Algeria-France Trade Faces Headwinds: Exporter Count Drops Amidst Diplomatic Thaw
Image: TSA
Takeaway
The decline in Algerian exporters to France, particularly SMEs, signals a potential shift in trade dynamics that could impact supply chains and market access for both countries. Investors should closely monitor the Algerian government's efforts to diversify its export markets and reduce reliance on France, as this could create new opportunities in sectors like energy, infrastructure, and technology. Companies with exposure to Algerian-French trade should assess their risk exposure and explore alternative sourcing and distribution strategies to mitigate potential disruptions.
Algeria and France are navigating a complex trade landscape, marked by a decrease of 290 Algerian exporters, primarily small and medium-sized enterprises (SMEs), according to TSA Algérie. This decline occurred despite efforts to mend diplomatic relations, highlighted by French Interior Minister Laurent Nunez's visit to Algiers on February 16-17, 2026. Nunez met with Algerian President Abdelmadjid Tebboune and Interior Minister Said Sayoud to reactivate high-level security cooperation. The renewed partnership aims to improve judicial coordination, policing, intelligence sharing, and collaboration on migrant readmissions.
France and Algeria's economic relationship, while historically significant, has faced challenges, particularly since 2024. Trade between the two nations was estimated at 7 billion euros (~$7.56 billion) per year, encompassing hydrocarbons, infrastructure, and telecommunications. In 2022, Algeria held a 900-million-euro (~$972 million) trade surplus with France. However, overall exchanges decreased by 4.3% in 2024, falling from 11.8 billion euros (~$12.74 billion) in 2023 to 11.1 billion euros (~$11.99 billion). This decline is partly attributed to diplomatic tensions arising from France's stance on Western Sahara, which has strained relations since summer 2024.
In the first quarter of 2025, French exports to Algeria plummeted to €992.5 million (~$1.07 billion), a 21% drop from €1.255 billion (~$1.36 billion) in the same period of 2024. Algerian exports to France also saw a decrease, albeit more modest, falling 3.9% from €1.42 billion (~$1.53 billion) to €1.36 billion (~$1.47 billion). The decline in French exports spanned various sectors, including machinery, pharmaceuticals, and agricultural goods. Hydrocarbon exports from Algeria to France experienced a marginal increase of 0.3%, rising from €1.075 billion (~$1.16 billion) to €1.078 billion (~$1.16 billion), while refined petroleum products and nitrogenous products declined by 17.1% and 22.7%, respectively.
Approximately 1,200 Algerian companies, 70% of which are SMEs and micro-enterprises, export to France. Conversely, over 400 French companies operate in Algeria, primarily in energy, services, and agri-food. France's investments in Algeria are concentrated in the financial, banking, construction materials, and pharmaceutical sectors. The hydrocarbon sector, dominated by about twenty major Algerian companies, remains a crucial pillar of exports. These bilateral exchanges support more than 50,000 jobs in Algeria. A potential rupture in economic relations would disproportionately affect French companies, particularly SMEs, and sectors like agri-food, especially after Algeria excluded France from wheat import tenders.
Looking ahead, the success of reactivating the high-level security cooperation mechanism will be critical in easing diplomatic tensions and fostering a more stable environment for trade. Upcoming visits by French justice and foreign ministers, though previously stalled, could further advance judicial and economic cooperation. The findings of the joint historian commission examining colonial-era archives, initially scheduled for summer 2025, may also influence future relations. Investors should monitor the evolution of trade agreements and partnerships Algeria forges with other nations, including Italy, Spain, and China, as these relationships could reshape Algeria's trade dynamics.