By the end of 2022, Algeria was the fourth largest economy on the African continent. It is largely propelled by oil and gas export and the industry built around the sector. By land size, Algeria is number one in Africa and tenth in the world. While most of the central and southern regions are deserts, the vastness of the country gives it wider geopolitical reach and importance.

It links the western parts of the Sahel region of Africa to the Mediterranean and southern Europe. It also links the upper Atlantic coast of northwest West Africa to Libya and the greater Middle East.

The country’s economy grew by 3.0% in 2021 and 3.4% in 2022 according to the African Development Bank (ADB). Real GDP growth for 2023 is projected above 3%. Much of this growth has depended on the petroleum sector. On human development, the bank places Algeria as the 91st on the globe—out of 191 economies. The country's economy was valued at $187 billion at the end of 2022.

The agricultural sector brought in about 13% of earnings with the hydrocarbons bringing in close to 95%. With new gas deals emerging from Europe as an alternative to heavy reliance on Russian gas, Algeria stands to gain more in the long term. Despite other African states along the West coast discovering huge gas deposits, the country’s proximity to Europe gives it an upper hand.

These notwithstanding, the fluctuation in the prices of oil and gas requires that the country works on diversifying its economy in the long term. A lot could be learned from the UAE and Singapore.


Security Issues:
After the end of the Algerian civil war in the 2000s, the country experienced relative stability in the North African region. The Arab Spring did not immediately affect the country as much as it did other countries. This was partly due to the fact that some reforms had been carried out after the end of the civil war.

Regardless, the remnants of the Islamists that had refused to join peace talks have become the “bedrock” of violent extremism in the Sahel. Some of these still threaten the Algerian state. Instability in Libya and neighboring states is also securitized by Algiers.

On security, Algeria has one of the most well-equipped and modernized militaries on the continent.

Verdict:
Despite security challenges and over-dependence on hydrocarbons, Algeria’s new political leadership has been active in recent times across the world. Cordial relations with both Eastern and Western powers means its system is open to business. Algiers is making deliberate efforts at attracting investors into the economy. With a robust education system, there is a pool of skilled hands in the job market. Risk is at medium levels.