Algeria To Coordinate National Development Plans With China’s Belt And Road Initiative
El Hamdania Port to be one of the largest in the Meditteranean
Chinese Foreign Minister Wang Yi has concluded his Middle East tour – his second this year – with a trip to discuss bilateral matters with the Algerian President Abdelmadjid Tebboune and the Algerian Foreign Minister Ramtane Lamamra.
Wang stated the mutually beneficial cooperation between the two countries has great potential and space for development, adding that China encourages its enterprises to invest and do business in Algeria. China is willing to work with Algeria into tangible results, help Algeria accelerate its pace of industrialization, and enhance its capacity for independent development. Wang said that China will continue to provide COVID-19 vaccines to Algeria and promote cooperation in vaccine production to help Algeria overcome the pandemic as soon as is possible.
Tebboune said that both countries have entered a new stage of development, and they intend to deepen cooperation in the areas of economy, trade, investment, energy, mining, and infrastructure construction under the BRI framework, so to achieve common development which will also benefit other developing countries. Algeria is also prepared to work with China to promote trilateral cooperation with Africa.
Both parties agreed to speed up consultations on signing the five-year plan for China-Algeria comprehensive strategic cooperation and the implementation plan for jointly constructing the Belt and Road Initiative.
China is involved with the development of Algeria’s El Hamdania Central Port, which will be Algeria’s largest and first deep-water port and the second deep-water port in Africa.
Located 90 miles from Algiers, Algeria envisions the Port of El Hamdania as a regional hub for North Africa in the Mediterranean, competing with Morocco’s Tangier-Med Port. It will have a capacity of 25 million tons per year and 23 terminals capable of handling up to 6.5 million 20-foot containers.
A memorandum of understanding (MOU) for the project, an initiative of former-President Abdelaziz Bouteflika, was signed in January 2016. The MOU committed the China State Construction Engineering Company (CSCEC), China Harbor Engineering Company (CHECH), and the Algerian Port Authority to the project. In exchange for Chinese financing, the agreement handed the port’s operations to China for the first 25 years.
There have been political holdups with the development, however construction began in May this year. El Hamdania could represent new business opportunities in the port development and equipment sectors. With a project budget of US$3.3 billion, international port development and equipment companies should monitor procurement opportunities for computer systems and software; design and planning services; dredging; security systems, services, and technology; terminal technologies and systems; and vessel traffic information systems.
Chinese companies have become Algeria’s preferred partners for infrastructure projects, and includes the East-West Highway, a US$12 billion contract for a half of the 1,216 km highway which connects Algeria with neighboring Morocco and Tunisia. The six-lane Chinese build section was completed by CITIC-CRCC.
About 1,000 Chinese companies operate in Algeria, assisted by the Algerian Governments waiving of the 51/49 ownership rule (for non-strategic sectors). The government has identified key areas where Algeria can leverage its competitive advantage, including solar energy, phosphates, gold, uranium, zinc, and iron ore – resources vital for the development of both Algeria and China. Algeria is a member of the African Continental Free Trade Agreement (AfCFTA) which came into effect from January 1 this year and has largely abolished all intra-African trade tariffs. This means that ports such as El Hamdania will flourish as Free Trade Zones will also be part of these developments. That means that component parts can be imported duty free, matched with African sourced products, with finished products either re-exported or sold back onto the African continental market.
Algerian-China trade has been growing in recent years, with China overtaking France as the largest exporter of goods to the country in 2019. China exports about US$7.9 billion to Algeria, with Algeria exporting US$1.2 billion to China. The two countries signed a double tax treaty in 2006.
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Silk Road Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Asia, and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at silkroad@dezshira.com or visit www.dezshira.com
