President Tebboune Orders Prioritization of Local Manufacturing, Import Reduction
Image: Rass El Mal
Takeaway
President Tebboune's renewed emphasis on local manufacturing and import reduction presents both opportunities and risks for international investors. Companies should reassess their Algeria market-entry strategies, focusing on potential partnerships with local firms and investments in domestic production facilities to navigate the evolving regulatory landscape. Sectors like plastics and food processing are poised for growth, but import-dependent businesses may face headwinds.
President Abdelmadjid Tebboune has directed the government to accelerate the implementation of major strategic projects, emphasizing the need to boost local manufacturing and reduce import dependence. During a Council of Ministers meeting on May 17, 2026, Tebboune issued strict instructions to exploit Algeria's petroleum resources for local production, particularly in the plastics industry, aiming to decrease the import bill. The President also stressed adherence to the timelines and decisions set by the Council of Ministers for the execution of strategic projects designed to transform Algeria into an emerging economy with a diversified base.
Algeria's push for import substitution and local manufacturing has been a consistent theme in recent years. In 2022, the government introduced incentives for local manufacturers, including tax breaks and preferential access to land. These measures built on the 2021-2024 economic recovery plan, which allocated DZD 500 billion (~$3.7 billion) to support domestic industries and reduce reliance on imports. In 2023, import restrictions were tightened on several product categories, including certain food items and consumer goods, to protect local producers.
Algeria's plastics industry, a key target for import substitution, has a current production capacity of approximately 400,000 tonnes per year. However, domestic demand is estimated at 600,000 tonnes, resulting in a significant import gap. The government aims to bridge this gap by encouraging investment in new plastics manufacturing facilities and upgrading existing ones. The focus on utilizing Algeria's petroleum resources for local plastics production aligns with the country's broader strategy to maximize the value of its hydrocarbon reserves.
The directive to prioritize local manufacturing and reduce imports is expected to benefit Algerian companies in sectors such as plastics, food processing, and construction materials. Conversely, international firms that heavily rely on exporting to Algeria may face increased competition from local producers and stricter import regulations. The policy could also lead to higher prices for some consumer goods in the short term, as domestic producers adjust to increased demand and reduced import competition.
In the coming months, the government is expected to announce specific measures to support local manufacturers and further restrict imports. Key indicators to watch include the level of investment in new manufacturing facilities, the growth rate of domestic production in targeted sectors, and the evolution of Algeria's trade balance. The success of this strategy will depend on the government's ability to create a favorable business environment for local producers, address infrastructure bottlenecks, and ensure access to financing.