Algeria buckles up for homegrown auto drive

Employees work at a car factory in Oran, Algeria. (Reuters file photo)
Updated 12 February 2017

Algeria buckles up for homegrown auto drive

ALGIERS: Once one of Africa’s biggest car buyers, Algeria is embarking on an ambitious program aimed at replacing hundreds of thousands of foreign imports with domestically produced models to keep drivers on the road.
Facing up to a sharp drop in the price of oil — its main revenue source — the North African nation has launched a “new economic model” which seeks to reduce reliance on crude sales.
One of the ways it hopes to achieve this is by developing its domestic automotive industry, which has been given incentives to produce more models after the government radically slashed imports.
As fears grow over US President Donald Trump’s impact on global free trade, Algeria’s move toward homegrown manufacturing is a possible sign of protectionism in the country.
Algeria in 2014 was Africa’s second-largest car market in terms of sales, with more than 400,000 vehicles imported annually, but last year it cut import licenses by half.
As a result only 83,000 units were brought in, representing around $1 billion worth of sales — a sharp fall from the $7.6 billion Algeria spent on foreign cars in 2012, Ministry of Commerce figures show.
According to economist Abdelatif Rebah, Algeria’s reliance on foreign cars had become “unsustainable and dangerous for our external balance.”
“In 15 years, Algeria imported more than 4 million vehicles for close to $25 billion, not counting the cost of importing spare parts,” he told AFP.
According to the national statistics office, vehicle imports doubled between 1995 and 2015, as the economy and population grew.
Now, heartened by a similar domestic production drive in neighboring Morocco — which has a Renault plant in Tangiers producing 200,000 models a year — Algeria is eyeing homegrown car manufacturing.
The French motor giant opened a multi-million-euro plant in Paris’s former colony in 2014, with an eventual yearly output set to hit 75,000 vehicles.
In November, Volkswagen signed an agreement with its Algerian sales partner for the construction of a vehicle assembly plant in Relizane, 320 kilometers (200 miles) southwest of the capital Algiers.
The plant will produce several models, including the Volkswagen Golf, SEAT Ibiza and Skoda Octavia as well as the Caddy.
Algeria’s Industry Ministry says it has another dozen such projects in the planning, but experts have expressed doubts over quality assurance.
“Due to decades of deindustrialization... to benefit imports, the level of technological development in our country cannot currently ensure a sufficient level of quality sub-contracting,” Rebah said.
He noted that opting to assemble cars from imported parts often ends up producing a more expensive final product than simply importing finished models.
Although the percentage of car parts manufactured locally is currently negligible, the government has plans to increase that proportion to 40-50 percent within five years.
It also plans to produce 500,000 units per year by 2019 — a rate some analysts say will barely keep up with domestic demand, let alone helping to boost export stock.
Car industry expert Reda Amrani said Algeria had an “immediate” need for 600,000 private cars and another 100,000 industrial vehicles.
“Within two years of production starting at these factories, 20 to 30 percent needs to be destined for export,” he said.


Sweden bans Huawei, ZTE from upcoming 5G networks

Updated 20 October 2020

Sweden bans Huawei, ZTE from upcoming 5G networks

  • European governments have been reviewing the role of Chinese companies in building their networks
  • Sweden’s security service called China ‘one of the biggest threats against Sweden’

STOCKHOLM: Swedish regulators on Tuesday banned the use of telecom equipment from China’s Huawei and ZTE in its 5G network ahead of the spectrum auction scheduled for next month.
The Swedish Post and Telecom Authority (PTS) said auctions the setting of the license conditions followed assessments by the Swedish Armed Forces and security service.
European governments have been reviewing the role of Chinese companies in building their networks following pressure from the United States, which says they pose a security threat because, among other concerns, Chinese companies and citizens must by law aid the state in intelligence gathering.
Sweden’s security service called China “one of the biggest threats against Sweden.”
The United Kingdom in July ordered Huawei equipment to be purged completely from Britain’s 5G network by 2027, becoming one of the first European countries to do so.
Huawei and ZTE did not immediately respond to requests for comment on the decision by Sweden, home to Ericsson, one of Europe’s leading telecoms equipment suppliers.
“The ban leaves network operators with less options and risks slowing the rollout of 5G in markets where competition is reduced,” said Ben Wood, chief of research at CCS Insight.
The ban is likely to benefit rival telecom equipment makers Ericsson and Finland’s Nokia.
PTS said companies taking part in the auction must remove Huawei and ZTE gear from existing central functions by Jan. 1, 2025.
The regulator defined central functions as equipment used to build the radio access network, the transmission network, the core network and the service and maintenance of the network.
PTS said the license conditions were decided to address the assessments made by the armed forces and security service.
It has approved the participation of Hi3G Access, Net4Mobility, Telia Sverige and Teracom in the planned spectrum auction of 3.5 GHz and 2.3 GHz, key bands crucial for the rollout of 5G.
Tele2 and Telenor will participate together as Net4Mobility to secure spectrum for a joint nationwide 5G network.
Tele2, which uses Huawei equipment in its network, which had earlier called Huawei an important vendor, said the PTS decision “does not change our plans substantially.”
“We may have to phase different costs differently between years to meet security conditions on time,” a spokesman told Reuters.
The 5G spectrum auction was originally planned for early 2020, but last year PTS said it would delay the auction due to a security review. PTS announced in April this year that the auction would begin in November.