bid to Diversify Its Oil- and Gas-Dependent Economy, Unveiling Ambitious Plans to Open Up the County to Foreign Visitors. Contributors: Kan, Charlotte - Author. Magazine title: The Middle East. Issue: 433 Publication date: June 2012. Page number: 46+. © 2009 IC Publications Ltd. COPYRIGHT 2012 Gale Group.
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