Anti-graft drive complicates Algerian economic woes
ALGIERS - Analysts warned that Algeria’s economy could be in dire straits if uncertainty continues to dominate the political landscape.
The exceptional situation that Algerians have been living for more than two months has contributed to the country’s economic isolation and the alienation of foreign capital, especially in the oil sector, since the beginning of a campaign against corruption.
Economic expert Nabil Jouma said the shaking of legitimacy of Algerian political institutions was going to have negative repercussions on the economy for some time. He pointed out that, because of the political turmoil in Algeria, international rating agencies placed the country in the red zone on their scale of indicators. The necessity to move beyond the current troubling situation has become urgent.
Jouma’s comments were made after a wave of arrests of businessmen, such as Ali Haddad, Issad Rebrab and the Kouninef brothers, who were taken before the courts to face charges related to corruption and waste of public money.
Major government institutions have undergone sweeping changes in recent weeks, purportedly to be cleansed of corruption and suspicious practices. The Algerian Supreme Court is investigating former Energy Minister Chakib Khelil on corruption charges.
The courts referred two files for investigation related to charges of violation of the laws on foreign currency exchange, transferring funds abroad and concluding two irregular deals with two foreign companies on behalf of the Algerian national oil company Sonatrach. Sonatrach CEO Abdelmoumen Ould Kaddour was sacked, sparking uncertainty among investors.
The list of people and businesses likely to be investigated remains open and that will contribute to the impression that Algeria is an undesirable destination for investors.
Rebrab, owner and CEO of the Cevital Industrial Group, has been described as Africa's richest man, with a fortune of about $4 billion and investments in Brazil, France and Sudan. However, the largest fortune in Algeria is held by Kouninef family.
The Kouninefs have operated out of the limelight, so much so that most Algerians did not know about them. At the turn of the millennium, the family acquired huge loans from local banks but defaulted on them, forcing former Algerian President Abdelaziz Bouteflika to step in to fix things.
Authorities had been preparing to review the law on hydrocarbons in June to encourage international oil companies to invest in exploration in Algeria but the political unrest and shake-up affecting state institutions changed all the rules and agendas.
Because of the popular protests, American oil giant ExxonMobil delayed consultations with Sonatrach. Even though Ould Kaddour had been convicted and imprisoned for mismanagement and selling information, he was returned in March 2017 to lead the largest company in the country with the blessings of some US oil circles.
US investors had hoped for the reactivation of exploration and exploitation of shale gas, which was halted in 2014 under pressure from popular protests in southern Algeria.
Khathir Zerman, president of the National Coalition for Combating Corruption, called for an acceleration in reforms and fighting corruption to restore normalcy in the country because the main challenges it faces are economic, especially major economic imbalances and the erosion of foreign exchange reserves.
An official source said facts that will be revealed to the Algerian population are going to be shocking because the alliance between political and financial lobbies had depleted state resources and revenues by $1.6 trillion in the last two decades. The source, who spoke on condition of anonymity, said all local investments and tenders went to profit a small group of monopolists and political figures.
He pointed out that US statistics estimated that 3% of all Algerians own 90% of the country's wealth, which indicates the imbalance that created a “mafia” economy. “Haddad and Kouninef alone have siphoned around $4 billion a year in investment funds from Sonatrach,” the source said.
A source said extensive investigations were initiated against businessmen who were members of the forum of heads of companies close to Bouteflika. The first to be investigated are those active in automobile and truck assembly.
Estimates say the automotive sector has drained about $6 billion of state revenues and investors in the sector failed to increase integration rates in their businesses.