Algeria Pursues Economic Transformation, Seeking to Break Decades-Long Oil and Gas Dependence

Algeria is seeking to develop industry, agriculture, services, and mining into new economic pillars, attempting to break decades-long dependence on oil and gas. According to a report by Africanews, this diversification strategy has been launched against the structural backdrop of the country's economy being heavily concentrated in hydrocarbon exports for a long time.

Oil and gas revenues have historically accounted for the bulk of Algeria's exports and fiscal revenue. This highly concentrated structure leaves it vulnerable to global energy price fluctuations and changes in the energy policies of major importing countries—in years of soaring oil prices, finances are flush, while in years of sharp declines, it is forced to cut spending and delay projects, and the macroeconomy swings wildly in tandem. Over the past several decades, successive Algerian governments have put forward economic diversification objectives, but the dominant position of the oil and gas sector in the export structure has not fundamentally changed.

The report notes that the diversification directions Algeria is now promoting cover industry, agriculture, services, and mining. However, the available public information provides limited detail on specific policy tools, investment scale, timelines, and the prioritization of each sector. To measure whether this round of transformation can truly take hold, at least three sets of indicators need to be observed: whether the share of manufacturing and agriculture in GDP can rise substantially, how actual progress unfolds in private-sector vitality and in attracting foreign investment, and whether new growth poles such as mining can meet the standards demanded by international investors in terms of governance and contract transparency.

From a deeper structural perspective, whether Algeria can escape dependence on oil and gas exports does not depend solely on industrial policy itself. The long-term trajectory of fossil fuel demand during the accelerated period of global green transition, and whether Algeria can obtain reciprocal conditions when dealing with Western transnational capital and international financial institutions, are likewise variables that will determine the success or failure of the transformation. Historically, resource-rich developing countries have often found themselves in an unequal position in contract negotiations and resource pricing with multinational corporations, and this power asymmetry constitutes the real obstacle behind the rhetoric of "diversification."

For ordinary Algerians, whether diversification can bring employment growth, price stability, and improvement in public services depends on how the dividends of the transformation are distributed domestically—whether they continue to be concentrated in the national oil company and its upstream and downstream networks of interests, or can spread to small and medium-sized enterprises, the agricultural sector, and the local economy. The report itself does not address the above-mentioned distributional questions, which are precisely where the key lies in judging whether the transformation has substantive significance.