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
0

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.


Undersea gas fires Egypt’s regional energy dreams

Updated 18 November 2018
0

Undersea gas fires Egypt’s regional energy dreams

CAIRO: Egypt is looking to use its vast, newly tapped undersea gas reserves to establish itself as a key energy exporter and revive its flagging economy.
Encouraged by the discovery of huge natural gas fields in the Mediterranean, Cairo has in recent months signed gas deals with neighboring Israel as well as Cyprus and Greece.
Former oil minister Osama Kamal said Egypt has a “plan to become a regional energy hub.”
In the past year, gas has started flowing from four major fields off Egypt’s Mediterranean coast, including the vast Zohr field, inaugurated with great ceremony by President Abdel Fattah El-Sisi.
Discovered in 2015 by Italian energy giant Eni, Zohr is the biggest gas field so far found in Egyptian waters.
The immediate upshot has been that since September, the Arab world’s most populous country has been able to halt imports of liquified natural gas, which last year cost it some $220 million (190 million euros) per month.
Coming after a financial crisis that pushed Cairo in 2016 to take a $12 billion loan from the International Monetary Fund, the gas has been a lifeline.
Egypt’s budget deficit, which hit 10.9 percent of GDP in the financial year 2016-17, has since fallen to 9.8 percent.
Gas production has now hit 184 million cubic meters a day.
Having met its own needs, Cairo is looking to kickstart exports and extend its regional influence.
It has signed deals to import gas from neighboring countries for liquefaction at installations on its Mediterranean coast, ready for re-export to Europe.
In September, Egypt signed a deal with Cyprus to build a pipeline to pump Cypriot gas hundreds of kilometers to Egypt for processing before being exported to Europe.
That came amid tensions between Egypt and Turkey — which has supported the Muslim Brotherhood, seen by Cairo as a terrorist organization, and has troops in breakaway northern Cyprus.
In February, Egypt, the only Arab state apart from Jordan to have a peace deal with Israel, inked an agreement to import gas from the Jewish state’s Tamar and Leviathan reservoirs.
A US-Israeli consortium leading the development of Israel’s offshore gas reserves in September announced it would buy part of a disused pipeline connecting the Israeli coastal city of Ashkelon with the northern Sinai peninsula.
That would bypass a land pipeline across the Sinai that was repeatedly targeted by jihadists in 2011 and 2012.
The $15-billion deal will see some 64 billion cubic meters of gas pumped in from the Israeli fields over 10 years.
Independent news website Mada Masr reported that Egypt’s General Intelligence Service is the majority shareholder in East Gas, which will earn the largest part of the profits from the import of Israeli gas and its resale to the Egyptian state.
Kamal said he sees “no problem” in that, adding that the agency has held a majority stake in the firm since 2003.
“That guarantees the protection of Egyptian interests,” he said.
Ezzat Abdel Aziz, former president of the Egyptian Atomic Energy Agency, said the projects were “of vital importance for Egypt” and would have direct returns for the Egyptian economy.
They “confirm the strategic importance of Egypt and allow it to take advantage of its location between producing countries in the east and consuming countries of the West,” he said.
The Egyptian state is also hoping to rake in billions of dollars in revenues from petro-chemicals.
Its regional energy ambitions are “not limited to the natural gas sector, but also involve major projects in the petroleum and petrochemical sectors,” said former oil minister Kamal.
Minister of Petroleum and Mineral Resources Tarek El Molla recently announced a deal to expand the Midor refinery in the Egyptian capital to boost its output by some 60 percent.
On top of that, the new Mostorod refinery in northern Cairo is set to produce 4.4 million tons of petroleum products a year after it comes online by next May, according to Ahmed Heikal, president of Egyptian investment firm Citadel Capital.
That alone will save the state $2 billion a year on petrochemical imports, which last year cost it some $5.2 billion.
Egypt is also investing in a processing plant on the Red Sea that could produce some four million tons of petro-products a year — as well as creating 3,000 jobs in a country where unemployment is rife.