Algeria has scrapped a law that limits foreign ownership in local companies to no more than 49% in a bid to attract international investors and boost its economy.

Algeria’s Council of Ministers approved the new law on May 10 allowing foreign investors to produce goods or services without any obligation to associate with a local shareholder.

However the 51/49 majority ownership rule – which has been in place since 2009 – will continue to apply to “strategic sectors” such as mining, energy, military, transportation and pharmaceuticals.

“The Algerian government is adopting new rules and procedures to offer incentives to foreign investments by reviewing the legal framework and uprooting all the obstacles in order to facilitate FDI inflows to Algeria,” President Abdelmadjid Tebboune said in March.

Since taking office in December, Mr Tebboune has vowed to carry out political and economic reforms in response to widespread protests, which led to the resignation of former president Abdelaziz Bouteflika in April last year.

Despite the political uncertainty, investors displayed renewed confidence in Africa’s largest country in 2019. Algeria attracted 24 greenfield project announcements in 2019, its highest in eight years, according to greenfield investment monitor fDi Markets. The resurgence was led by Algeria’s financial sector, which saw seven announced projects in 2019 – more than the previous seven years combined.

“A free participation of foreign investment in the share capital of an Algerian company should enable the investor to take strategic decisions without having to trigger any complex legal engineering to mitigate the majority ownership of a local sponsor,” said Samir Sayah, an Algiers-based partner at law firm CMS.

“This law change, and the related shareholding freedom offered to foreign investors, should enhance the legal framework for foreign direct investment and improve the business climate which has suffered during the last decade, as Algeria was considered a more closed and constraining economy.”