Algeria’s battered business community started Monday with a sense of cautious anticipation, following the resignation over the weekend of Prime Minister Ahmed Benbitour, and President Abdelaziz Bouteflika immediate appointment of Ali Benflis in his place.
The 56-year-old Benflis has the reputation of a reformist, and it is hoped by many that he will accelerate plans to privatize this country’s telecommunications and mining sectors, which in turn could jumpstart the country’s almost dormant capital markets. A lawyer by training, he served as justice minister in a number of previous administrations. He most recently was Bouteflika’s chief of staff, after managing his presidential election campaign in 1999.
Benflis’ close relationship with the Algerian president has led to speculation that Bouteflika was looking for even greater control over the country’s bureaucracy, ahead of a referendum that will decide whether the presidential term will be extended to seven years from the current five. But Bouteflika is also clearly hoping that his new prime minister will revitalize Algeria’s fragile economy, an area in which Benbitour was judged to have failed.
Given the fact that oil prices have skyrocketed over the past year, and that oil and gas represent more that 97 percent of Algeria’s exports, Benbitour should have had much going for him. Indeed, oil revenues rose from $1.29 billion in July 1999 to $1.6 billion in July 2000. But, despite the fact that the country’s trade surplus rose to reach $809 million in July 2000, compared to $507 million in the same period last year, the economy remains burdened with more than $31 billion in foreign debt and an unemployment rate that exceeds 30 percent.
To make matters worse, Algeria’s capital markets are practically in suspended animation. Only four companies have entered the Bourse d’Alger (BA) thus far in 2000, and the volume of activity that these stocks have generated have barely been able to sustain the country’s five authorized brokerage firms. In fact, the general lack of activity may eventually force both the brokerage houses and the bourse to cease operating.
In response to this danger, capital market investors have called upon the Algerian finance ministry to be proactive in attracting new listings. A number of state-owned firms, such as industrial gas manufacturer ENGI, El-Djazair Hotel and Socothyd, have said that they are prepared to launch initial public offerings once receiving the government’s go-ahead.
In the meantime, parliament has approved a new post and telecommunications law, which is meant to reform the telecommunications sector by opening it up to private entrepreneurs under a concession regime, and at the same time setting up a state agency that will grant mobile phone licenses. Currently, the Administration de Postes et Telecommunication (PTT) monopoly maintains about1.5 million fixed line subscribers and 60,000 mobile phone users. An international tender for the sale of a mobile telephone license will be launched early next year.
During his first days in office, the new Algerian prime minister is taking a careful approach. There are few new faces in his cabinet, with the communications and territorial development ministries being the only economic departments that saw a change at their head. New ministers were also appointed to foreign affairs, and health and the environment. — (Albawaba-MEBG)