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Algeria

Executive Summary

Following the April 2, 2019 resignation of President Abdelaziz Bouteflika, Algeria entered into a transition period headed by an interim president.  Algeria’s state enterprise-dominated economy has traditionally been a challenging market for U.S. businesses, though one that offers compelling opportunities.  Multiple sectors offer opportunities for long-term growth for U.S. firms, with many having reported double-digit annual profits. Sectors primed for continued growth include agriculture, tourism, information and communications technology, manufacturing, energy (both fossil fuel and renewable), construction, and healthcare.  A 2016 investment law offers lucrative, long-term tax exemptions, along with other incentives. Rising oil prices in the latter half of 2018 helped reduce the trade deficit and restore some revenue to the government budget, though government spending is still higher than revenue. 

The energy sector, dominated by state hydrocarbons company Sonatrach and its subsidiaries, forms the backbone of the Algerian economy, as oil and gas production and revenue have traditionally accounted for more than 95 percent of export revenues, 60 percent of the state budget, and 30 percent of GDP.  The Algerian government continues to pursue its goal of diversifying its economy, with an emphasis on attracting more foreign direct investment (FDI) to boost employment and offset imports via increased local production. Algeria has pursued a series of protectionist policies to encourage local industry growth.  In December 2017, the government scrapped a short-lived policy requiring importers of certain goods to obtain import licenses (the license requirement was subsequently retained only for automobiles and cosmetics), replacing it with a temporary ban on 851 products announced January 1, 2018. The government replaced that ban on January 29, 2019 with a set of tariffs between 30-200 percent on over 1,000 goods.  The import substitution policies have generated some regulatory uncertainty, supply shortages, and price increases.

Algeria’s political transition may affect economic policies, though most leaders recognize the importance of economic diversification and job creation.  Economic operators currently deal with a range of challenges, including overcoming customs issues, an entrenched bureaucracy, difficulties in monetary transfers, and price competition from international rivals, particularly China, Turkey, and France.  International firms that operate in Algeria sometimes complain that laws and regulations are constantly shifting and applied unevenly, raising the perception of commercial risk for foreign investors. Business contracts are likewise subject to changing interpretation and revision, which has proved challenging to U.S. and international firms.  Other drawbacks include limited regional integration and the 51/49 rule that requires majority Algerian ownership of all new foreign partnerships. Arduous foreign currency exchange requirements and overly bureaucratic customs processes combine to impede the efficiency and reliability of the supply chain, adding further uncertainty to the market.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 105 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 157 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 110 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2018 $3 Billion http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2018 USD 3,940 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

Morocco

Executive Summary

Morocco enjoys political stability, robust infrastructure, and a strategic location, which have contributed to its emergence as a regional manufacturing and export base for international companies.  Morocco is actively encouraging and facilitating foreign investment, particularly in export sectors like manufacturing, through macro-economic policies, trade liberalization, investment incentives, and structural reforms.  Morocco’s overarching economic development plan seeks to transform the country into a regional business hub by leveraging its unique status as a multilingual, cosmopolitan nation situated at the tri-regional focal point of Sub-Saharan Africa, the Middle East, and Europe. In recent years, this strategy increasingly influenced Morocco’s relationship and role on the African continent. The Government of Morocco has implemented a series of strategies aimed at boosting employment, attracting foreign investment, and raising performance and output in key revenue-earning sectors, such as the automotive and aerospace industries. 

Morocco attracts the fifth-most foreign direct investment (FDI) in Africa, a figure that increased 23 percent in 2017.  As part of a government-wide strategy to strengthen its position as an African financial hub, Morocco offers incentives for firms that locate their regional headquarters in Morocco, such as the Casablanca Finance City (CFC), Morocco’s flagship financial and business hub launched in 2010.  CFC intends to open a new, 28-story skyscraper in 2019, which will eventually house all CFC members. Morocco’s return to the African Union in January 2017 and the launch of the African Continental Free Trade Area (CFTA) in March 2018 provide Morocco further opportunities to promote foreign investment and trade and accelerate economic development.  In late 2018, Morocco’s long-anticipated high-speed train began service connecting Casablanca, Rabat, and the port city of Tangier. Despite the significant improvements in its business environment and infrastructure, insufficient skilled labor, weak intellectual property rights (IPR) protections, inefficient government bureaucracy, and the slow pace of regulatory reform remain challenges for Morocco.

Morocco has ratified 69 bilateral investment treaties for the promotion and protection of investments and 60 economic agreements – including with the United States and most EU nations – that aim to eliminate the double taxation of income or gains.  Morocco’s Free Trade Agreement (FTA) with the United States entered into force in 2006, eliminating tariffs on more than 95 percent of qualifying consumer and industrial goods. The Government of Morocco plans to phase out tariffs for a limited number of products through 2030.  Since the U.S.-Morocco FTA came into effect, overall annual bilateral trade has increased by more than 250 percent, making the United States Morocco’s fourth largest trading partner. The U.S. is the second largest foreign investor in Morocco and the U.S. and Moroccan governments work closely to increase trade and investment through high-level consultations, bilateral dialogue, and the annual U.S.-Morocco Trade and Investment Forum, which provides a platform to strengthen business-to-business ties.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 73 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 60 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 76 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2017 $412 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2017 $2,860 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

Tunisia

Executive Summary

Tunisia continues to make progress on its democratic transition and will hold its second round of parliamentary and presidential elections since the 2011 revolution in October and November 2019, respectively.  Tunisia’s economy experienced a modest recovery in 2018, with GDP growth of 2.6 percent, but the country still faces high unemployment, high inflation, and rising levels of public debt.  

In recent years, successive governments have advanced much-needed structural reforms to improve Tunisia’s business climate, including an improved bankruptcy law, an investment code and initial “negative list,” and a law enabling public-private partnerships.  The Government of Tunisia (GOT) has also encouraged entrepreneurship through the passage of the Start-Up Act. The GOT also passed the “organic budget law” to ensure greater budgetary transparency and make the public aware of government investment projects over a three-year period.  These reforms will help Tunisia attract both foreign and domestic investment.

Tunisia’s strengths include its proximity to Europe, sub-Saharan Africa, and the Middle East, free-trade agreements with the EU and much of Africa, an educated workforce, and a strong interest in attracting foreign direct investment (FDI).  Sectors such as agribusiness, aerospace, renewable energy, telecommunication technologies, and services are increasingly promising. The decline in the value of the dinar has strengthened investment and export activity in the electronic component manufacturing and textile sectors.

Nevertheless, substantial bureaucratic barriers to investment remain.  State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment.  The informal sector, estimated at 40 to 60 percent of the overall economy, remains problematic, as legitimate businesses are forced to compete with smuggled goods.

The United States has provided more than USD 500 million in economic growth-related assistance since 2011, in addition to loan guarantees in 2012, 2014, and 2016 that enabled the GOT to borrow nearly USD 1.5 billion.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 73 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 80 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 66 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2017 $279 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita ($ USD) 2017 $3,490 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 
Investment Climate Statements
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