Overview

With a 2022 defense budget of roughly $10 billion, Algeria is Africa’s most prominent defense market and the world’s sixth-largest arms importer.  Algeria’s small indigenous defense industry provides light weaponry in ground transport, explosives, warships, and Russian- and Chinese-licensed arms.  Military modernization, terrorist threats from Libya and the Sahel, oil and gas field surveillance, and a quest for regional military superiority drive Algeria’s demand for new defense systems and equipment.  The industry is expected to grow to $11.9 billion by 2023, with expenditures reaching $12.1 billion by 2025.

Given the size of its local defense industry, Algeria depends on foreign suppliers for most of its equipment.  Russia enjoys preferential status with nearly 75 percent of the overall market share due to a long-standing bilateral defense relationship and Algeria’s competition with its Western-supplied neighbor and rival, Morocco.  Industry analysts expect Russia to continue filling the lion’s share of Algerian demand.  Following Russia, China and Germany have been Algeria’s second and third largest suppliers since 2014.  The U.S., Denmark, Finland, France, Italy, Netherlands, Poland, South Africa, Sweden, the UAE, Ukraine, and the UK compete for the remaining market share.

Despite their relatively small market share, American companies could gain potentially large contracts in specific subsectors.  Algeria recently committed to diversifying its weapons and equipment suppliers and expanding its suppliers to include more European and American companies in its $30 billion future spending plan.  Algerians look to U.S. suppliers mainly for military communications, electronics, and ground vehicles.  U.S. companies may also have opportunities in military medical supplies and training, drones, and avionics.  Despite its goal to reduce imports through international joint development equipment programs, Algeria depends on foreign cooperation for continued knowledge transfer.

The only buyer in the defense sector is the Algerian Ministry of National Defense, making all purchases from American companies via Direct Commercial Sales (DCS).  Qualifying for a U.S. export license through DCS is based on how a product or service is categorized.  The Department of State’s Directorate of Defense Trade Controls and the Department of Commerce’s Bureau of Industry and Security grant these licenses.  Algeria does not participate in U.S. Foreign Military Sales (FMS) or Foreign Military Finance (FMF) programs.  It limits its equipment purchases that require end-use monitoring to the maximum extent possible.  These factors typically reduce the total number of U.S. DCS transactions authorized annually to less than 30.

Source: The Stockholm International Peace Research Institute (The Algerian government does not release defense production statistics or procurement statistics. *the numbers shown above don’t include the totality of the Algerian Ministry of Defense procurement)

Leading Subsectors

• Military Communications
• Military Electronics and Parts
• Ground Vehicles
• Medical Supplies
• Drones
• Avionics
• Information Technologies, software, and systems
• SARC equipment
• Training

Opportunities

American companies are limited to non-lethal exports, subject to U.S. government regulations and licenses.  The most promising prospects are supplying ground vehicles, military electronics and parts, military communications, and equipment developed and manufactured locally in Algeria.

Resources

• The Ministry of National Defense frequently announces new tenders on its website: https://www.mdn.dz/site_principal/sommaire/appels/appels_an.php and on the official tenders bulletin website of Algerian public operators  https://bomop.anep.dz/en/

Commercial Specialist

• For further information and assistance in exploring opportunities in Algeria’s defense sector, contact: Amina Lakehal, Commercial Specialist, U.S. Commercial Service Algeria, at amina.lakehal@trade.gov.