In recent years Emirati investors have played a key role in the development of Algeria's economy. Encouraged by the country's increasingly welcoming attitude towards foreign investment, UAE-based companies have channeled investment and resources into a variety of economic sectors.
The visit to Algeria in May of this year by Sultan bin Saeed Al Mansouri, the UAE's minister of economy, was largely aimed at putting the once-profitable bilateral relationship back in gear. During the event, it was remarked that despite the reduction of capital inflows following the financial crisis, investments from the UAE in Algeria had reached a total of €27.2bn, positioning the UAE as the largest Arab investor in the country. He continued by highlighting industry, agriculture and tourism as sectors with the most potential for joint investments and cooperation in the coming years.
The arrival of the financial crisis dampened the UAE's involvement in Algeria, with tightening financing conditions in the home country causing various Emirati investment funds to scale down, and in some cases withdraw entirely. Dubai-based developer Emaar Properties, for example, cancelled four major projects, including the construction of a new city in Sidi Abdallah, as well as a health care complex on the western periphery of the capital.
Up until mid-2008, the property sector had been a primary focus of investment for UAE companies, with announcements of multibillion-dollar projects made by various real estate firms, including Emaar, Al Qudra and Emirates International Investment Company (EIIC). This was followed by new investments in the industrial sector by companies such as Dubai-based Emirates Aluminium International, which announced plans to construct of a €5.1bn aluminium plant at Beni Saf in western Algeria, and EIIC, which announced investments in electrical cabling, agriculture and banking.
Emirati investors - in a bid to better buffer themselves against sectoral volatility - are also beginning to diversify their operations in Algeria, expanding their investments into sectors outside of real estate. National Holding (NH), the private Abu-Dhabi holding company that owns EIIC, is one example.
In May this year, the company, which has exclusive investments in Algeria, announced its plans to redesign its global portfolio along five main business lines – EIIC (investments), Bloom (properties), Exeed (industry), Rise (trading) and Petromal (energy).
NH's activities in the property sector are dominated by two large-scale projects. The most prominent among them is Dounya Park; set to become one of the world's biggest urban parks measuring up to 800 ha. In addition to almost 630 ha of green space, the project will include high-end commercial and residential complexes, a shopping centre, an international school and a hospital. Works are expected to start before the end of the year in anticipation of the green light from the investment authorities.
The company's second property investment is Oran Waterfront, a major tourist development in Algeria's second-largest city. It will include a marina, an aquarium and a sea museum, as well as two five-star hotels, office space and high-end residential units. After officially presenting the project to the regional authorities this month, the company is expecting to submit it to the National Investment Council later this year.
The newly reorganised Exeed has recently broken ground on a cable production facility called Cablet El Djazaïr, which aims to produce an annual total of 45,000 tonnes of copper and 7000 tonnes of aluminium cables for the country's rapidly expanding electricity network. The plant is expected to be complete over the following 18 to 24 months.
Also, the company is currently in negotiations for the purchase of land to build a large-scale milk farm, Mahassil. The farm, which is the first example of Emirati investment in the agricultural sector, will produce an annual total of 100m litres of milk as well as 3000 tonnes of meat.
Speaking to OBG, Camille Nassar, the CEO of NH Algeria, stated that for Emirati investors the outlook in the Algerian economy is a favourable one. "The opportunities abound, even more so considering the excellent job Algeria has done in the development of its road and maritime infrastructure, social housing as well as its energy sector." According to Nassar, Algeria will figure as a centre for the company's expanding North African operations.
Recent changes to the country's investment laws have put question marks around foreign investors' confidence in Algeria. However, with the precedent being set by the likes of National Holding, Emirati enthusiasm for investment in the country is hoped to be brought back to pre-crisis levels. Persistence and commitment on the part of foreign investors is likely to be rewarded with a diversified portfolio of high-potential development opportunities
Global Arab NetworkThis article is published in partnership with Oxford Business Group