In addition to some Algerian reflection circles, called “think-tank”, such as Care, Nabni and others.
Mr Zahir Serrai, CEO of SerraI Invest Capital Ltd London, an Algerian and international finance expert based in Great Britain, proposes three strategic solutions to enable the government to have an influence over the financial situation and to establish a long-term strategy to diversify the economy and, perhaps, become a regional or even continental leader in certain economic sectors. In his explanatory memorandum to his propositions, the expert explains that “in order to respond to the financial problems that could enable Algeria to become the African leader of tomorrow and which will be able to respond to the financing of State infrastructures such as the creation of the 22GW project to be carried out over the period 2017-2030/40, the creation of refineries, incinerators, hospitals, tourist complexes and the trans-Saharan fibre optic back-up project”. Thus, the first proposal advanced by this expert is the issuance of a sovereign guarantee for the financing of state projects (22 GW project, refineries, tourist complexes, waste incinerators, seawater desalination plants (reverse osmosis).
A Sovereign Guarantee to Finance Sonatrach Projects
For this purpose, he proposes that the Central Bank issue a sovereign guarantee to Sonatrach for the state projects financing. The expert recommends in the same context to create a company of exploitation, extraction, terrestrial which he shall name GALACTUS. “It will represent the assets of the 20 trillion m3 shale gas field through a reservoir devaluation and valuation model,” he notes. He also proposes the acquisition of a European bank with all banking licences and the creation of a Risk Mutual Fund, which he will call LICORNE with a share capital of one billion dollars. “It will enable us to create an investment platform for the financing of Public-Private Partnerships (PPP) in Algeria and Maghreb in Offshore regime”, he says.
He also proposes the creation of a new Fixed Capital Investment Company (FCIP) for an amount of 500 million dollars, according to the exchange regime relating to non-residents (Offshore), and in compliance with Algerian regulations. He provides examples from around the world to support his proposal, such as the Chinese companies Sinopec, Petrochina, Cnooc for energy and the Industrial and Commercial Bank of China, China Construction Bank, Agriculture Bank of China, and also in construction with China State Construction Engineering, China Railway Group, China railway Constructions, etc. The international economic expert, Zahir Serraï, also proposes that the SICAR/SPV structure in Luxembourg would be the holding pattern for all under investment entities established in the different geographical regions of the main investment markets. Luxembourg provides 2400 billion euro net of AUM – Asset under management. “For the investment structure to be credible, a minimum 1 billion euro or dollars should be invested by the Sonatrach group in each of the deposit structures in Europe and Asia,” he explains.
“The targeted investors in each region would be pension funds, high net worth individual funds requiring exceptional return on investment for highly rated projects within the Sonatrach group,” he explains. “We must take into account that Asians want to get rid of dollars and invest their money in sustainable societies,” he points out. The expert recalls that Algeria is the 16th largest oil reserve in the world and the 10th largest for gas. In total, 95.4% of Algeria’s export earnings are generated by the hydrocarbon sector.
Campaign for a Connected Agriculture
The oil crisis has reduced hydrocarbon revenues and “Algeria is unable to balance its budget with such a low price”.
He also recommends “urgent structural reforms and the diversification of its investments, particularly towards natural gas”.
According to the expert, the money earned from the extraction of shale gas must finance freshwater factories using reverse osmosis. He also suggests developing a connected agriculture thanks to the IOT (Internet of Things).
To conclude, the expert, Zahir Serraï, suggests enacting an Algerian Patriot Act on agriculture, “which is a sensitive subject such as the financial one “, he states. “Algeria and Africa have an opportunity for the next 5 years because Saudi Arabia has made a takeover not only on religious leadership, but also on hydrocarbons”. He believes that the ongoing succession in Saudi Arabia is an opportunity that means that Algeria “must be operational and structured to meet international demand for hydrocarbons and to take the leadership in the oil market under the condition of investing in infrastructure to respond to tomorrow’s challenges.