In show of power, Algerian president blocks PM from carrying out reforms

Algeria has about 1,200 state companies employing 400,000 workers but more than 80% of the enterprises fail to make a profit.
Saturday 26/05/2018
In check. Algerian Prime Minister Ahmed Ouyahia attends a parliament session in Algiers. (AFP)
In check. Algerian Prime Minister Ahmed Ouyahia attends a parliament session in Algiers. (AFP)

TUNIS - Algerian President Abdelaziz Bouteflika scrapped two bold economic reforms, a move analysts said was aimed at asserting his authority ahead of elections next April.

The government planned to offer foreign investors concessions to farm state-owned land for the first time to expand locally produced food output and trim reliance on imports.

Under the plan, foreign investors would have been allowed to form farming partnerships with the state or private Algerian investors. The scheme was part of the government’s efforts to lure foreign investment, especially in the technology sector, to help increase agricultural productivity.

The draft law was struck down by Bouteflika during a cabinet meeting May 13.

It was the second time Bouteflika blocked Prime Minister Ahmed Ouyahia from implementing economic reform measures in recent months. In January, Ouyahia signed an executive order to put stakes in small state enterprises up for sale but Bouteflika swiftly filed a directive to halt the privatisation move.

Ouyahia’s attempt at privatisation was among economic reforms announced last year that would allow some public-private partnerships in which state companies retain majority ownership.

Algeria has about 1,200 state companies employing 400,000 workers, government data show, but more than 80% of the enterprises fail to make a profit.

Analysts said the decisions highlighted divisions within Algeria’s leadership over which key sectors to open to private investors, including foreigners. They said Bouteflika’s intervention in key economic issues was an attempt to show that the president was in full control of the country’s affairs.

Bouteflika, 81, has made a series of  appearances in Algiers, travelling to an Islamic shrine and inspecting construction of a mosque on May 15. He had largely disappeared from public view since he suffered a stroke in 2013, leading opposition figures to cast doubt on his health and ability to govern.

Bouteflika’s showing up in public and his pushback against Ouyahia are powerful messages ahead of presidential elections next April, analysts said.

Foreign investors have long complained about red tape and other obstacles to investment in Algeria. In 2010, Algeria allowed private firms to lease state-owned farmland for 40 years. Private firms could enter into partnerships with foreigners but they were not allowed to directly hold concessions.

Potential investors from the United States lobbied for such concessions to expand the presence of American investors in Algeria’s agriculture. A US investor is already active in a big farm in the southern region of el Bayadh.

Early this year, Ouyahia promised that 3 million hectares would be leased under the concession scheme. Officials said Algeria could expand its area of farm land from 8 million hectares to 30 million hectares if the government provided the right environment for private investment including foreigners but Bouteflika’s moves put that in question.

“A new initiative by the government headed by Ouyahia fell through as the president pulled the plug,” said analyst Hassan Haddouche. “It is the same move with the privatisation attempts in January.”

He said: “A conclusion must be reached that there is no unity among the country’s leadership on the direction of economic reforms.”

Other analysts said Bouteflika’s intervention was good for the country’s political stability and noted that, with rising oil prices likely to yield an estimated $30 billion more than projected this year, Algeria would not be as urgent to look for foreign investment in farming and other sectors outside the hydrocarbon industry.

“With this directive to cancel the concessions plan, he (Bouteflika) sent a message to the public opinion that he is the protector of the country’s high interests and he is the guard who is ready to ward off any policy excesses by the government,” said political analyst Mokrane Ait Ourabi.

“President Bouteflika appeared to offset his absence from the public scene by multiplying the directives that cancel measures taken by the government. This way of ruling the country mirrors the image of a country that is not stable, fragile and without a strong hand on the rudder.”