Preparing for the on-coming Fourth Industrial Revolution

Preparing for the on-coming Fourth Industrial Revolution

Posted on August 8th, 2018, this article by Jonny Williamson expands on the future of manufacturing possibilities of those countries that would be best at it in the future. Preparing for the on-coming Fourth Industrial Revolution will be rewarding through commercial opportunities to be gained, by these that are not surprisingly almost all from amongst the developed countries of today. For instance, “the leading 25 countries account for more than 75% of global manufacturing value added, while 90% of the countries from Latin America, Middle East, Africa and Eurasia fall into the low level of readiness.” 

Readiness for the future would require, according to this study, not regional or national but global solutions. Connected production systems that have so far developed quasi naturally would need “not only sophisticated technology but also standards, norms and regulations that cross technical, geographical and political boundaries, to release efficiencies and make it easier to do business across global value chains.”  

However, for all this to happen, it will have to be through new approaches to public-private collaboration that complement traditional models.


Which countries are best placed for the future of production?

 

A new report by the World Economic Forum reveals that only 25 countries are in the best position to gain as production systems stand on the brink of exponential change.

 

Future of Production Report 2018, World Economic Forum & A.T. Kearney.

The Readiness for the Future of Production Report 2018 reveals that Japan is leading globally in current baseline of production, with the US currently best placed to capitalise on the Fourth Industrial Revolution (4IR).

The report, developed in collaboration with A.T. Kearney, provides a snapshot of today’s global production landscape along with potential responses to emerging technologies and new production systems and/or business models

The new framework is made up of two main components: ‘Structure of Production’, which measures a country’s scale and complexity of production; and ‘Drivers of Production’ – the key enablers that position a country to capitalise on the 4IR to transform production systems.

Recognising that each country has its own unique goals and strategy for production and development, participants are assigned to one of four archetypes:

  • ·         Leading (strong current base, high level of readiness for the future)
  • ·         High Potential (limited current base, high potential for the future)
  • ·         Legacy (strong current base, at risk for the future)
  • ·         Nascent (limited current base, low level of readiness for the future).

Image courtesy of Future of Production Report 2018, World Economic Forum & A.T. Kearney.

Along with further qualitative analysis, the initial assessment reveals eight main findings:

1.      Global transformation of production systems will be a challenge, and the future of production could become increasingly polarised in a two-speed world. The 25 countries in the Leading archetype account for more than 75% of global manufacturing value added (MVA), while 90% of the countries from Latin America, Middle East, Africa and Eurasia fall into the low level of readiness.

2.      Different pathways will emerge as countries navigate the transformation of production systems. Advanced manufacturing will not be the chosen path for all: some may seek to capture traditional manufacturing opportunities in the near term, while others will pursue a dual approach, or prioritise other sectors altogether.

3.      All countries have room for improvement. No country has reached the frontier of readiness, let alone harnessed the full potential of the 4IR in production. While there are early leaders to learn from, these countries are also still navigating the early stages of transformation.

4.      Common challenges within each archetype indicate potential future pathways for Leading, Legacy, High Potential and Nascent countries. Countries can learn from each other, while pursuing their own unique strategy.

5.      Technological advancement brings the potential for leapfrogging, but only a handful of countries are positioned to capitalise. Lagging countries can potentially enter emerging industries at a later stage without the legacy costs of earlier investment, but only if they have the right set of capabilities and develop effective strategies for capturing leapfrogging opportunities most relevant to them.

6.      The 4IR will trigger selective reshoring, nearshoring and other structural changes to global value chains. Emerging technologies will change the cost-benefit equation for shifting production activities and, ultimately, impact location attractiveness. All countries must develop unique capabilities to make them attractive production destinations and capitalise on these shifts.

7.      Readiness for the future of production requires global, not just national, solutions. Globally connected production systems need not only sophisticated technology but also standards, norms and regulations that cross technical, geographical and political boundaries, to release efficiencies and make it easier to do business across global value chains.

8.      New and innovative approaches to public-private collaboration are needed to accelerate transformation. Every country faces challenges that cannot be solved by the private sector or public sector alone. New approaches to public-private collaboration that complement traditional models are needed to help governments quickly and effectively form partnerships that unlock new value.

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Algeria and its illusory raw material annuity

Algeria and its illusory raw material annuity

The Minister of Energy whilst proceeding with the installation of an inter-sectorial Steering Committee of the mega-partnership project for phosphate exploitation and the development of petrochemical industries, said in a communiqué that this will enable Algeria to “become a global exporter of phosphate fertilizers and its derivatives”. This contribution is about Algeria and its illusory raw material annuity potentialities with a particular look at the case of phosphate mining and exploiting.

This strategic mega-project’s objective is to achieve a production of phosphates of nearly 11 million Tons/year compared to 1 to 1.5 million of Tons/year currently.

Unlike euphoria such as stated by the former Minister of Industry in 2014 – 2015 that thanks to the exports of phosphate, iron and cement, Algeria would not be negatively impacted by the recent oil prices drop. However, for both phosphate and iron (crude or semi-crude) and cement, marketing depends so much on the constraints of the international strategic environment management, the content of these ores that determines the cost of exploitation, and above all the growth of the world economy whose future structure with the fourth industrial revolution that gradually sets in by 2018 through 2030.

In these internationalized segments, some multinational firms control the techniques and distribution channels. We should avoid the mistakes of the past that have been estimated at billions of Dollars’ worth of losses and approach these for some mutual understanding.

Phosphate is a key element in the composition of fertilizers which are of crucial importance for world food security, but paradoxically the prices between 2015 to 2018 have been oriented downward.

For phosphate reserves, by order we have Morocco 50000 MT, China 3700, Algeria 2200, Syria 1800, South Africa 1500, Russia 1300, Jordan 1300, Egypt 1250, Australia 1030, The USA 1100 and Saudi Arabia 950. As far as production is concerned, we have for 2015, 223 million metric tons (MT) including China 100 MT, Morocco 30 MT, USA 27.6 MT, Egypt 5.5 MT, Tunisia 4 MT, Saudi Arabia 3.3 MT, Israel 3.3 MT, Australia 2.6 MT, Vietnam 2.6 MT, Jordan 2.5 MT and Algeria 2.6 MT. The price of crude phosphate has been divided by three since its peak in the year 2008; Having fallen by 43.2% since the year 2011. The world price of raw phosphate remained stable at around US $115 per MT, on a monthly average of 2015. According to a forecast of the World Bank, the general and medium-term trend of prices of phosphate products would remain down; crude phosphate would negotiate in 2020 at about of $80 – 85 per MT, that of DAP around $377.5 /MT and the TSP to nearly $300 /MT.  In a new analysis, the world rating agency estimates that the prices of phosphate ore will remain on average at 100 per tonne (toll-free), in 2018 and the prices of the ton of phosphate ore (no charge on board) would reach $105 in 2019 and possibly $110 in the long-term

Crude phosphate price is this month approximately $86 per ton compared to $84 for the same period in 2017. So, if Algeria exports 3 (three) million ton of raw phosphate annually at an average price of $100 between 2018 through 2020, we could have a turnover of about $300 million and for ten million tons a billion Dollars.

All related costs in this sector being relatively high, of notably depreciation and wages at a minimum of 40%, the resulting net profit would be, for 10 (ten) million tons about $600 million. In the event of an association with a foreign partner using the unavoidable 49/51% rule, the net profit of Algeria would be slightly more than $300 million. We are therefore, far from the profits generated from the oil fields.

To increase net profit, it is therefore necessary to embark on highly intensive processing units with heavy and profitable investments in the medium term with an export of as diverse products as possible. Thus, in a market as competitive as that of  the European Union, all fertilizer / Urea products were sold at more than $423 per ton in 2014 and was quoted on an annual average in 2017 at $327 per ton and on April 24th, 2018 to €247 per ton.

The price of Ammonia is a function of the price of gas on the international market. For instance, when the price of gas is $4 / MBTU, the cost of Ammonia is about the current rate of $140 / ton. When the gas price is $7 per MBTU, the cost price is $242.

In the world market, prices fluctuated between $338 / ton in August 2017 and $404 as quoted at the beginning of February 2018. But for large exportable quantities, this requiring heavy investments in the medium term would bring any profit not before 2020 – 2022 if the project was in operation as of 2018. And for large exportable quantities, this would require going through some partnership notably because of the world market being controlled by some firms. Moreover, for Algeria, it will be necessary to solve the problem of the price of the transfer of gas which cannot be aligned with that of the market and avoid the numerous disputes. In this context, I recommend, following many experts, that petrochemicals be attached to the Ministry of Energy / SONATRACH for greater coherence and efficiency, even if it is to establish a State Secretariat for Petrochemical Industries.

Focusing only on the country’s higher interests, it must be recognised that there is a lack of strategic vision. I would like to think that, as a word of warning against all visions of utopias of the past, should be left behind.

All this raises the problem of the limits of all public expenditure via the annuity and refers, for Algeria, to the mastery of strategic management to at least avoid all mismanagement, ignoring the new global mutations and / or initiation of non-mature projects that may go bankrupt in between time. A pertinent example is this drift towards all those automotive assembly plants where we ended up with more than thirty manufacturers, thing unknown anywhere in the world.  Hence the importance of understanding the new mutations of these internationalised channels in perpetual technological change.

 

Algeria needs a Vision within which all industrial policies should be coordinated (institutions, financial system, fiscal, customs, federal, socio-educational systems, labor market, land use, etc.), in order to adapt to the new world in perpetual evolution driven by innovation. Without this necessary adaptation to the new world in perpetual change, referring to a clear political will to accelerate the reforms, thus to a cultural revival generalized to the society as a whole, Algeria having all the required potentialities to go beyond the current status quo, it is futile to penetrate any world market. Algeria still dependent for long years on hydrocarbons, all other raw materials would only help make it possible to realize just an average profit,

In short, a win-win partnership with companies that control international circuits is the only way to value phosphate and to bring more value-added because exporting the raw material per say would not be as vitally important especially in a heavily devalued currency.

Let us avoid the illusion of an eternal annuity via some raw materials related exports revenues, as I recall in my previous contributions, no country in the world that has focused solely on raw materials has achieved sustainable development. As we must avoid this myth of the power of capital-money as a means. If we take the oil exporting countries of the MENA region that have had hundreds of billions of Dollars in the last three decades, none have achieved at least an emerging country status.

Since the world is world, and this proves truer with the forthcoming fourth world economic revolution, the prosperity of different civilizations has always been based on good governance.

Ademmebtoul@gmail.com 

 

Knowledge and Technology Transfer

Knowledge and Technology Transfer

Sound Foundation for Development

Algeria was ranked 108th out of 127 in June 2017 in the Global Innovation Index, a global ranking of countries according to their abilities and results of economic innovation as published annually by Cornell University, the INSEAD and the UN’s World Intellectual Organization Property (WIPO). The Fourth Industrial Revolution (4FIR) is on us; this will be based on the generalised Knowledge and Technology Transfer throughout all endeavours. We should therefore not forget that the world is not waiting for Algeria to get on the band wagon.  This country is not isolated and its assessment from either the above GII 2017 as from official data shows the limits of the administratively bureaucratic approach that lead to that ranking.

This brief analysis is a synthesis, of Volume VI of the multidisciplinary audit, submitted to the Government in January 03, 2013 (1).

Technology Transfer

According to the WIPO, technology transfer is the process of designating the formal transfer to industry of discoveries resulting from University research and the commercialization of these discoveries in the form of new products and services.

As far as academic research is concerned, technology transfer is an operation that is to transfer a specific piece of knowledge from research, formalized or not in the form of patent(s) or deposited property rights, to another center of research, public or private, with the intended purpose to pursue for industrial development or to turn research into industrial innovation, by assigning any discoveries to an industrial enterprise.

If we limit ourselves to industry, technology transfer is the sale by contract of all rights of use of a technique, a process, a product (commodity) that it owns, as well as the know-how for its industrial production.

The technology owner remains the owner and the buyer is contractually limited to a market (for example geographical limits, customer type, volumes) and constraints of broadcast (the purchaser cannot transfer technology).

As one should not confuse technology transfer with an assignment of license, the transfer of technology including the disclosure of know-how adapted to the context of the purchaser whether in public or private law.

What are the different forms of technology transfer?

We can classify this in different forms also often complementary. First, the dissemination of knowledge, sometimes named dissemination and transfer of knowledge, which is a discipline practiced by research centres for the purpose of information of public bodies et enterprises.

This broadcast is practiced in conventions, through publications constituting one of the information sources of technological intelligence that monitors the evolution of knowledge, know-how and the feasibility of inventions in a certain field and its development environments.

Strictly speaking, technology watch is not a transfer of technology but facilitates the transfer. Then there is the technological slurping, i.e. digging up sleepy projects in research laboratories and universities that did not find industrial opportunities and promote them for purposes of enterprise creation.

Another method of transfer often used in industry to facilitate knowledge management is the recruitment of executives and specialists in a given technology. It is one of the activities of head-hunters, recruitment firms or sometimes this leads to industrial espionage if the beneficiaries of the information know how to exploit them.

There is no real training phase, unless the data transmission includes didactic elements. Also included as transfer facility in a first phase is reverse engineering as applied in technical education, the counterfeiting or piracy (often prohibited under the terms of the WTO)

Finally there is the partial transfer of technology through the granting of a  license to the purchaser production but excluding certain technologies (protection of know-how). Good management requires knowledge and skills.

Knowledge fundamentals to technology transfer

Facing up to the pressure of competition with innovation, development of tailor-made products and increasingly complex technologies geared for the production of more and more personalized services, the required work of employees has no immediacy. Increasingly, directions of companies request of employees to lay down knowledge of their own work thus the importance of continuous training.

This production of knowledge is based on commitment and involvement that make initiative, intuition, judgment (famous Japanese Toolbox source of innovation) play a central role but also on the abilities of the individuals and the wider “social knowledge” that is strategic for every company that wants to continue to succeed.

Knowledge management relies on the levers of success such as knowledge embedded in products and services; knowledge and skills within a company (human capital); knowledge contained in the process (internal structure); corporate memory; transactional memory and finally knowledge as intangible property (intellectual capital).

This openness reflects the necessary break with the forms of governance that are centralized, disciplinary and mutilating as inherited from the Ford era.  Capital also goes social in different techno-organisational devices influencing the rapport of individuals at work.

Surveys clearly show that this extension of social knowledge is accompanied by new forms of segmentation (qualified / not qualified; mobile / immobile; young / old; man / woman) and a sharing of activities and services that become more and more merchants (outsourcing computing to India electronics to Japan, South Korea, etc.)

This sociocultural approach that reflects the complexity of our societies with technology transfer being the apparent appearance owes much to the important work in terms of the approach to the economic anthropology of the Indian economist Nobel prize winner Amartya Sen whereby according to him, there cannot be any sustainable development without the introduction of the competitive market economy and of a real democracy that only allows both tolerance and confrontation of ideas and growth of renewable energy taking into account the cultural anthropologies of societies.

There is generally a dialectical link between technology transfer and culture

National culture being not static, but evolving as strongly characterised by the opening of a society onto environmental values, myths, rites and signs shared by the majority of the social body is an essential constituent of the culture of enterprise and technology transfer.

The successful experiences of Japan, emerging countries such as China and India show that we can assimilate technology without renouncing one’s culture. Moreover, the transfer is favoured where there is a better understanding of convergent and divergent values between two groups whereas trying to impose one’s own values could lead to a relationship of domination that in turn limits the transfer.

Corporate culture is also a by-product of a national culture and thus a set of values, myths, rites, taboos, and signs shared by the majority of employees and an essential element to explain the strategic choices by strengthening common values: example, regulations behaviour codes, job descriptions, as well as by the rewards and sanctions system so that employees are mobilised for the purpose of identification with their company and take over its history.

All this facilitates the transfer of technology that should not be limited to its technical, but to all managerial, organizational and commercial etc. aspects.  The index of human development or HDI developed in 1990 by Pakistani economist Mahbub ul Haq and Indian Economist, Nobel Prize in economics Amartya Sen reflects the importance of the development of human capital including education and health.

Change of legal framework blocking investment and technology transfer

It is useful to recall that from the political independence to the present day, the Algerian economy has experienced different forms of organization of public enterprises.

Prior to 1965, self-management was preferred; from 1965 to 1980, we had large national companies and from 1980 to 1988, we witnessed a first restructuring carving up the large national corporations. As a result of the crisis of 1986 that saw the oil price collapse, timid reforms have begun in 1988: the State creating 8 Fund that were responsible for managing the various State portfolios.

As a result of cessation of payments in 1994 (with the consequent rescheduling), in 1996, the State created 11 holdings in addition to the 5 regional ones with a national Council of privatization; in 2000, we are witnessing their merger in 5 mega holdings and the removal of the national Council of privatization; in 2001, a further reorganization created 28 companies of participative management (GSP) in addition to large companies considered as strategic and in 2004, these GSPs are grouped into 11 and 4 regional ones.

At the various Governments Councils held throughout year 2007, a new organization is proposed by the Department of the Promotion of Investment, (both large companies oil SONATRACH and SONELGAZ, governed by specific laws being not concerned), articulated around four major segments: from the economic development corporations that fall under the exclusive State Management; companies of promotion and development by promoting partnership with the private sector, national and international; called State companies to be eventually privatized ; and finally, a company responsible for the liquidation of structurally loss-making enterprises.

In February 2008, this organisation proposal that did not have unanimity within the various spheres of authorities is abandoned. A commission was instead created to define the typical organization of the public economic sector between 2011/2016 with differing industry groups.

Not forgetting this ambiguous 49 / 51% of company share ownership that was introduced in 2009 to all enterprises including banks in 2010, regardless of strategic and non-strategic sectors drove away foreign capital, Algeria supporting all additional costs.

These periodically recurring changes of organization discouraged managers in the public economic sector, as well as the local and foreign investors clearly showed the dominance of the administrative and bureaucratic approach at the expense of the economic operational approach resulting in a waste of financial resources, a strengthening of the rentier dynamics and blocking of any transfer of technology.

Because of the essential blocking of local and foreign investment being a bureaucratic machine that feeds on the lack of visibility and coherence in the overall reform this situation would require an approach with a comprehensive reform whereas lack of political consensus and neutralization of the balance of power has never addressed a clear way of the future role of the State in the face of both internal and international changes.

Indeed, the future stakes are essentially economic and as in all countries in transition the Algerian society is naturally facing two trends, with in the a majority “the swamp” in the middle not understanding the issues that are anticipated between 2017 and 2030 in essentially economic, between adverse actors and stakeholders favouring reforms where the importance of records eminently political as that of hydrocarbons, the production place of the rent, of the financial system, place of distribution of the rent, and that of the partnership-privatisation, coupled with that of a socio-educational system, rather than the production of added-value that skills will create new social forces either backward if we are moving towards a new private monopoly or carriers of progress if we set a total transparency for a truly competitive market economy.

Hence the rentier tendency to managing the reforms according to a vision bureaucratic as of administrative injunctions based on administrative relays – the office, necessary in any society, but in contrast to developed countries analyzed by Max Weber, a factor blocking that attends the blocking of useful investment for more than 60%.

What conclusion for the action of the Government?

Reconciling economic efficiency and a deep social justice in the context of an open economy, control of the time being the main challenge for Governments in the 21st century would at the end of the day constitute the real challenge of Algeria between 2017, 2020 and 2030.

It is clear that at the time when big businesses and SMIs/SMEs are organized into networks corresponding to a historic phase where the enterprise tends to focus on its core business by outsourcing a good number of secondary activities, and the manufacturing industry experiencing a crisis rarely matched globally, it is necessary to avoid theoretical experiments with huge costs for the country which can only lead to an impasse for lack of strategic vision.

It is the result of the new configuration of the international labour division, product of the evolution of the development of capitalism, an unfinished globalization historical process with the new technological ecological challenge.  Knowledge within the stability of the political environment, economic and social determinants according to international reports, would be a decisive factor in the development of Nations in the 21st century with good governance.

Any operational analysis would have to connect the process of technology transfer to both the new changes at the global level, in front of a profound change in geopolitical, socio-economic, managerial and technological at horizon 2017/2020/2030 as a future policy of the Government tossed between two social forces: the rentier logic supported by proponents of import, the unfortunately dominant informal sphere and the entrepreneurial logic.

In fact technology transfer should not be limited to the technical aspects only but to the organization of society in general on a par with both internal and global changes.  The passage of the status of ‘support against the pension’ to the rule of law “based on work and intelligence” is a major political gamble since it simply involves a new social contract and a new political contract between the Nation and the State.  ademmebtoul@gmail.com


(1) Three audits under the direction of Dr Abderrahmane Mebtoul for the Government including the observation and operational resolutions were conducted comprising:
Study carried out and assisted by officials from the Department of Energy, senior executives of SONATRACH and Ernst Young titled “For a policy of fuels including a policy of subsidies targeted in a competitive market.”
Start-ups revolution in the MENA region?

Start-ups revolution in the MENA region?

All economic activities are enterprise based and these are like any living body in need of renewal and maintenance, in other words, they go through a lifecycle like anybody else.  This begins, to carry on the same analogy, with birth.  According to the Cambridge Dictionary  it means a small business that has just been started. Wikipedia elaborating little more to define a startup company (startup or start-up) as being an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing or offering an innovative product, process or service. A startup is usually a company such as a small business, a partnership or an organization designed to rapidly develop a scalable business model. Are we witnessing a Start-ups revolution in the MENA region? The answer would depend on the location of where the birth occurs.

In the MENA generally, there is a relatively good understanding of the vital importance of the Start-up as it were business of encouraging its eclosion and nurture.  The reality of the terrain though does make some difference between those with the required cash and those have-nots.  Stability and domestic market buoyancy do weight in and most times take over the relevance of the cash requirement.

The Middle East’s start-up scene – explained in five charts: an interesting article written John McKenna, Formative Content published on May 17, 2017 by the World Economic Forum on the situation of the Start-ups in the MENA as illustrated by colourful charts would be advisable to ponder on.  The author concludes his essay with a laconic Middle Eastern cities have a long way to go before they can compete with leading global start-up hubs.

Meantime, the local press mainly online also looking at the matter whether it be the long awaited respective governments’ programme of diversification of the economies leitmotivs or the new thriving dynamism is giving positive results especially now there is almost no hope as far as the petro economies of the GCC, etc. of going back to the $100 barrel heydays.

Here are the most illustrative areas of predilections in which the young start-ups dive in first and these are not surprisingly the Phones, Apps & learning tools: Here are the best tech launches of 2017 as per AMEinfo.  It notably stating that today the world is dominated by technology thoroughly looked at it, brand by brand and arrived at the conclusion that better be with it than without it.

Apart from the obvious hardware, start-ups are also interested by all matters software such as data handling, open and / or shared data from all types of organisations, government, public and private sector alike.  AMEinfo again shines with a beautifully tailored article on this subject.  It is about  Data will add AED10 billion to Dubai economy: Arabnet Digital Summit.

 

Automotive Industry in North Africa or Assembly Plants

Automotive Industry in North Africa or Assembly Plants

Ten questions for their feasibility . . .

The purpose of this article is to as objectively as possible raise the issue of the future profitability of the Automotive Industry in North Africa or Assembly Plants or put simply manufacturing of cars specifically in Algeria.
Because the international constraints are there and in the face of the global changes, the automotive sector is known for its restructuring, mergers and relocation of large groups, and for its high production capabilities. The global market for cars in perpetual mutation is nevertheless an oligopolistic market where a few companies control the international circuits.
It seems that some Algerian officials forget that globalization is here for good with political and economic implications. The press has recently echoed several Algerian operators desirous to embark into projects of cars manufacturing though with Original Equipment Manufacturers (OEM) from France, Italy, South Korea and Germany, etc. have open debates on the viability of such undertakings.
The question that arises, would be in the face of the global changes, about the break-even point of all these small car manufacturing projects, knowing that Algeria would be called to evolve within an open economy, though protectionism being sometimes necessary is only transitional?

According to the ‘Office National des Statistiques’ (ONS), the official agency of statistics, the automotive national park (NPA) totalled 5,683,156 vehicles by the end of 2015, up 4.75% year on year.  This increase of the NPA is due to an increase in registrations of new vehicles in 2015 compared to 2014 of more than 900,000 units, or 7.72%.

The number of operations of registration went from 1,397,554 operations in 2014 to 1,505,403 operations in 2015. According to the ONS, the number of registration of new cars fell from 301,722 units in 2014 to 257,589 in 2015, drop of 14.63% and that, unlike past years before the introduction of import licenses, almost all (91.3%) vehicles imported in 2015 were of the order of 282,119 units and registered their year of import.

Taking into account that the Algerian economy is based on the hydrocarbons revenues, the evolution of the price of oil basically determines the purchasing power of the Algerians and inflation would lead to its deterioration.

Several questions would need answers for any coherent economic policy and these are :

 

-First, what will happen with the inevitable exhaustion of oil in terms of economic profitability on the purchasing power of the Algerians? In this case of the real purchasing power of the middle classes, that will remain in terms of the possibility of purchasing power to buy a car?

 

-Secondly, due to the absence of industrial specialized units, and referring to the knowledge-based economy in order to promote integrated subcontracts, what will be the currency balance of these projected units? Especially that the majority of the inputs (costlier with the slippage of the Dinar) will almost all be imported before?

 

-Third, by international standards, the threshold of capacity at the global level are between 200,000 and 300,000 per year for individual cars, about 100,000 units per year for trucks / buses and scalable with the concentrations since 2009. Cost accountings are fixed costs to variable costs what is the break-even point for a competitive cost compared to international standards and the new mutations of this sector?   The hardware representing less than 20 to 30% of the total cost, whereas like a computer, the costs of software represent 70 to 80%; these mini projects will they ever be competitive in terms of cost/quality?

 

-Fourth, what is the situation of sub-contracting in Algeria in order to achieve an acceptable integration rate that can reduce costs? In making a comparison with neighbouring countries where the integration rate is higher as compared to Algeria, experts stressed during forum at El Mujahid this month that in Tunisia, the number of sub-contractors represent 20% of the industrial companies (1,000 sub-contractors among 5,000 industrial firms), while in Morocco, the rate is 28% (2,000 subcontractors out of 7,000 industrial companies). And that the industrial sector currently represents only 5% of GDP, while the needs of industrial equipment and other industrial components and spare parts are generally $25 billion. The number of sub-contractors in Algeria is generally around 900,000 companies, but 97% of these firms are SMEs, or even of all small enterprises (SEs) with less than 10 employees and about 9000, either 1% active for the industrial sector, the rest operating either in the commercial sector, distribution, services, building and infrastructure sectors.

 

-Fifth, in a coherent vision of the industrial policy taking into account the strong international competition and new technological change in this area, need not we select two or three Algerian constructors in a win/win partnership with foreign partners so as to start mastering the international circuits with precise specifications giving them tax and financial advantages in functions of their ability. So for an integration between 0 and 10% rate, the benefits must be limited to the maximum and before a certain threshold of production not exceeding 5000 units/year in order to avoid that during this period some operators might be tempted in a rentier logic, to arrive at more than 30.000/50.000 units per year without integration, increasing this way, the import components currency Bill.

 

-Sixth, related to the previous question, are we currently building a manufacturing factory of cars for a local market while the objective of the strategic management of any business is it not either regional and / or global in order to guarantee financial profitability in the face of international competition; this sector being internationalized with sub segments nesting at the global level?

How then will these micro-units often oriented to the domestic market, realize the rate of integration of 40 / 50% at the end of about five years, and risking to close by bankruptcy after having benefitted with all the benefits that are supported by Algerian Treasury subsidies where the importance of strict State regulations to avoid transfers of annuity in favour of a rentier minority?

 

-Seventh, an industrial policy without control of the solar is inevitably doomed to failure with a waste of financial resources. Also the automotive industry becoming capital based, with digital programming eliminating almost all intermediate jobs, what is the number of direct and indirect jobs that can be created, referring to the necessary qualification, taking into account new technologies applied to the automobile?

 

-Eighth, what will be the cost and strategy of distribution networks to adapt to these technological changes?

 

-Ninth, will these cars use petrol, diesel, LPG, hybrid or solar referring also to the policy of generalized fuels subcidies that distort the optimal allocation of resources?

 

-Tenth, how to approach the world market with the existing rule of 49 / 51% knowing that no reputed foreign firm would accept such a rigid constraint of this type. This rule not only carries the risk of all additional costs being born by Algeria, but could lead to further debts that might envenom tensions between 2017-2020?

 

In conclusion, I would not remind enough that the engine of any development process lies in research and development, that without the integration of the knowledge economy, economic policy or any project has no future in the 21st century. In the face of a turbulent and unstable world where technological innovations are constantly changing, Algeria should invest both in democratic institutions in segments where it can have comparative advantages, i.e.: agriculture, tourism, new technologies and in sub-segments of certain industrial sectors, taking into account the on-going deep technological changes and a major restructuring of this industry that is internationalized.

Algeria’s 15 Best Places to Visit

Algeria’s 15 Best Places to Visit

THE CRAZY TOURIST in a coverage of Algeria’s 15 Best Places to Visit put it this way: the largest country in the continent of Africa, Algeria has a diverse landscape and lots to offer travellers . . .

Algeria has many charming cities with winding streets and stunning architecture, Mediterranean coast, lush landscapes and roman ruins to rival anywhere in the world.  The problem is therefore how to do it; travelling by road and / or by train.  The image above is that of Constantine, ancient and present day capital of the eastern provinces, it sits on a canyon that dramatically cut through the center to the amazement of trains, cars and pedestrians alike.

Taking the transport by train, The Algerian National Railway ‘SNTF’ in this article of Infrastructure DZ  elaborated on the country’s plans to multiply its railway network threefold within the next 15 years, to reach 10,000 kms (from 3,200 kms currently) of railways. Most of the 47 billion-dollar package set aside for transport will be allocated to railway development.

Meanwhile, Railway Gazette produced this other article republished below.

‘Modernisation, movement and beauty’ of Algeria’s future inter-city trainsets

27 Feb 2017

 

ALGERIA: National railway SNTF and Alstom have revealed the final design for the 17 Coradia Polyvalent electro-diesel multiple-units which are under construction in France for use on inter-city services between Alger, Oran, Annaba, Constantine and Béchar from January 2018.

The SNTF units will be similar to the Coradia Polyvalent units operated by France’s SNCF under the Régiolis brand, but adapted for local conditions including protection against sand and ‘highly efficient’ air-conditioning.

The six-car units will be 110 m long with a capacity of 254 passengers. They will have a maximum speed of 160 km/h, and be capable of operating from 25 kV 50 Hz electrification or by the six 350 kW diesel engines per unit.

The styling was developed by Alstom’s Design & Styling department in collaboration with SNTF and aims to evoke the ‘modernisation, movement and beauty’ of Algeria’s landscapes, according to Henri Bussery, General Manager of Alstom Algeria. The exterior will feature a ‘subtly reflective’ coating to reflect the cities, countryside, coasts and mountains that the trainsets will pass. The air-conditioned interior is ‘spacious and bright’, with comfortable seating and a dining area.

SNTF placed the €200m order for 17 units in July 2015. They are being manufactured at Alstom’s Reichshoffen site, with the bogies supplied from Le Creusot, motors from Ornans, traction systems from Tarbes and on-board electronics and passenger information systems from Villeurbanne.

‘The project is underway and is progressing extremely well at full speed’, said SNTF Managing Director Yacine Benjaballah on February 27. ‘This train will become a national asset, satisfying the needs of our passengers who will be proud to use it.’

We would also invite all to visualise this Youtube footage for a greater appreciation of the diverse variety of landscapes of the country.