I have always wondered what (or who) really sets the prices for consumer goods and comodities within the Algerian market. The national press has a long-established moaning tradition about booming food prices (which usually sky-rocket in festive seasons such as Eid, Ramadan, Mawlid etc.). The poor Algerian consumer is always depicted as the powerless victim who doesn’t have enough spending power nor choice and is obliged to buy at whatever the selling price. The merchants are always the evil, merciless baddies who refuse to lend a helping hand to their brethren and sisteren compatriots (by selling their goods at cheaper prices) and the Algerian State is the pathetic useless tired old dog who cannot control anything and is unwilling to even try. These arguments when considered separately may seem coherent and sensible but when considered together they are devoid of any sense and are even contradictory!
First of all, how can the Algerian consumer be so powerless when regardless of the prices, he still buys all sorts of goods (for example, prices of construction materials such as cement have been steadily increasing and yet the Algerian national sport of building houses has shown no sign of abaiting). To my sense, the Algerian consumer is a mystery, he is an entity which needs to be analysed and comprehended because spending power on its own does not explain the Algerian consumer’s seemingly self-contradictory behavior. My own guess is that social pressure and the need to keep up appearances is a major factor in shaping the Algerian consumer’s spending choices and often overrides any personal budget constraints (I don’t dare imagine what the situation would have been if Algeria had the same borrowing-based financial infrastructure as the West).
Second, we have the evil merchants whose justification for the prices always consists of blaming foreign imports, military controlled cartels of key market sectors (eg. sugar, meat and cement) and the ever stretching production and distribution chain which incurs increasing costs that will have to be passed on to the consumer. These arguments are not completely devoid of truth but the merchants are lying because everyone knows that a huge proportion of retailing within Algeria takes place informally (up to 40% according to this report) and is beyond the control of the government. In many ways, Algeria does have as close to a ‘free market’ as it’s possible to have.
Third, we have the oligarchs who detain production means or importation licences and their arguments always revolve around the many taxes and trade restrictions imposed by the government, the discouraging investment environment in Algeria and the rise in the prices of raw materials in international markets. This is all very well and good, but doesn’t the existence of these oligarchs at least partially deny the ‘discouraging investment environment’ claims? Algeria does not have a discouraging investment environment, it has a preferential investment environment. For years, foreign oil companies have been looting the country’s oil ressources through outrageous deals with government officials (only recently has the government decided to apparently wake up and smell the coffee and prosecute senior management figures in the one and only national oil company SONATRACH amongst others). As for inbred entrepreneurs, the Bushist philosophy of ‘You’re either with us or against us‘ applies. If you want to make it, you need to stay under the protective wing of one of the big barons and the golden rule is: don’t get too ambitious because if you do you’ll get squashed like the vermin that you are.
And last but not least, we have the State whose only function seems to step in in every crisis to reassure the Algerian consumer and say that prices will be subsided by the government (crisis micro-management). The arguments of the government are the most hilarious (in a tragic way). The government blames everything on ‘speculation’ and whatever else happens in international markets. I really have the impression that all what our government does is parrot whatever other government officials in other unrelated countries say! The only thing government seems to do is subside prices, no matter what it says the reason for their boom is. Isn’t this odd? I mean do they have no regulating power at all over the national economy? Can’t they enforce policies on retailers, importers for example? Restructure the market sectors, organise trade activities; I don’t know…anything that may look remotely more sustainable than subsiding prices!
To recap, I don’t understand what economic mechanisms govern the Algerian domestic market and I don’t know how this situation will unfold in future. On the one hand, I quite like the relative autonomy the average Algerian citizen has to trade (it is not without problems but nothing is). But on the other hand, I am worried that this doesn’t seem to fit in any national scheme or vision for a sustainable economic development. The government policies have been so erratic and incoherent, at one point they went mad with wanting to encourage foreign investment and went as far as basically selling bits of the country to foreign capital. I don’t have the reference, but I seem to remember that Chakib Khalil’s argument to justify this was that investment cannot take off without personal property: meaning that the motivating force for investment is when the investor feels that they own the investment. Well, in that case, why not sell the country to its own citizens then! Why bring in foreigners? Wouldn’t it have been better to promote local businesses, even small ones and create a diversified range of local goods and produce, or even products that are imported by small groups of young people (who are known as bzansiya in common Algerian parlance)?
This is what Algeria needs, a stable and diverse local economy which is based on fair competition. Small businesses which help people become independent and sustain their families whilst at the same time being productive. We don’t need foreign investment, not if it means prostituting the country’s natural ressources. Because this is what it looks like: the country is up for grabs for the highest bidder!