Algerian Entrepreneurs See Opportunity in Oil-Price Plunge
By Aida Alami
ALGIERS - Algeria, a country that depends on energy for 97 percent of its exports and two-thirds of its government revenue, is facing an economic crisis precipitated by the plunge in oil prices. And that is just fine with Toufik Lerari and Marhoun Rougab, entrepreneurs who see it as salvation for the rest of the Algerian economy.
“Our
chance is the collapsing oil prices,” Mr. Lerari said in his office,
where colorful pop art paintings decorate the walls. “Now, we cannot
wait anymore. We must act. We want to concentrate our energy on what
works well in this country. What can you build if you’re not positive?”
Mr.
Lerari, 38, and Mr. Rougab, 30, founded a communications company,
Allegorie, in 2010, and business has been good — so much so that they
want to hold up themselves and others like them as an answer to
Algeria’s problems.
If
nothing else, Mr. Lerari said, their optimism is a welcome antidote to
the government officials who recently warned on national television of
an incipient economic crisis. The warnings prompted talk among pundits
that political instability could soon follow.
Mr.
Lerari and Mr. Rougab — who can recall childhoods of water shortages
and slow-flowing faucets, as well as terrorist attacks and curfews that
kept them inside at night — live today in a more secure and developed
Algeria. Now when they discuss water, they talk metaphorically about
glasses half full. When the sun goes down, they seek out pockets of
night life in the otherwise staid capital.
But
if the country has been remarkably stable in recent years even as the
Arab Spring and the rise of the Islamic State have shaken the rest of
the region, it has achieved that primarily by doling out generous
oil-financed benefits, including housing, cars and pay raises. According
to the International Monetary Fund, government spending jumped by 50
percent and civil servants’ salaries grew at nearly the same rate in
2011.
“Once
you get low oil prices, the system doesn’t work anymore, and it creates
series of dysfunctions,” said Riccardo Fabiani, a senior analyst at the
political-risk research firm Eurasia. “As long as there is an effective
authoritarian regime in place, there is no incentive to change the
system. They need to address issues of governance and transparency, and
invest in the human capital of the country like bettering the education
system.”
Mr.
Fabiani said that while the country had a socialist tradition, its
recent protectionism was aimed at maintaining a system of privileges.
“The
regime has been talking about diversifying its economy for the past 30
years,” he said. “It remains a place very hostile to foreign investors.
They prefer to work with businessmen close to the elites in order to buy
their loyalty.”
Protests
take place nearly every day, and basic social services, health care and
education had been widely perceived as declining even before oil prices
collapsed. Now the government of President Abdelaziz Bouteflika is
facing budget shortfalls.
In
February, Mr. Lerari and Mr. Rougab held their third annual Fikra
conference (fikra is Arabic for “idea”) with the goal of inspiring
Algerians to think beyond oil. Their call for entrepreneurship,
innovation and diversification of the national economy was received by a
mainly young audience, whose desire for change was evident.
Fikra,
now a major event in Algeria, featured 30 speakers this year, including
economists, entrepreneurs and some of the country’s richest
businessmen, at the Hotel Aurassi overlooking Algiers. Hundreds of
people attended the presentations, which were casual and interactive.
The theme was success.
Since
French colonial era ended in the early 1960s after a bloody war,
Algeria has been relatively closed to the world culturally, politically
and economically. The political system has been dominated since
independence by one party, the National Liberation Front, while the
economy has been choked by cronyism, insider dealing and anticompetitive
regulations.
Algeria
had its version of the Arab Spring in the 1980s amid another collapse
in oil prices. In 1991, the army canceled elections after an initial
round was won by Islamists, sparking a decade of civil war and terrorism
that killed tens of thousands. Then, military leaders imposed a state
of emergency that was lifted only in 2011.
“It
is true that Algeria still suffers from a lot of administrative red
tape and the fact that things tend to move slowly,” said Mr. Rougab, who
said foreign participants at Fikra had difficulty obtaining visas. “But
we don’t like to talk about problems.”
That
climate has led many young people to crave more interaction with the
world now that years of instability have given way to calm.
The
Algerian government has promised to ease unemployment among youths,
which is over 20 percent, by redistributing energy revenue and offering
microcredits to young entrepreneurs who create jobs. The initiative has
yet to show significant results, however, in part because banks are not
prepared to invest in start-ups.
Still,
Mr. Lerari and Mr. Rougab, who are childhood friends, said success was
possible through hard work. “We are the first to arrive and the last to
leave, seven days a week,” Mr. Lerari said.
They
founded Allegorie at a time when the Algerian public relations and
communications field was relatively small, and they had to convince big
companies of the importance of their services. They plan to build the
first video production studio complex in Algeria before the end of the
year; an Algerian version of MasterChef is expected to be filmed there
in partnership with News Corp.-owned Shine France.
Mr.
Lerari travels between Nice, in France, where he has another company,
called Tequila, and where his wife and two children live. His wife holds
a doctorate in biology and is pursuing a business degree. Mr. Rougab,
who was educated at King’s College London, lives full-time in Algiers.
He
views living in this sleepy capital as a challenge that he and other
young entrepreneurs are surmounting. Despite its beautiful landscape,
Algeria is not a tourism destination because it offers few leisure
activities. But he thinks the situation has evolved recently.
“Restaurants
are starting to open and the social life is richer than it was,” Mr.
Rougab said. “There are a lot of beautiful museums in Algiers that have
pieces by Delacroix, Rodin that few know about.”
Both
Allegorie founders are passionate about photography and like to travel
together. They share an office and regularly exchange ideas. Mr. Lerari
says he is the hard-nosed, analytical thinker, while Mr. Rougab, who is
also an art collector, is the more creative one.
“We always had ideas. Our strength was to carry them out,” Mr. Rougab said.
You can read the article on the New York Times' website
