The uphill battle of Libya’s private sector

Friday 03/07/2015
A ship unloads cargo at a port in Misrata. Insecurity is the biggest impediment.

Tunis - The fall of Muammar Qaddafi’s regime in 2011 saw the emergence of a Libyan private sector. Af­ter four decades of state restrictions, entrepreneurs were eager to capitalise on new econom­ic and political opportunities.
Leading the charge for Libya’s private business sector is 32-year-old entrepreneur Almahdi Abdula­ti, executive director of the Libyan Council of Entrepreneurs.
Abdulati passionately lamented the inadequate economic poli­cies in his country since Qaddafi’s downfall.
“The successive governments in power after the February 2011 revolution kept using the same sys­tematic policies against the private sector,” he said on the sidelines of a recent business conference.
At a discussion dedicated to the emergence of the Libyan private sector during the June 4th Tunis Forum, economic experts and Lib­yan private sector heavyweights, Abdulati included, discussed the perspectives of development and the obstacles facing free enterprise in the country. Panellists agreed on priority issues in the way of devel­opment of investment and private initiative, such as barriers to for­eign investment, including com­pany and land ownership laws and an almost exclusive dependency on oil revenues.
Abdulati bemoaned the increas­ingly inefficient and inept gov­ernance in post-Qaddafi Libya. “Private initiative continues to be neglected, and the bloated pub­lic service apparatus has been re­stored and reactivated,” he said.
The World Bank Representative in Libya Marouane El Abassi, said during the Tunis Forum that pub­lic wages and subsidies ballooned in Libya due to the frail transition as the government attempted to win hearts, minds and loyalties, while oil revenues dropped signifi­cantly due to civil strife and low prices.
The Libyan budget, which en­joyed large surpluses until 2012, has suffered an increasing deficit since 2013. Abassi says the diver­sification of the economy and rev­enue sources, as well as reforming the public sector, is critical.
“The entire public economic force of the country, ranging from the public sector and companies to the national chambers of industry and commerce, are in a state of sus­pension and paralysis,” he said.
Fares al-Hussami, an economist with the Organisation for Econom­ic Co-operation and Development, said 60% of Libya’s small and me­dium enterprises (SMEs) were cre­ated after February 2011 but the so­cialist legacy of 42 years of Qaddafi rule was difficult for Libyans to shed.
Mohamed Raid, chief executive officer of Al-Naseem for Food In­dustries, decried the lack of sup­port and funding for the training of the private sector employees, as well the continuing stigmatisation of the sector. He and other speak­ers pointed out that urgent reform is needed in the educational sys­tem, which is chronically churning out graduates ill-suited for today’s workplace.
However, the greatest hurdle in the way of private business and that of the Libyan economy in gen­eral is the chaotic security situa­tion, the speakers said.
The United Nations has been seeking to bring together into a unity government two warring fac­tions: an anti-Islamist bloc based in eastern Tobruk and Bayda led by General Khalifa Haftar and a coalition of Islamists militias with bases in Tripoli and Misrata in the west. Exacerbating the situation is the rise of the Islamic State (ISIS), which over that past month took control of the coastal cities of Sirte and Hawara after having previous­ly established a base in Derna.
Despite the bleak security situa­tion, Abdulati is forging ahead with his projects. He organised a meet­ing in Brussels in March involving Libyan businessmen with the in­tention of creating an organisation to promote the private sector.
“We aimed to consolidate and coalesce the active economic forc­es in Libya,” he said. “We would like to achieve security and peace in the country. That would in turn create an auspicious environment for national reconciliation.”
Abdulati’s new organisation hopes to affect economic policy as well. “We also seek to lobby and advise the Central Bank and the government on best practices and policy, like implementing cash transfers instead of subsidies, and linking the public payroll with the private pay level, in order to main­tain stability and avoid disparate salary levels,” he said.
The group met again June 15th in Tunis as it is expected to announce the launch of a new organisation for Libyan businessmen that will be, as described by Abdudalti, “the uniting umbrella of all active eco­nomic forces in Libya”.