An abrupt government reshuffle is an indication of the power of the ascendant reformist and pro-business party in the National Assembly, the unchallenged dominance of the presidential circle, and the growing influence of the country’s oligarchs that seek a partial liberalisation of the ailing economy.
A trade dispute with South Africa over US chicken imports last year and an ongoing disagreement between the US and East African countries over used clothing imports indicate that some African countries are increasingly willing to forego privileged US market access, while the US government may move to repeal multilateral trade terms in favour of bilateral deals with selected African countries.
The new government is likely to push ahead with its unpopular austerity agenda, while the centre of gravity in the governing alliance is likely to shift in favour of the smaller pro-business coalition partner, indicating that large Algerian conglomerates will increasingly seek new business opportunities in Africa.
An upcoming cabinet reshuffle following legislative elections in which the government party under-performed is likely to provide fresh indicators for the gradual transition from the old guard ‘pouvoir’ to a newer generation of leadership.
The president’s closest advisors are vying to succeed him at a sensitive time of intensifying ethnic unrest; yet a more technocratic and liberal faction within the government is gaining momentum, driving up business confidence and creating new opportunities in the energy and financial sectors for foreign investors.
While it is still too early to assess the longer term implications of a Trump presidency on Africa, trade agreements such as AGOA and security cooperation are unlikely to be significantly affected, yet various indicators point to risk of even slower African economic growth due to a stronger dollar and pledges to cut US foreign aid commitments.
Algeria’s deteriorating economic outlook will force the recently reshuffled government to make deeper spending cuts, raising the risk of strikes and riots, at a time of intense rivalries over the succession of the country’s president.
The government seeks to boost non-oil and gas economic diversification and to promote the manufacturing, tourism, and agricultural sectors, however serious impediments to foreign investment remain.
The rise of digital financial services in Africa will prove to be an exciting growth opportunity, although will be constrained to key consumer markets and face significant regulatory hurdles.
- EXX Africa director Robert Besseling moderated a panel on Africa’s commodity rollercoaster at GTR Commodities in Geneva hosted by Global Trade Review (GTR)
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