In an exciting development, Algeria has announced its accession to the New Development Bank, the financial institution set up by the BRICS nations. The move is expected to create fresh opportunities for the country in a fast-changing world.
The NDB is a multilateral lender established by the bloc—Brazil, Russia, India, China, and South Africa—which has also expanded with membership invitations issued to Saudi Arabia, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.
Set up in 2015 to fund infrastructure and sustainable development projects in emerging economies, the NDB has admitted Algeria just as relations between the North African country and its traditional partners have come under strain, especially in Europe.
Algeria’s Ministry of Finance announced the move after it was agreed upon at the NDB’s annual Board of Governors meeting, held in Cape Town, South Africa, in late August. Treasury officials described it as “a major advancement in integrating into the global financial system.”
It followed a “rigorous evaluation,” which found Algeria has “strong macroeconomic indicators, reflecting the robustness of its economy."
Membership in the NDB comes as Algeria seeks to reposition itself on the global stage, seeking new partnerships as its ties with European nations look increasingly strained.
Global diversification
Spain’s radical shift to support Morocco over the dispute over the Western Sahara, which came in March 2022, followed by France’s recent endorsement of a plan for an autonomous region there as the sole means to resolve rival territorial claims, upset Algeria, increasing its determination to adopt a more global outlook and diversify its partnerships.
“Algeria is beginning to engage with the global economic and financial community after decades of isolation, low exports, amounting to less than $1bn, and the lack of capital to integrate into the global financial system," business analyst Mohammed Himran said.
Algeria aims to boost its GDP to $400bn by 2026 and increase non-hydrocarbon exports to $30bn by 2030.” Achieving such targets will require robust economic openness. That approach could help Algeria with another ambition – membership in the World Trade Organisation – although negotiations have been challenging amid contentious issues on both sides.
Financial freedom
The NDB may offer Algeria a welcome means of escaping the dominance of the major international financial organisations, the International Monetary Fund (IMF) and the World Bank.
Hirman said: “These institutions are known for interfering in countries' policies by issuing recommendations and often imposing unfair conditions, particularly in the management of critical sectors.”
For decades, the IMF has injected billions of dollars into recipient countries, but to this day, most, especially in the Arab world, have not managed to escape poverty, low living standards, or social decline.
Hirman described Algeria’s primary goal in looking toward the NDB as “to seek new alternatives”, adding: “The NDB is known for offering loans without economic or social conditions and without interfering in the internal affairs of beneficiary countries.”
In its latest report, the IMF ranked Algeria as the third-largest economy in Africa for 2024, following South Africa and Egypt, surpassing Nigeria, which fell to fourth place. It estimated Algeria's GDP this year at $266.78bn, with a projected growth rate of 3.8% for 2024.
Algeria’s President Abdelmadjid Tebboune, in a recent interview with local media, anticipated that national GDP would exceed $400bn by the first half of 2026, with a growth rate of at least 4%. Experts, meanwhile, consider this forecast to be highly optimistic.
