Algeria opens its doors to investment with new reforms and promising opportunities for capital

Written by: Mohammed Omran

Algeria continues to implement broad economic and legislative reforms aimed at improving the investment climate and attracting foreign capital by modernizing investment laws, simplifying administrative procedures, and offering new incentives to investors, as part of a strategy to diversify the economy and reduce its reliance on the hydrocarbon sector.

Algeria opens its doors to investment with new reforms and promising opportunities for capital

The investment system has undergone its most significant reform in more than a decade, with the 2026 Finance Act coming into effect, alongside the continued implementation of the amended Investment Law of 2022, which overhauled foreign investment rules by allowing 100% full foreign ownership in most non-strategic sectors, following the repeal of the 51/49 rule, which had required foreign investors to have an Algerian partner holding the majority stake. Restrictions remain in place for strategic sectors, such as defense, hydrocarbons, certain mining activities, and public utility management.

In order to facilitate investment procedures, the Algerian government established the Algerian Agency for Investment Promotion (AAPI) to be the unified body responsible for registering projects and supporting investors, in addition to working on digitizing administrative services and simplifying company incorporation procedures, which contributes to reducing bureaucracy and improving the business environment.

New legislation has also strengthened legal guarantees for investors by approving the principle of free transfer of capital and profits abroad, in accordance with applicable legal frameworks, thereby providing greater confidence for international investors.

On the tax front, the Finance Law for 2026 includes a package of amendments, which cover updating corporate tax rules, adjusting some withholding taxes on cross-border financial transfers, clarifying permanent establishment rules, and introducing new disclosure requirements for certain international transactions, aiming to enhance transparency and strike a balance between attracting investment and ensuring tax compliance.

Several sectors stand out as promising destinations for foreign investment in Algeria, foremost among them the manufacturing sector, which is the most attractive sector for investment, having drawn more than 6,200 investment projects during the period from November 2022 to November 2025, and accounted for more than 50% of the total jobs expected to be created by the new projects.

The transportation and logistics, construction, agriculture and fisheries, renewable energy, mining, food industries, technology and digital economy, and pharmaceutical industries sectors were among the most promising areas, in light of the state's direction to diversify the production base and strengthen value-added industries.

The Algerian Promotion Agency for Investment registered 18,712 investment projects totaling 8,049 billion Algerian dinars (around $59.6 billion) over three years, with expectations of creating 454,802 direct job opportunities.

New projects accounted for 50.6% of total recorded investments, compared to 48% for expansions by existing companies, while foreign investments accounted for 1.6% of total projects, compared to 98.4% for domestic investments, reflecting the market’s continued reliance on domestic capital, with expectations of increased foreign inflows in light of recent reforms.

Despite the opening up of the investment system, some activities still require prior approvals from the relevant authorities, especially in strategic sectors. The oil and gas sector is also subject to a special law that regulates partnerships with Sonatrach, imposing rules different from those for other economic activities.

Algeria is betting in the upcoming phase on completing legislative reforms, expanding digital services, and issuing more executive decrees, aiming to solidify its position as a regional investment destination connecting Africa and Europe, benefiting from its geographical location, natural resources, and the package of incentives it offers to investors.