African Development Bank Group
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Governor's image: 
Algeria
Name of Governor: 
Abderrahmane Raouya
Governor's title: 
Minister of Finance
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Bio: 
  • Abderrahmane Raouya began his career at the Ministry
of Finance in 1985. In 2006, he was appointed Director-General of the Tax Administration. He held this position until his appointment as head of the Ministry of Finance.
  • A graduate in legal sciences from the University of Algiers, he holds a degree from the National School of Public Finance of Clermont-Ferrand in France.
  • Abderrahmane Raouya worked with the International Monetary Fund as an expert in the Democratic Republic of the Congo from 2003 to 2005.

Industrialization: A challenge for Africa and for Algeria

Body: 

Africa has recorded strong growth over the past few years, raising it to the second fastest-growing zone, but it needs
to continue this effort to improve the substance of the growth and sustain the pace. The African continent has the ability to achieve these goals, the potential needed to make significant advances
in economic and social development, and to reduce its shortfalls when compared to emerging economies.

Africa cannot count on its natural wealth alone. It must also consider its human capital, and primarily its young people who must be viewed as
a significant asset for its development. The African continent currently has human potential that provides an opportunity as well as a challenge. Everything must be done to satisfy the needs of a population that is growing and increasingly demanding. The challenge our continent must meet in the years to come is the structural transformation of our economies, which is a necessary condition for sustainable, inclusive development.

In this context, industrialization seems to be an essential part of Africa’s development process. It is a determining factor that will allow the continent’s transition from an economy based on primary products to a more diversified economy with significant value added.

Industry is central to structural transformation and economic growth. Beyond the ripple effect it has on other sectors of the economy and on the economies of scale it helps achieve, industry is incontestably a source of the technological change needed to increase productivity and strengthen the competitiveness of African economies.

Industrialization will also help Africa improve its position in terms of integration in Global Value Chains. Africa must position itself in growth niches such as agricultural food production, textiles, automobile production, aerospace industries, etc. Like Asian and Latin American countries, the continent must take advantage of this integration. However, it must be accompanied by a revolution in innovation and new technologies, improved cost control and logistics, and an enhanced effort to improve negotiating power with international firms, all while working for growth in intra-African trade in an African free trade zone.

For African countries, industrial recovery
is emerging as a cornerstone for national economic strategies. Africa’s vulnerability to external crises due to the level of volatility in primary materials cannot be mitigated without diversifying African countries’ production structures and exports so that they can better withstand these shocks.

Africa is aware of this challenge and has shown the political will to overcome it. In addition to emergence plans and national strategies, political will was demonstrated on the continental level by the African Union’s adoption of the 2063 development agenda, in which industrialization is considered to be a significant lever for Africa’s development.

Intra-African trade, which accounts for only 13% of trade volume, demonstrates that the margin of growth for commercial trade within the continent is significant and the potential
of this market represents an essential lever to encourage the acceleration of industrialization. However, this continues to depend on mutual efforts by states to create basic infrastructure that will improve African value chains.

As far as Algeria is concerned, industrialization remains a major challenge for its economy, which depends heavily on hydrocarbons. Since the early 2000s, Algeria has begun a series of ambitious five-year development programs covering several development areas. These programs, which have been financed almost exclusively by public savings that the authorities have been able to mobilize over the past decade, have had a very positive impact on growth and on poverty reduction.

During this decade, for example, 26 dams were built, and public works have included
the completion of 1100 km of highways,
1695 km of expressways, and 129 port infrastructure projects. In transport, 2,318 km of railways have been constructed. Installed electrical power rose from 8503 MW in 2008 to 17238 MW in 2015. In addition, Algeria has always had an approach based on shared prosperity that goes beyond its borders, taking into account the important issue of regional integration of infrastructure projects, particularly in the context of NEPAD.

Today, the financial stresses resulting from the drop in oil prices that began in 2014 pose some acute challenges for Algeria, in terms of economic diversification and accelerated structural reforms aimed at improving
the institutional structure, introducing the principle of performance-based budgeting, and redirecting available resources towards economic growth.

For the Algerian economy, the success of the diversification process depends in large part on the industrial sector’s progress. Algeria
has adopted a new growth model based on a sustained industrial growth policy and greater liberalization of initiatives to achieve the growth rates required for a more diverse economy. Algeria’s industrial policies will be reorganized along four strategic lines: support for sectors with comparative advantages, support for sectors that have already built comparative advantages, a targeted substitution strategy, and support for the development of industrial activities in sectors with significant export revenue elasticity over the long term.

The African Development Bank’s role in accompanying African countries as they industrialize seems fundamental. In this context, we must highlight the effort to use this institution through its Highs 5s, which count industrialization among the five strategic priorities, along with energy, agriculture, regional integration and improving the quality of life for the people. The African Development Bank’s continental scope gives it prominence in providing appropriate responses to the development challenges faced by Africa.

Bio: 
  • Abderrahmane Raouya began his career at the Ministry
of Finance in 1985. In 2006, he was appointed Director-General of the Tax Administration. He held this position until his appointment as head of the Ministry of Finance.
  • A graduate in legal sciences from the University of Algiers, he holds a degree from the National School of Public Finance of Clermont-Ferrand in France.
  • Abderrahmane Raouya worked with the International Monetary Fund as an expert in the Democratic Republic of the Congo from 2003 to 2005.