For 2016, the National Defence budget is expected to remain the same as for 2015, i.e. at some US $ 10.2 billion (€9.02 billion), constituting the 23% of the overall Budget allocated for the year. In comparison, the second largest amount allocated by Algeria in its 2016 Budget in a ‘specific’ direction –namely some €6.16 billion- are to be spent on Education.

Gathering momentum in recent years towards the development of a regional arms industry, the Algerian government has invested great efforts in building up an indigenous defence industrial base, always under the control of the Algerian Ministry of Defence; however, it does not seem yet to generate the expected earnings.

To further reinforce the defence industry, as well as establish an international presence, several Algerian defence companies have signed agreements with international counterparts. Towards this direction, the Algerian government has promoted the creation of joint ventures, between domestic and foreign suppliers, through specific legislation; the “49/51” investment law (as discussed in previous, covering both military and commercial activities), is a fundamental part of this. Furthermore, while investors in Algeria are typically granted tax breaks and related incentives, there is an obligation under the 2009 Complementary Finance Law to reinvest equivalent sums within the country.

According to the above legislation, a list of indicative agreements between indigenous defence firms and international companies includes: 

  • The Algerian Aerospace Company (Enterprise de Construction Aeronautique - ECA) has been producing the Safir 43 light aircraft -local variant of the Czech Zlin Z 43-, through an industrial offsets agreement. Moreover, ECA has been reportedly contracted to produce locally the AgustaWestland AW101 Merlin and AW139 helicopters.
  • Mers El Kebir shipyard was reported in 2013 to build landing craft vehicles, under license from Orizzonte Sistemi Navali.
  • Tawazun Holding announced in 2012 that Groupement de la Promotion de l’Industrie Mécanique (GPIM), a company under the Algerian Ministry of National Defence’ and NIMR Automotive, would produce UAE-designed armoured vehicles in Algeria as part of a JV, under licence from NIMR.
  • Rheinmetall has formed Rheinmetall Algérie in March 2011 in partnership with Ferrostaal and various state bodies. The company’s goal is to set up a production site for manufacturing Fuchs armoured transport vehicles. The first armoured transport vehicles are expected to enter production in the near future (2016), although certain key components will be shipped in from Germany. Currently (2016), the first vehicles for Algeria are leaving the factory hall. The planned factory, located about 400 km east of Algeria's capital Algiers, is to build nearly 1,000 armoured vehicles.

 Other large defence companies of the country include:

  • National Industrial Vehicles Company (Société Nationale des Véhicules Industriels - SNVI), a producer of trucks and buses, since 1967.
  • BCL (Central Logistics Base), an armoured vehicle maintenance and construction complex (produces the armoured personnel carrier BCL M-5).
  • Enterprise for Naval Construction and Repairs (Entreprise de Construction et de Réparation Navales - ECRN) which mostly provides maintenance and repair services, however also produces corvettes (Classe Djebel Chenoua) and patrol boats (Classe Kebir).
  • ERIS (Seriana Company of industrial achievements), established in 1991, produces ammunition, spare parts and tooling, lightning rods, diesel generators, etc.
  • ECMK (Khenchela Company of Mechanical Constructions), established in 1990, produces submachine guns, shotguns, pistols and spare parts and associated tooling.
  • ONEX (National Diwan of Explosive Substances), established in 1976, produces hunting cartridges, ammunition, hand grenades, anti-tank mines and a number of explosive materials.

Finally, having learnt a valuable lesson from the embargo imposed on Algeria during the 1990’s –that was only lifted in 2001- the Algerian army has invested great efforts in developing its own facilities for the maintenance of its military aircraft.