Algeria is charting a bold path to economic growth, driven by diversification, infrastructure development and sustainability goals. With a focus on non-hydrocarbon sectors such as agriculture, tourism and renewable energy, the government aims to position itself as a leader in Africa’s industrial landscape while reinforcing its role as the third-largest economy on the continent.
Financial and Regulatory Reforms
In December 2024, Algerian government authority the Algerian Investment Promotion Agency (AAPI) launched the second phase of reforms aimed at improving efficiency and regulatory provisions in the country’s investment space. The reforms include a single window service and an improved land distribution process. Additionally, the AAPI is collaborating with various sectors in the Algerian economy, notably housing and the environment, to improve the regulatory landscape, administrative guidance and consultation opportunities for investors.
As of December 2024, the AAPI has registered 11,000 investment projects, with a total value of approximately $32.5 billion. Roughly 50% of these projects have entered the implementation phase and are expected to create nearly 270,000 jobs in the country.
National Infrastructure and Transportation Development
Algeria is advancing a range of key infrastructure projects in 2025, targeting energy, transportation and water security to support national growth and modernization. The country has allocated more than 900 billion Algerian Dinars in recent years to support major water infrastructure projects and plans to register more than 500 infrastructure projects between 2025-2026 as part of a broader national digital transformation strategy.
The South West Gas Fields Development Project – led by national oil company Sonatrach and executed by L&T Hydrocarbon Engineering – involves the construction of three Central Processing Facilities in Adrar Province to handle up to 14 million standard cubic meters per day of natural gas. Meanwhile, Algeria has launched a 185-km rail project to improve connectivity between its northern cities. The first phase, currently under construction, is a 63-km line linking Tissemsilt and Tiaret in the Northwest. Once completed, the railway will expand to Relizane Province, creating a vital logistics corridor across the northern lines.
Industrialization and Manufacturing Modernization
Algeria’s heavy industrial activity is rapidly expanding, particularly in the production of industrial equipment, including electrical components. In September 2024, Algeria’s power utility Sonelgaz exported a shipment of electric meter spare parts, produced by its subsidiary Société Algérienne des Industries Électriques et Gazières, to Tunisia and Iraq. In August of the same year, Sonelgaz and U.S. company General Electric began construction of the General Electric Algeria Turbines Plant in Ain Yagout, set to start producing electricity transmission equipment by August 2025.
Economic Diversification Strategy
Algeria’s President Abdelmadjid Tebboune has made economic diversification a national priority, setting a goal to exceed $15 billion in non-hydrocarbon exports by 2027. Increased foreign investment, particularly in major industrial projects, have boosted the country’s economic activity in recent years, positioning Algeria as Africa’s third-largest economy. Government reforms aimed at strengthening non-oil sectors – which include green hydrogen, mining, agriculture, heavy industry and tourism – are expected to continue driving diversified growth in 2025 and beyond.
President Tebboune is targeting food self-sufficiency for Algeria, aiming for complete independence in durum wheat production by the end of 2025, followed by barley and maize in 2026. To achieve this, he plans to expand irrigated land by one million hectares. In July 2024, Algeria signed an agreement with Italian agro-food company BF to boost durum wheat production, with peak output expected by 2028. Meanwhile, Algeria recently experienced its highest tourism sector growth in 20 years, with over 2.5 million visitors in 2023. The government is aiming to significantly increase this number, with the goal of welcoming 10 million tourists by 2030.
Investment in Renewable Energy
With a lack of investment representing a major barrier for most African countries in their transition to a clean energy future, Algeria is leveraging revenue generated from LNG exports to enhance the contribution of renewables in the country’s energy mix. Using this revenue, the country plans to fast-track an ambitious plan to generate between 30% and 40% of electricity using renewables by 2030.
Algeria also has ambitious plans to meet 10% of Europe’s green hydrogen demand by 2040. To achieve this, the country is developing the SoutH2 Corridor, a 3,300-km hydrogen pipeline connecting North Africa to Italy, Germany and Austria. Meanwhile, in July 2024, Sonatrach signed a MoU with Turkish industrial group Tosyali to jointly explore the potential to produce green hydrogen for green steel manufacturing.
