Algeria blighted by youth unemployment despite recovering oil prices

Economists have predicted that the government of veteran President Abdelaziz Bouteflika, 81, is likely to spend any increased revenues on imports, not on job-creation initiatives. (Reuters)
Updated 12 September 2018
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Algeria blighted by youth unemployment despite recovering oil prices

  • More than one in four Algerians under the age of 30 are unemployed in a country that remains heavily reliant on exports of oil and gas
  • Unlike neighboring Tunisia or Morocco, Algeria has made little headway in attracting foreign tourists, and foreign investors outside the energy sector give it a wide berth

ALGIERS: Two years after graduating from university, Ali Lamir, 26, has been spending his days sitting in a cafe in central Algiers thinking about how to land a job.
He is not alone — more than one in four Algerians under the age of 30 are unemployed in a country that remains heavily reliant on exports of oil and gas, despite numerous official promises of economic diversification.
Economists see little prospect of improvement despite a recovery in global oil prices. They have predicted that the government of veteran President Abdelaziz Bouteflika, 81, is likely to spend any increased revenues on imports, not on job-creation initiatives.
“My university degree is of no use. I have been looking for a job for two years but to no avail,” said Lamir, a graduate of the Algiers Institute of Law and Administrative Sciences.
Unlike neighboring Tunisia or Morocco, Algeria has made little headway in attracting foreign tourists, and foreign investors outside the energy sector give it a wide berth, deterred by security concerns and bureaucracy.
A scheme of interest-free loans, introduced two decades ago to encourage young Algerians to start their own businesses, has not fulfilled early hopes that it could boost the non-energy sector, which today accounts for only 6 percent of exports.
“I have applied for jobs at many firms, but get nothing other than promises. I am willing to accept any position even with a low salary,” said 24-year-old Aziza Bari, a graduate in economics from Algiers University.
Overall unemployment stood at 11.1 percent in the first quarter of 2018, official data shows, but was 26.4 percent among the under-30s, who make up more than two thirds of Algeria’s 41 million people.
Such figures do not make for happy reading for Bouteflika, who has been in power since 1999 and is considering seeking a fifth term next year, despite poor health.
The recovery in global oil prices led to a 15 percent increase in Algeria’s oil and gas revenues in the first seven months of 2018 to $22 billion. Energy exports account for 95 percent of its foreign earnings.
Algeria has also gradually opened up industries such as food, home appliances and mobile phones to private investors, helping the non-energy sector to grow by 3.1 percent in the fourth quarter of 2017, according to the most recent available data.
But business leaders have demanded bolder steps. “Our country is in need of accelerating the transition movement to an economy of knowledge and innovation,” Aliu Haddad, head of the country’s largest business association Algerian Business Leaders Forum, told a conference.


Abu Dhabi Islamic aims to boost lending after capital increase

Updated 28 min 33 sec ago
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Abu Dhabi Islamic aims to boost lending after capital increase

  • ADIB to increase lending this year
  • Bank set to complete rights issue next week

ABU DHABI: Abu Dhabi Islamic Bank expects to increase lending in 2018 after boosting its capital, its acting chief executive said, adding that the rate of profit growth will slow as the sharia-compliant bank battles against a sluggish economy.
An economy weakened by lower oil prices and a crowded banking market has hit the balance sheets of United Arab Emirates banks and hobbled loan growth.
ADIB, the largest sharia-compliant lender in Abu Dhabi, expects to increase profit in 2018 in single digit percentage terms, acting-CEO Khamis Buharoon Al-Shamsi said. This compares with growth of 18 percent in 2017.
“We cannot sustain the same (growth) this year. With the capital increase we will grow the balance sheet, we can lend more,” he told Reuters in an interview.
The bank expects to grow lending by up to 5 percent this year, compared with a drop of 2 percent in 2017.
ADIB will complete its 1 billion dirham ($272.4 million) rights issue next week, increasing its share capital to 3.63 billion dirhams from 3.17 billion.
Last week, ADIB raised $750 million of additional tier-one capital through a perpetual sukuk.
The bank is studying another capital increase in 2019, Al-Shamsi said.
He added that the bank was looking to lend to new business sectors, such as shipping, manufacturing, education and health and plans to grow its share of the retail market by spending on digital technology. It is investing $100 million in digital technology and has appointed a chief digital officer.
Abu Dhabi is reshaping its economy and consolidating state-owned companies to cope with the effects of lower oil prices.
Two of Abu Dhabi’s top banks were merged last year to create First Abu Dhabi Bank, while two of its big sovereign wealth funds were also combined.