Algeria withdraws the so-called “51/49 rule” for non-strategic business sectors and extends possibilities for foreign financing on targeted and structuring projects.

Published

Dec 05 2019

Written By

As the partner in charge of our Finance group in France and co-managing partner of our Casablanca office, I advise investment funds, banks, sponsors and public entities on the structuring, award and financing of projects in the energy, infrastructure and automotive sectors in Europe and Africa.

Practices

Nearly ten years ago, Algeria introduced an obligation for local individuals or companies to hold 51% of any foreign investment that significantly curtailed external resources and foreign investment during this period. The texts provided for a 49% cap on the participation of any foreign investor in the capital of an Algerian company.

Last week, in response to the need to revitalize the country's economic growth, Algeria has adopted the 2020 Finance law to withdraw the so-called "51/49 rule" for foreign investment in non-strategic sectors on November 28, 2019, restricting the scope of this rule to strategic sectors, that need to be defined.

The new Finance Law for 2020 also enables the use of external financing for "strategic, flagships, and targeted" projects for the national economy. Until then, the investments were limited to local financing. Relaxing the so-called 49/51 rule permits projects to benefit from financing and borrowings from regional and international financial institutions, of which Algeria is a member.