Libya is a growing market which offers enormous opportunities for British exporters of goods and services and Libyan firms are keen to establish strong commercial links with the UK. Many prominent Libyan decision-makers have received a British education and English is widely used in business.
As UKTI points out in a recent briefing, “change is in the air in Libya” today, the business climate is becoming much more attractive, the private sector is growing and the field for foreign investors is improving.
Spending on the country’s infrastructure is high with major projects for residential housing, roads, railways, telecommunications and irrigation to name but a few.
Libya has been classified by the World Bank as an “upper-middle-income developing country”. Income obtained from oil and gas exports has enabled Libya to maintain a large public sector with extensive public investment in health, education, agriculture and non-oil related industries.
Libya is continuing with its efforts to diversify the economy and encourage more private-sector participation in areas like manufacturing and services. As the country moves forward with its modernisation and integration within the global economic system, Libya offers potentially rich trade opportunities in nearly every sector, including oil and gas, agriculture, telecommunications, education, medical equipment and services and tourism.
There has been a significant increase in trade and improvement in relations over recent years. New opportunities in a wide range of areas are continuing to open up and UK companies are gearing up to take advantage.Infrastructure
The country is undergoing an infrastructure and construction boom, which is attracting major global players looking for contracts as Libya positions itself as a regional hub for the growing Maghreb/Mashreq markets as well as for the developing markets in sub-Saharan Africa.
Tripoli and other major cities in the country are developing rapidly with new architectural designs and improvements in infrastructure changing the skylines.
A new impetus to building activity came with plans to mark the 40th anniversary of the Libyan Revolution which took place in September last year.
Major works have been taking place on projects such as the Tripoli Airport and ring road. Building has also been under way on several five-star hotels; today the Corinthia Hotel and the Al-Waddan are “the best in town”, UKTI says.
Libya’s public Housing and Infrastructure Board let contracts worth $50 billion over the last two years, in housing, utilities, also roads and bridges. Wastewater treatment facilities are one area identified where Libya will need to invest more in future.
Due to the rapid development, Libya is showing an increasing need for overseas technology and financial expertise for the expansion, upgrading and modernization of its vital infrastructure network, and the opening up of the market to leading overseas banks is a first step in this direction.Tourism
Libya has a richly diverse and relatively unspoilt tourism product. It enjoys huge Mediterranean coastline and is home to some spectacular Greek and Roman heritage sites. The country is now fast becoming a regular port of call for cruise liners and has been attracting an increasingly number of visitors over recent years now that tour operators have woken up to the potential. Historical highlights of Libya include the remnants of Roman civilisation at Leptis Magna and Sabratha and the monuments to ancient Greece at Cyrene and Apollonia. Meanwhile, UKTI stresses that Tobruk, an important Second World War location, can also be found in Libya Banking and Financial Services
Both Islamic and mainstream financial instruments are gathering momentum as they have in other countries of the MENA and Mashreq regions.
Foreign consultancy services in Libya are in increasing demand and UK banks have been investigating the potential of the market.
Libya’s financial assets are considerable. It has an estimated $136bn in foreign currency reserves and is looking for places to invest, UKTI points out. The Libyan central Bank holds around $67bn of the reserves while a further $69bn is held by the Libyan Investment Authority, whose first overseas office is in London.
Libya has embarked on a reform of its banking system to improve its competitiveness and attract more foreign investors.
The Libyan economy is already benefiting from huge budget allocations and providing wide ranging opportunities to the international investment, consultancy, design, engineering and export community capable of delivering technology and expertise to this exciting emerging, challenging and lucrative market.
IT, transport and financial services provide huge untapped potential and legal treaties have been completed to encourage and protect investment. The City of London has been providing professional training in the finance sector and numerous representative offices of foreign banks have already been established in Libya and in due course will request and receive branch status.UK Firms in Libya
The Libyan market reopened to UK firms in 1999 following the restoration of diplomatic relations and the suspension of UN and EU sanctions after 2003. Visible UK exports to Libya in 2008 were worth £280m and the first 6 months of 2009 showed a 60% increase compared to the same period in 2008.
In comments made following a UK trade mission to the country last November, Antoine Sreih, Chief Executive Officer of Europe Arab Bank said ‘Our parent company, Arab Bank, has a 19% share of Al Wahda Bank and as Wahda’s Chairman I am working closely with their Board of Directors to strengthen the Bank’s capabilities to serve the needs of the growing number of European companies and individuals wishing to transact with Libya.”
The Libyan market is not the exclusive preserve of the major corporations. Opportunities have emerged for UK Small to Medium-sized Enterprises (SMEs) to benefit from the opening up of the country’s market either as exporters or providers of a range of services.
There are currently over 150 UK based companies operating in the country with many well-known brand names active in the Libyan market including: Biwater, AMEC, WS Atkins, British Airways, Cummins Power Generation, Buro Happold, FG Wilson (Engineering), Mott MacDonald, Halcrow, Bhs, M&S, Monsoon, La Senza, G4S, HSBC, Arup, Davis Langdon, British Arab Commercial Bank, Corus International, KBR, KPMG, GSK, AstraZeneca, JCB, Rentokil, De La Rue, BT, Unilever, Ernst & Young, Parsons Brinckerhoff, MDA Consulting, PWC, Herman Miller, Land Rover and Weir Group, (information from UKTI).
The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, 25% of GDP, and 60% of public sector wages.
The drop in world hydrocarbon prices in 2009 reduced Libyan public revenue and impeded economic growth.
Substantial revenues from the energy sector coupled with a small population give Libya one of the highest per capita GDPs in Africa.
Libyan officials in the past five years have made progress on economic reforms as part of a broader campaign to reintegrate the country into the international economy. All sanctions had been finally removed by June 2006, giving an extra boost to Libya’s bid to attract greater foreign direct investment, especially in the energy sector.
Libyan oil and gas licensing rounds continue to draw high international interest and its National Oil Company set a goal of nearly doubling oil production to 3 million bbl/day by 2012.
Libya faces a long process of liberalisation and modernisation, but its initial steps - including applying for WTO membership, reducing some subsidies, and announcing plans for privatisation – have laid important groundwork for a transition to a more market-oriented economy.
The non-oil manufacturing and construction sectors, which account for more than 20% of GDP, have expanded from processing mostly agricultural products to include the production of petrochemicals, iron, steel and aluminium.
Climatic conditions and poor soils severely limit agricultural output, and Libya imports about 75% of its food. Libya's primary agricultural water source remains the Great Manmade River Project, but significant resources are being invested in desalinisation research and technologies to meet growing water demands.Global Arab NetworkThis article will appear in Arab-British Business, the bulletin of the Arab-British Chamber of Commerce.