Risk Management in Transport PPP Projects
In the Islamic Countries
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regulatory framework. The establishment of a PPP unit is also recommended for coordination
purposes that could be taken by CNED under control of the Ministry of Finance, due to its
institutional remits, and the good reputation of this institution in the preparation and follow up
of infrastructure investments at the national and international level (EIB, 2011; KID, 2014;
Nesrine Bougriou N., Benterki A. 2018). PPP units/departments could be also set up within other
entities, for instance the line Ministries or their controlled procuring institutions, depending on
the number of PPP expected to be developed and implemented.
Investment attraction
As mentioned above, the National Agency of Investment Development (Agence Nationale de
Développement de l’Investissement – ANDI), has the main remit of attracting private foreign
investments to Algeria. A one-stop shop for potential foreign investors has also been set up
within this entity, provided that the unit does not seem to have at present a specific role in the
promotion of PPPs. The National Development Equipment Fund (Caisse Nationale
d’Equipement pour le Développement – CNED), is instead responsible for the promotion of PPP
initiatives among the public and/or private sectors at the national and international level. CNED
also deals with International Financing Institutions such as the World Bank, African
Development Bank, European Investment Bank, European Bank for Reconstruction and
Development, for the promotion of PPP initiatives.
Economic and fiscal incentives are in place in Algeria to attract foreign investors, which are
however not specific to PPPs, specified that they may be applied to PPPs if applicable. The
legislation on foreign investments, and particularly the resident national shareholding
requirement, minimum levels of participation by Algerian residents, restrictions on the transfer
of dividends and the fact that debt should be financed from local banks represent potential
barriers for international lenders and investors. According to the law, there could be some
exemptions to these rules, and it might be appropriate to consider some guidance on the
possibilities to adopt derogations, particularly for long term contracts as investors will
otherwise need to enter into long-term partnering contracts without adequate guarantees over
their investments (EIB, 2011; Nesrine Bougriou N., Benterki A. 2018). According to CNED the
above limitation on foreign investments are also recognized to represent a barrier by private
stakeholders in Algeria, whereas positive elements associated with the country are
represented by macroeconomic stability, reliability of the public sector and solidity of the
banking sector (CNED, 2015).
Another key aspect is represented by the possibility to extend state guarantee loans to private
sector investors. At present such guarantees are indeed covering loans from banks and financial
institutions used by public companies. Such a measure could make more attractive and
positively influence the bankability of long-term PPP initiatives financed by private investors,
which usually require significant financing from international banks (EIB, 2011; Nesrine
Bougriou N., Benterki A. 2018).
Islamic finance does not seem to have been adopted for the financing of PPP initiatives in Algeria.
Overall Islamic banking and financing in the country seems to be at an inception stage in the