The Current and The Future Scenario of The Industrial Sector in Saida City: A Statistical Study Makhlouf Ahlem 1, Dr.Dahmani Mohamed Driouche 2 1 Ph.D. student, Djillali Liabes University of Sidi Bel Abbes (Algeria) 2 Lecturer, Djillali Liabes University of Sidi Bel Abbes (Algeria) Abstract: The aim of this paper is to study the impact of the contribution of both public and private sectors of the State and the private sector, as well as small and medium enterprises in the development of the industrial sector, especially the manufacturing industry in Saida city by conducting an analytical, statistical study from 2011-2018 for the number of public and private small and medium enterprises active in the industrial sector, The study concluded that there was a significant contribution to the private sector in the development of this vital sector, but despite the incentives provided by the local authorities, this sector did not rise to the required level due to the lack of funding, investment rule 49-51, and poor governance by local authorities. Key words: Industrial sector, S.M.E, Industrial Zones, public sector, Private sector, Saida City JEL classification codes : L520 ; L530 ; L7 ; E22. 2018-2011 51-49 .E22 L7 L530 L520 -243- Makhlouf Ahlem et Dahmani Mohamed Driouche 1. INTRODUCTION Despite the marked improvement of economic performance indicators after 2001 in Algeria, its excessive dependence on oil put it in a difficult situation and faced significant economic challenges to support its economic growth. To be more precise, the growth rate of 3.9% in 2015 compared to 3.8% in 2014 clearly reveals the government's failure to diversify its economy away from the hydrocarbon sector. The share of GDP outside this sector was 5.5% in 2015 compared to 15% in neighboring countries. Another aspect of the weakness of the Algerian economy is the adoption of 60% of the oil tax in the provision of resources to the budget of the government. Therefore, the diversification process is necessary but more difficult to achieve it because of the oil crisis of 2014, the decline in foreign direct investment. Here, the government introduces its new policy through the Finance Act 2016, which aims to increase spending to promote investment with a budget of over 264 $ a billion for 2015-2019, much of this amount is for the industrial sector, especially the manufacturing sector, which contributes only 4.3% in 2018. Now we return to such an important point, we know that the development of the economy of any country started by diagnosing and analyzing its internal economic situation, it’s mean at the city level, and here we choice Saida city because its contain so many enormous potentials in the fields of agriculture and industry, and in line with the new development plan for the industrial sector, the state has benefited from huge amounts of money and incentive policies such as the laws that encourage investment in this sector (law finance 2016), especially the manufacturing industry, in order to improve the current economic situation with more productive and developed situation in the near future through the industry sector, and the use of small and medium enterprises, and that what we will discover it in this paper with numbers on the facilities granted to investors in this vital sector, and considering that we are studying the reality of the industry sector in Saida city, The paper looks to answer the following question: - 244 - The Current and The Future Scenario of The Industrial Sector in Saida City: A Statistical Study Has Algeria's economic policy, based on the expansion of public expenditure, succeeded in improving the performance of the industrial sector? In our study, we relied on the statistics provided by the Directorate of Energy and Mines, as well as the Office of Investment Promotion and the Bureau for the Promotion of Small and Medium Enterprises from 2011- 2018. The other part of the information was collected through interviews with the aforementioned heads of the offices and the workers of the directorate. To provide a complete image of the current situation of the industry sector in Saida city and the future prospects for this sector in the coming years. 2. Facts About the Industrial Sector in Algeria The hydrocarbon sector's control of the Algerian economy significantly complicates the process of development outside the sector. The issue of economic diversification, which is becoming more and more important after the 2014 crisis, requires the elimination of this dependency and the move towards more efficient sectors. This is part of the new strategy of the Algerian industry, For industry. If we go back to the years of 70, we can see that the State has not hesitated to invest billions of dollars in heavy industries (steel, cement, iron) as a base for the production of light commodities without satisfactory results. This is due to poor management and the absence of an effective strategy to exploit the resources of this country efficiently, this is logical. Nothing will happen in reality because of the government in that period following a generous policy by squandering spending resulting from oil revenues in the period from 1970 to 1984, it before the oil crisis of 1986. In addition, the withdrawal from the Oil Stabilization Fund in 2014 exceeds 2132 billion dinars to finance the deficit Treasury after falling oil prices in 2014 to 33 US dollars, Algeria is forced to focus on other sectors more vital instead of concentration in the hydrocarbons sector, but so far, the figures show the inability of these industries to contribute effectively to achieve development, which is noted in fig.1. - 245 - Makhlouf Ahlem et Dahmani Mohamed Driouche Fig.1 Share of Industrial Sector, Extractive Industry, Manufacturing as % of GDP from 2000-2016 Extractive industry % GDP 55 Manufacturing % gdp Industrial Sector % gdp 50 d e m o d e m o d e m o d e m o d e m o 45 d e m o d e m o d e m o d e m o d e m o 40 35 d e m o d e m o d e m o d e m o d e m o 30 d e m o d e m o d e m o d e m o d e m o 25 20 d e m o d e m o d e m o d e m o d e m o 15 Extractive industry % GDP industry% Extractive d e m o d e m o d e m o d e m o d e m o 10 5 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Years Source: Prepared by Researchers Based on The Annual Reports of The Arab Monetary Fund. These figure led the government to settle some of the failing public institutions and to move towards privatizations in order to attract FDI, but so far these policies have not succeeded as they should be due and this is going back to the absence of an effective governance and the gaps in the terms of investment laws, especially the rule 49-51. To be realistic, In general, the investment climate doesn't help to increase capital flows to Algeria, in addition to the lack of production base due to the weak of production factors and poor management, in addition to the increase in the import bill. It is noted that the cost of production increased as a result of foreign importation. However, these products did not meet the quality standards and has limited its products only in the light industry more unlike foreign countries who produce both heavy and light industries, and given that the government has turned it's interested in recent years to the industrial sector we can see that the industrial production rates increased by more than 3.8% after private sector participation in the productive process. One of the largest manufacturing segments in Algeria is construction materials, which accounted for 2.2% of total country GDP and 10.4% of industrial GDP in 2016, with value added of AD101.3bn (€840.2m), according to the National Statistics Office. In 2016 segment GDP grew by 6.2% in real terms – up from 5.1% the previous year – making it the - 246 - The Current and The Future Scenario of The Industrial Sector in Saida City: A Statistical Study second-fastest-growing industrial segment, behind only wood, paper, and cork. Growth slowed in 2017, to 3.7% in the first quarter and 2.8% in the second. Activity is roughly equally split between public and private sector actors: AD46.8bn (€388.2m) of sector value added originated with private companies in 2016, versus AD54.5bn (€452.1m) for state firms. (Oxford Business Groupe 2017). 3. Industrial Zones in Algeria Industrial zones (ZI) were developed to accommodate industrial investments which were essentially state. They defy the logic of decentralization or regionalization. At the end of the second four-year plan 73, ZI was built on an area of 15 000 hectares with no land use plan. Indeed, the first law on spatial planning was enacted in 1987. The latter was to meet the need to locate the investment at the national regional and local level. The majority of industrial areas was conducted between 1966 and 1977. An industrial zone was to be composed of at least five industrial units and provide at least 1,000 jobs in an area of 50-2000 hectares. New industrial areas called "new generation areas” are being developed in addition to the renovation of old areas.