Algeria

Author: Rym Loucif

Algeria’s core strengths as a business location are scale, geography, natural resources and reform momentum.

Algeria is one of Africa’s largest economies, with a GDP of USD 269.32 billion in 2024(1), a territory of 2.4 million square kilometres and a population of almost 47 million.

Its demographic profile is young and iincreasingly skilled, which supports both labour supply and consumer demand. Algeria is also the leading natural gas producer in Africa and a major supplier of gas to Europe, making it a strategically important energy market with continuing relevance well beyond its domestic economy.

Geographically, Algeria sits at the crossroads of Europe and Africa. This gives it natural importance as a logistics, industrial and export platform. The country also offers abundant natural resources, a skilled and cost-effective workforce, and competitive utility prices for electricity, gas and water.

Importantly, Algeria’s investment case is no longer limited to hydrocarbons. Although the hydrocarbon sector remains central, the State’s policy direction is now firmly focused on diversification. The legal framework is more welcoming than it was in the past, procedures are increasingly digitised, and incentives are available for qualifying investments in sectors such as renewable energy, pharmaceuticals, petrochemicals, agriculture, mining, and information technology.

Algerian law provides for the following commercial company forms:

• partnership (société en nom collectif);
• limited partnership (société en commandite simple);
• partnership limited by shares (société en commandite par actions);
• limited liability company (société à responsabilité limitée);
• joint stock company (société par actions); and
• simplified joint stock company (société par actions simplifiée).

Law No. 22-09 of 5 May 2022 introduced the simplified joint stock company, exclusively for entities certified as start-ups. Its principal attraction is its contractual flexibility: unlike the more rigid joint stock company, it allows shareholders significant freedom to organise governance and internal functioning in the articles of association.

In practice, the limited liability company and the joint stock company remain the most commonly used vehicles for foreign investment, primarily because they limit shareholders’ liability to the amount of their contributions.

For most foreign investors, the key questions are entry, operation and exit.

• From an entry perspective, the first step is usually to determine whether the proposed activity falls within a sector open to 100% foreign ownership or within one of the sectors still subject to the 51/49 rule. If the activity is open, a foreign investor may establish an Algerian subsidiary without a local partner. If the activity is restricted, the investment must be structured through a joint venture with one or more Algerian partners.

The incorporation of an Algerian company requires the execution of the articles of association before a public notary. The articles must be in Arabic and governed by Algerian law. Foreign investors must import foreign currency through banking channels in order to subscribe and pay the share capital before the notary.

Where the investor wishes to benefit from incentives, the investment must be registered with the Algerian Investment Promotion Agency (“AAPI”), through its one-stop shop and digital investor platform. That platform is intended to centralise information and permit the completion of investment formalities online.

Where access to land is required, the investor may apply digitally for a concession over state-owned land. For most projects, the concession is granted for 33 years, renewable, and may ultimately be converted into a sale once the project has been completed in accordance with the concession specifications and has commenced operations.

• Exit has also become easier than under the previous regime. The Supplementary Finance Law for 2020 removed the State’s former pre-emption right on direct and indirect share transfers involving foreign entities.

Today, only the direct transfer of shares or equity interests in an Algerian company to foreign acquirers remains subject to prior approval, and then only where the target operates in a strategic sector.

In that respect, a material source of uncertainty has now been removed: Executive Decree No. 25-304 of 16 November 2025, published in the Official Journal on 23 November 2025, finally lays down the procedure for obtaining the prior authorisation required for transfers, in favour of foreign natural or legal persons, of shares or equity interests held in the capital of an Algerian company active in a strategic sector. This decree is an important development for transactional certainty, as it renders the post-2020 exit regime operational and clarifies the procedural pathway for foreign investors contemplating disposals in strategic sectors.

Economy

1. Currency strength
2. Inflation rates
3. Main trade sectors

Hydrocarbons remain the backbone of the Algerian economy. According to the World Bank, the oil and gas sector accounted, on average between 2020 and 2024, for 13.3% of GDP, 83.7% of exports and 48.2% of budget revenues. Algeria therefore remains, first and foremost, an energy economy, with fiscal and external balances still materially exposed to hydrocarbon market conditions.

That said, the State’s economic diversification agenda is beginning to produce measurable results. The World Bank notes that non-hydrocarbon exports have tripled since 2017, reaching USD 5.1 billion in 2023, with fertilisers, steel products and cement identified among the key export lines.(2).

Trade data available through the World Bank’s WITS platform further confirm that Algeria has become a meaningful exporter of cement and clinker: in 2023, for example, the European Union imported USD 123.0 million of cement clinkers from Algeria, while Algeria also exported white Portland cement to markets including the United States and France.

In pharmaceuticals, the picture is one of advanced import substitution rather than full sovereignty: official statements in late 2025 indicated that Algeria had achieved over 80% self-sufficiency in pharmaceuticals, and that the country accounted for around 230 of Africa’s 649 pharmaceutical factories.(3).

Current opportunities & future prospects

The hydrocarbons sector remains an obvious priority. The 2019 hydrocarbons law was designed to create a more competitive and adaptable investment framework, and the results of the first bid round announced in June 2025 show that international operators remain willing to deploy capital into Algerian oil & gas projects. The round also brought in a new entrant, with the Ahara licence being awarded to TotalEnergies and QatarEnergy, thereby marking QatarEnergy’s entry into Algeria’s upstream sector.

Further licensing activity is already in train. APS reported in December 2025 that ALNAFT had launched a digital platform in preparation for the next “Algeria Bid Round 2026”, following earlier indications that a new hydrocarbons call for tenders was expected to be launched in early 2026.

Mining is another major opportunity area. The 2025 mining law is a significant structural reform. By abolishing the notion of “strategic substances”, simplifying licensing procedures and enhancing the transferability and bankability of mining titles, it signals a more investable mining regime while maintaining State participation and control over strategic value.

Renewable energy is also a clear growth sector. Algeria’s “Solar 1,000 MW” initiative evidences a serious policy commitment to energy transition and opens opportunities not only for power generation, but also for associated infrastructure, technology and industrial services.

Beyond these headline sectors, investors should also focus on industries supported by both public policy and demographic logic. Agriculture and agribusiness merit particular attention, not least in view of the State’s emphasis on food security, domestic production and import substitution. At the same time, Algeria’s youthful and growing population continues to drive demand for hospitality, leisure and entertainment, as well as for healthcare, pharmaceuticals, consumer goods, housing, digital services and modern logistics.

In short, the strongest opportunities are not limited to traditional extractive industries. They increasingly arise in sectors that serve domestic demand, support import substitution, create jobs, or contribute to export diversification.

Legal system

Algerian law is mostly based on the French civil law system. Accordingly, it is a codified system of law where the legislation is divided into codes which contain the primary legislation.

Furthermore, the Algerian Constitution dated 8 December 1996 and amended several times, contains, amongst others, provisions on division of powers, the tasks and the election procedure of institutions, and values of the Algerian society.

Clients should be mindful of the formal requirements of doing business locally. Company incorporation is notarised; articles of association must be drafted in Arabic and governed by Algerian law; and capital contributions by foreign investors must be imported through proper banking channels. In strategic sectors, legal analysis must be undertaken at an early stage to determine whether a 51/49 ownership structure is mandatory. Administrative engagement is also critical, especially where land concessions, incentives or sector-specific approvals are required.

On dispute resolution, the New Investment Law No. 22-18 dated 24 July 2022 (“Law No. 22-18”) establishes the principle of equal treatment for investments, alongside protections and guarantees aligned with international standards.

According to Law No. 22-18, foreign investors may resort to international arbitration in case of disputes with the Algerian State, provided bilateral or multilateral treaties are in force.

Algeria has ratified 46 bilateral investment protection treaties (including with Italy, China, France, Qatar, Egypt, etc.), in addition to various multilateral conventions covering similar aspects.

In the absence of an international treaty, arbitration remains an option through a mutual agreement between the Agency (representing the State) and the investor.

Furthermore, a "High National Commission for Investment-Related Appeals" operates under the auspices of the Presidency of the Republic to adjudicate appeals brought by investors.

Foreign investment restrictions

1. Regulatory environment
2. Direct investment
3. Restrictions on foreign capital
4. Foreign exchange controls

Regulatory environment

Since 2016, against a backdrop of increasing competition among Mediterranean jurisdictions - particularly within the Maghreb - to attract high-quality foreign direct investment, and in light of Algeria’s longstanding need to diversify its economy away from hydrocarbons, the Algerian authorities have undertaken a broad reform of the investment framework.

That reform culminated in the publication, in the Official Gazette on 28 July 2022, of the new Investment Law No. 22-18. Eight implementing texts were subsequently published in the Official Gazette on 18 September 2022. Their principal features are summarised below.

Shortly before the enactment of Law No. 22-18, Law No. 22-15 of 20 July 2022 introduced, for the first time in Algeria, the concept of free zones, each of which is to be established by future executive decrees.

Taken together, these reforms send a positive signal to investors, and foreign investors in particular, as part of Algeria’s broader effort to enhance the country’s attractiveness as an investment destination. The key features of this recent reform package are outlined below in order to provide foreign investors with a clear overview of the current legal framework governing investment in Algeria.

End of the general obligation to partner with a 51% Algerian shareholder

Prior to the Supplementary Finance Law for 2020, foreign investors wishing to establish operations in Algeria were generally required to do so through a joint venture with one or more Algerian resident partners holding at least 51% of the share capital, irrespective of the sector concerned.

In the decade following the introduction of the 51/49 rule, levels of foreign direct investment declined sharply. In response, the Algerian authorities substantially narrowed its scope, confining it to a limited number of activities.

The Supplementary Finance Law for 2020 accordingly repealed the 51/49 rule, save in respect of (ii) a limited number of strategic sectors, and (ii) the importation of goods for resale in the same condition.

(i) Strategic sectors

Under the Supplementary Finance Law for 2020, as amended, the following sectors remain subject to the 51/49 rule:

• military industries and related activities placed under the authority of the Ministry of National Defence
• railways, ports and airports;
• the pharmaceutical industry, except for investments relating to the manufacture of essential, innovative and high value-added products requiring complex and protected technology and intended for both the domestic market and export; and
• fertiliser production activities.

In addition, pursuant to separate legislative and regulatory regimes, the following important sectors are also subject to capital restrictions:

• the exploitation of the national mining domain, as well as all underground or surface resources connected with extractive activities, including quarries; and
• the upstream hydrocarbons sector, together with the operation of electricity transmission and distribution networks by cable and the transport of hydrocarbons (liquid and gas) by overhead or underground pipeline.

Further clarification has been provided by implementing legislation. Executive Decree No. 21-145 of 17 April 2021, published in the Official Gazette on 22 April 2021, defines the list of strategic activities for these purposes. To that end, Decree No. 21-145 identifies 44 activity codes classified as “strategic”.

(ii) Importation of goods for resale in the same condition

The continued application of the 51/49 rule to the importation of raw materials and finished products for resale in the same condition reflects a deliberate policy choice. Its purpose is to discourage the expansion of activities considered costly to Algeria’s external balance and to limit outflows of foreign currency.

Sectors now open to unrestricted foreign ownership

Subject to the exceptions outlined above, all other activities involving the production of goods and services are now, in principle, open to foreign investment without any requirement to partner with a local shareholder. This liberalised regime extends, in particular, to sectors such as telecommunications, banking and insurance, agri-food and construction. It also encompasses areas of particular strategic interest, notably electricity generation from renewable sources.

Foreign exchange controls

An important question that frequently arises is how the repatriation of investment proceeds operates under Algerian law, and how it is effectively implemented in practice.

The New Investment Law No. 22-18 expressly provides in favour of foreign investors for the transfer guarantee of dividends and investment proceeds.

As a reminder, the transfer guarantee is the right for any foreign investor to transfer in foreign currency the dividends and other revenues resulting from its investment, subject to certain conditions being met.

Practice shows that in most cases, foreign investors can transfer in foreign currencies the dividends and other revenues distributed by their Algerian subsidiary, although such transfers are subject to a cumbersome administrative process with local banks, particularly for the first transfer.

Top tips to takeaway "What to know before Investing

Algeria is materially more investable today than it was only a few years ago. It nonetheless remains a jurisdiction in which success is driven by preparation, structuring discipline and careful upfront diligence.

As a first step, investors should determine whether the relevant activity is fully open to foreign ownership or falls within a strategic or otherwise restricted sector. They should then select the most suitable investment vehicle - typically a limited liability company or a joint stock company - and ensure that all incorporation formalities are properly addressed from the outset, including the banking procedures required for the importation of capital.

They should also consider, at an early stage, whether the proposed investment may benefit from the sectoral, zone or structuring incentive regimes, and whether it will require access to state-owned land. If so, registration with the Algerian Investment Promotion Agency and use of the digital investor platform should be built into the execution timeline from day one.

In restricted sectors, a joint venture structure may deliver meaningful operational influence to the foreign investor, but only if governance, control and exit arrangements are negotiated with care and documented with precision. The current legal framework is, however, more reassuring than its predecessor, offering improved transfer protections, legal stability safeguards and, where applicable, access to international arbitration.

Algeria is not a straightforward jurisdiction, but it is increasingly a workable and compelling one. For investors willing to engage with it thoughtfully and with the benefit of strong local support, it offers access to a large, strategic and evolving market with real long-term promise.

(1) (https://data.worldbank.org/country/algeria)

(2) (https://www.worldbank.org/en/news/feature/2025/04/18/how-algeria-is-crafting-a-dynamic-economy-for-tomorrow)

(3) (https://www.aps.dz/en/presidency-news/mjtuho1i-state-resolute-in-continuing-reforms-implementing-development-programs https://www.aps.dz/en/presidency-news/mihgge9r-president-tebboune-stresses-need-to-bolster-africa-s-pharmaceutical-capacity-to-guarantee-health-security).