Industry was a growing factor in Algeria's economy, and in 1990 constituted 10 percent of GDP. Steel production began in El Hadjar near Annaba in the early 1970s, when the government was emphasizing heavy industry. A decade later, however, this plant was operating at 20 percent of its expanded capacity of 2 million tons per year, as a result of poor management, shortage of inputs, and heavy-handed bureaucratic procedures. Although the Bendjedid government continued to invest in manufacturing, it was sensitive to consumer demands and hence amenable to allocating more funds to lighter industries that created more jobs.

Since the 1970s, smaller manufacturers of shoes and clothes and even smaller steel mills have been located in many parts of the country and have created some worthwhile opportunities for private investors. The manufacture of agricultural equipment, trucks, and machine tools, once the exclusive domain of the National Company for Mechanical Construction (Société Nationale de Constructions Mécaniques), has been decentralized and used as a model for restructuring other large national companies. The success of this experiment encouraged the World Bank in 1990 to extend Algeria a US$99.5 million loan for restructuring other industrial companies.

Data as of December 1993