Interview

Would Making the Dinar Convertible in 2022 Stimulate the Algerian Economy?

How is it possible to rouse from its torpor Algerian society which has scarcely evolved in twenty years of Abelaziz Bouteflika’s presidency? A seasoned industrialist believes he knows the answer: the end of foreign exchange controls in 2022 and the free convertibility of the national currency, the dinar. Interview conducted by Jean-Pierre Séréni, 20 September 2018.

France Alumni Algeria (screen shot)

Algeria is in the midst of an unacknowledged pre-electoral campaign, and the most original proposal has been made not by some obscure, publicity-seeking candidate but by a hard-headed, well-established businessman. Slim Othmani, a bearded, athletic-looking man in his sixties, the head of a large family company, number one on the fruit-juice market, advocates nothing short of doing away with foreign currency exchange controls as of 1 January 2022. This would require revolutionising the Algerian economy in just over three years, making up for its lag of decades behind its Moroccan and Tunisian neighbours, changing people’s whole outlook. “It’s a joke,” the specialists chortle, pointing to the existing obstacles: a budget deficit of at least 10%, a frantic printing of new money, a well-established black market in foreign currency, an informal sector which is at least as large as the official one, a general distrust of State institutions and those who run them.

Slim is familiar with all that. During the war of independence, the family sold foodstuffs to the troops guarding the border and built a small fruit and vegetable cannery, producing especially orange and grape juices. In 1966, his grandfather and father bought a hectare of land in Rouiba. In 1990-1991 when Slim returned from Canada, a 45% tax was levied on fruit and vegetable purchases, then another, also 45%, on the processed produce and finally a third 45% tax on the wholesaler. Within 24 hours, the country’s modest food-industry ground to a halt. The debacle lasted eight years except for tomato paste which for someone reason was not affected. And to top it all, there were no import duties on raw produce. It was not until 1999 that a finance minister with above-average intelligence suspended these taxes and then got parliament to scrap them. And yet despite his thirty years’ experience doing business in his country, Slim Othmani believes his plan is right and explained his reasons.

Jean-Pierre Séréni. Is the convertibility of the dinar a realistic ambition?

Slim Othmani. — I wasn’t born yesterday, I’m fully aware of the complexities of the operation and I don’t necessarily believe it can happen at the beginning of January 2022. But the convertibility of the Algerian dinar is a mobilising project because it will benefit each and every Algerian. A sick person seeking treatment abroad or a father who wants his son or daughter to attend a foreign university, a businessman who wants to develop his activities outside the country all have a goal devoid of any political prerequisite, one which carries a positive message, there is nothing polemical about it. Who can oppose such a project? The activists of the Workers’ Party who reject capitalism and advocate a return to the soukh el-fellah or socialised supermarkets and state-run commerce? The Islamists who advocate a free-market economy, limited only by religious restraints? People need to get out, to breathe, to get proper treatment, to educate themselves and so they all buy foreign currency on the black market.

An ordinary citizen doesn’t make the connection between his personal productivity and the quality of his life. With convertibility, he will experience concretely the value of his money, he will know that the 1000 dinar note in his pocket (£6.50, $8.50) will be legal tender wherever he goes, but he will also see that its value fluctuates on the basis of his own efforts, those of all the country’s workers, its governance and its economy. . . This is a way of mobilising Algerians, giving them a goal and the incentive to achieve it by 2022 or maybe later. Without that mobilisation, we’ll never be ready! This way, we’ll have a least three years to fulfil the necessary prerequisites: a better balance of public finances, consolidation and modernisation of the banking sector, government reforms. . .

J.-P. S.Why this obsession with convertibility?

S. O. : It’s not an obsession, I can reassure you. The idea came to me thinking about the roots of Algeria’s problem and the need to re-mobilise people around a common goal the way you’d motivate a football team. Why is Algeria in such a state? Why this rejection of modernity? Why is it doomed to this backward-looking, archaic version of Islam? These questions remain unanswered and someone has said that the country is undergoing an “Islamo-Bedouinisation,” in other words, we are in a rut, a worrisome situation for the Algerian people, for our closest neighbours and indeed for the whole Mediterranean rim. We belong to the Maghreb, a group of countries which have a great deal in common, our language, our religion and our clear-cut boundaries, the sea to the North and the desert to the South. Nor is it without significance that we are all more or less the same size. I don’t understand why these shared characteristics are ignored. Our leaders must learn to talk to one another, to overcome our differences and prepare for the future together, because everything requires preparation.

The people are not contemplating the overthrow of the power structure, it is too strong and too well organised, it is omnipresent and always able to impose its will. So we must be extremely patient, even if those in power adhere to this mobilising project and make it their own. The goal is the well-being of society as a whole, the maximisation of the GNH, or Gross National Happiness which will in turn bring about the growth of the GDP. Algerians want to be happy, and the proof is that they go looking for happiness abroad, buying real estate across Europe and keeping their ties with France by enrolling their children in the French lycées.

Two other reasons seem fundamental to me. First of all, there has been an absence of leadership for several years now due to the President’s illness; and secondly the role of women and their influence on Algerian society is shrinking daily due to this forced Islamisation. I still believe that too few women have any influence on the inner circles of the power structure, which may explain this exacerbated authoritarianism. To put it more bluntly, there is too much testosterone in the decision-making process.

The division of power is constantly claimed to be a solution to all these problems, but I am dubious. The military high command was eliminated, allegedly for purposes of rejuvenation but the new generals are as old as the ones they’ve replaced. Secrecy is absolute, it’s impossible to interpret what’s going on, to figure out their strategy, to predict the future. The decision-making, the arbitration, the reactions of this or that ministry are too personalized. Entrepreneurs and the rest of society need to be able to plan ahead. Which again requires some sort of unifying project.

J.-P. S. — Is the private sector achieving its independence from the power structure?

S. O. — I believe the people in power agree on the need to keep control of oil and gas revenues, but that there are disagreements about how these should be shared. Which is why the private sector is regularly called to task whenever it shows any inclination to become independent. These reprisals take various forms, including the withdrawal of public procurement contracts, tax audits, bank loan refusals or denials of the right to form an employers’ association. Once again, the idea is to show who’s boss! The Business Leaders Forum (FDE), the country’s main employers’ organisation, has come out in favour of a fifth term for President Bouteflika in response to the pressures exerted on it recently: it’s a way of making amends.

J.-P. S.How can relations between the government and the private sector be improved?

S. O. — The power structure has withdrawn into itself, it feels strong but it is worried, it remains autistic and authoritarian, yet it must find solutions to complex economic problems which it cannot resolve by itself. It must rapidly decide to set up bodies and mechanisms for communication and collaboration between the civil society and official institutions. The average members of the majority in the People’s National Assembly do not always make the effort to produce constructive critical analyses, despite the occasional outstanding speech. Our society needs a cultural sea change at every level.