Boatmaker Gaouar can't get the resin, fasteners, sails, windshields and motors she needs to keep boats coming off the line, so she has her crew making plastic seats for Oran Airport.
"This year for us is the worst year. I applied for these import licenses more than eight months ago," she said. "Do you realize what that represents, for a factory to wait eight months? It is hell!"
A fundamental part of the problem has been resistance from old-guard socialists in the ruling National Liberation Front (FLN) to opening the economy to private--and especially foreign--investment.
"The Algerians' sense of the private sector is that it is exploitative and that it is basically feeding off the people," said one analyst. "The feeling is that after the revolution in '62, we were all the same; (therefore) if (someone) has money, he must have stolen it from us, because we were all in this together."
When the Oran factory owners organized their protest in February, the government press was scornful, branding them a "cartel of millionaires."
Before the economic reforms that began in 1988, it was difficult, if not impossible, for a private entrepreneur to get a loan from a bank to start up a business. Loans of more than 3 million dinars ($370,000 at the legal exchange rate; $100,000 at the more widely used black-market rate) had to go through the Ministry of Planning, and in no case could a private entrepreneur borrow more than 30 million dinars.
More troublesome has been access to hard currency to import raw materials. Plummeting oil prices since 1986 have left Algeria with only about $8 billion per year for importing the huge array of food and goods on which the country relies. Only about $1.1 billion of that was allocated to the private sector last year.
In recent years, factory owners have had to apply for import licenses and hard-currency allocations to cumbersome state monopolies that seldom delivered the kind or quantity of goods ordered and that were almost never on time.
Gradually, President Chadli Bendjedid has been maneuvering reform measures through the FLN-run National Assembly. A new commercial banking network is being established, and business owners will soon be able to apply directly to banks for loans. They will be allowed to compete on equal footing for credit with public sector industries that in previous years were automatically granted most of the available credit.
The state purchasing monopolies have been eliminated, allowing business owners to deal directly with suppliers and apply for hard currency through the National Chamber of Commerce.
More importantly, after two years of foot-dragging, the National Assembly attached a significantly liberalized joint venture provision to the law that codified the bulk of the reforms March 26.
"This law is the most revolutionary thing that has hit this country since independence," said one Western economist studying the reforms. "It's overthrown 25 years of Soviet centralist Marxism, and it's moving into a market force-type economy."
The law eliminates most restrictions that previously limited foreign ownership of companies to 49%--holdovers of decades of fears about foreign interference that followed Algeria's war for independence from France. It also permits foreign partners to repatriate their profits. Both provisions are expected to encourage foreign investors to plunge into Algeria's fledgling private sector.
Raising questions over the entire economic reform movement, meanwhile, is last month's victory by Islamic fundamentalists in municipal and provincial council elections.
The Islamic Salvation Front (FIS) that captured 55% of the councils and which is seeking immediate national elections has declared itself pro-private business. Mohammed's first wife was a merchant, the movement sometimes points out.
But Western analysts believe the Islamic victory may discourage new foreign investment in Algeria.
"Foreign investments in Algeria would be very difficult to get, even without the FIS," countered Bensaadoun. "Be objective. Americans will not be ready tomorrow to invest, as we are not materially organized, we do not belong to the list of countries yet in which foreign countries are willing to invest. So there was a possibility at this point of maybe 1% or 2% foreign investment. It is not much. But the benefit for Algeria itself that will come out of this result from a psychological and moral point of view is far more important . . . .Algeria will become a strong nation, and foreign investment will follow."
