The Algerian economy put to the test by Covid-19: Do we need to reinvent everything?

In the light of this difficult context, there is reason to wonder about the effects of the Covid-19 pandemic for the country on the socio-economic level. One more threat or a great windfall? The near future will soon provide us with an answer!

A singular crisis

The coronavirus pandemic does not only affect the health of individuals. The death toll, which started to rise exponentially in the early days of its spread outside Wuhan, has declined rapidly because of the barrier and containment measures adopted by several countries. It is therefore in its social and economic impact that this pandemic deserves to be observed.

Covid-19 has shaken lifestyles, brought the global industrial machine to a standstill, reshuffled the cards, and reminded decision-makers around the world of the importance of international solidarity. We are witnessing a return to the fundamentals!

In Algeria, as elsewhere, the government is groping around and finding it difficult to arbitrate between the health of the citizen and the safeguarding of what serves as a productive apparatus. This reveals an economy that navigates at sight and is looking for itself: What socio-economic model should be instituted? What industrial strategy should be adopted and what priorities for reform should be undertaken?

The Algerian government, suffering from a "cultural dependence" on hydrocarbons, does not know how to imagine a social or economic approach outside the wealth of the subsoil. Subjected to the hazards of the oil market and the fluctuations in the price of fossil fuels, the country's financial and budgetary balances falter at the slightest crisis. Those in power react by adopting a financial regulation that is not always a winner. Attempts to capture "dormant savings", unconventional financing or public-private partnerships, among others, have all failed miserably.

If there is a lesson to be learned, it is that the problem of the Algerian economy is not financial but cultural and philosophical. Did the country's chief magistrate not explicitly acknowledge that for years the finance laws, especially the complementary ones, were designed to fuel the deficits generated by the revaluation of projects and the overcharging of imports of around 30% (press statements by President Abdelmadjid Tebboune on 1 April 2020). It is therefore no longer a question of regulating the volume or nature of expenditure but of mobilising and redeploying national resources.

The Algerian citizen: an asset to be revalued

In his spending frenzy and budgetary irrationality, the economic decision-maker has marginalized the human being and reduced him or her to the function of consumer in the most restricted sense. His or her intelligence, added value, creativity and regulatory role are set aside. The Algerian citizen has lost the values of work, innovation, and merit in a falsely providential State. To succeed, the Algerian economic project, both for the model to be adopted and for the strategic perspectives to be defined, must put the citizen at the centre of the process so that each individual becomes a source of added value creation. A strong economy is not limited to the financial strength of the State but to the well-being and development of the citizen. The diaspora is, in this respect, a breeding ground for skills that can easily be mobilized for economic and industrial renewal.

The necessary redistribution of national wealth

The spendthrift model adopted by successive governments has made public procurement a tool for social and political regulation. It has long benefited a minority of entrepreneurs and decision-makers. The social divide is widening, and inequalities are increasing. The overall unemployment rate exceeds 12% and goes beyond 20% among graduates of higher education and vocational training. Distribution systems designed more with a view to maintaining social peace than any strategy to support economic activity reduce the State's proactive effort. Moreover, despite the huge volumes of social transfers, grants of tax relief, social housing policies and support for entrepreneurship, discontent and revolt were the only response. Lack of control, mismanagement and corruption have indeed sapped these efforts.

The government would benefit from establishing more targeted and controllable redistribution mechanisms. Special funds should be rationalised, subsidies should be regulated, and the national solidarity effort should be decentralised through the empowerment of elected local authorities and the involvement of representative social organisations.

Human development, the winning lever

The Coronavirus crisis has highlighted the shortcomings in human development in Algeria. The precariousness of the health system, the timidity of technological integration mechanisms, the rigidity of training and research systems, and the agony of the leisure and culture sector are all deficiencies that should be urgently addressed.

Social expenditure must focus on improving health infrastructure, health coverage and medical training. Technological integration should be pursued with rigour, particularly in public services and the productive sector, to ensure the continuity of services to citizens and limit the effects of major cataclysms to which the economy may be exposed in the future. The strengthening of training and research facilities will make it possible to develop a quality human capital which will form the basis of the knowledge-based economy of tomorrow.

Developing the citizen through leisure and culture requires the development of industrial infrastructures dedicated to these two important aspects of life.

Above all, food security also remains a major challenge: the strengthening of strategic reserves, agricultural diversification, and the encouragement of a rural food-producing and subsistence economy through dynamic "de-bureaucratized" entrepreneurship can be winning courses of action.

A cross-cutting approach to human rights

Democracy, namely the informed and dynamic participation of citizens in decision-making, is the only path to harmonious socio-economic development. Opening the fields of expression to the citizens, enabling them to fully enjoy their fundamental and inalienable rights, will strengthen social cohesion and citizen involvement in the face of major threats and pandemics. The decisive role of the citizen in prevention, the organization of solidarity and the consolidation of social stability requires the design of legislative frameworks and mechanisms to ensure that citizens have equal and permanent access to the exercise of rights and the enjoyment of fundamental freedoms.

Measured and "de-ideologized” regional and international integration

The Covid-19 test showed the limits of detailed and isolated national policies in the face of systemic and global threats. It is more than imperative to combine efforts between states as well as between regional and continental groupings, to coordinate international efforts and to encourage common governance of major risks. Algeria would benefit from revitalizing the building of North Africa and strengthening cooperation in the Mediterranean.

In the medium term, this will make it possible to develop proactive approaches at both the socio-economic and geostrategic levels to take better care of environmental issues, security risks and economic cooperation. This is also the right way to manage the environmental and ecological issues that are bound to arise in the future.

In economics as in politics, no debate is definitively settled. The health crisis has made it clear to governments that quality development is the key to socio-economic harmony and stability. The Walrasian approach to the economy, which had established maximum financial profit as an economic goal, should give way to more humane approaches. A social and united world in which economic performance is accompanied by social justice is possible. Is this, perhaps, the new paradigm of tomorrow's economy?

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Belkacem Boukherouf, lecturer and researcher at Mouloud Mammeri University of Tizi-Ouzou, Algeria