I recently had the opportunity to chair the Libya Trade & Infrastructure Finance Conference which took place in Istanbul, Turkey. The conference, which was organised by the UK-based event and publishing house Exporta, presented a cutting edge assessment of the rewards and risks posed by this newly liberalising economy. It also highlighted the overhaul of Libya’s public institutions and private sector and addressed the extensive opportunities offered by this key North African market’s potential as a hub for regional trade.
The event had a very dynamic format and included presentations, panel discussions, interviews and extensive open debate. The fact that the participants hailed from various countries and represented a number of institutions, including several financial institutions, added to the quality of the proceedings.
Overall, there was a general sense of inquiry around; people wanted to know more about Libya, beyond what is reported in the media. Things are changing in this country, and developments are taking place.
However, one must keep in mind the context of all this: Libya is living a post-conflict reality that is not unlike what is happening in Egypt and Tunisia. Moreovover, this is a reality conditioned by a long period of dictatorial rule, a lengthy and violent conflict, a vast country with a dispersed population with very diverse opinions as to a vision for the future of Libya.
Libya is currently facing major problems of poverty, unemployment and lawlessness. But these problems can only be addressed if there is a common destination for this turbulent process of change – one shared vision. These are questions which Libya’s political leaders need to discuss and agree upon a priori.
At the same time, it is essential that the determination of a sustainable constitutional and legal system which is right for Libya be set in motion as a process. The rule of law, equality before the law, and the fact that everybody feels represented within such a system will be fundamental to its success.
The change occuring in Libya needs direction and must have a destination, but this can only be powered endogenously, if it is to be sustainable.
There is a lot that is positive in Libya, in spite of the general sense of alarm that often pervades media reports: Libya is resource rich; it has extensive foreign reserves; there is no government debt; Libyan risk can get insurance cover; banks have high liquidity and Libya does not have a record of payment default.
For those who want to do business in this country, Libyan risk is therefore measurable and containable. Similarly, if the private sector is given the necessary space to operate, with the government guaranteeing and supervising governance, the process of change could register some early tangible evidence of success, and could gather momentum as well as credibility.
The opportunities for foreign investors to participate in this country’s development are there. Libya does need extensive investment in both its hard and soft infrastructure (particularly in the administrative, legal, information and HR sectors), while the government is starting to look at the prospects of privatisation in the oil sector.
Libya’s banking sector can become more proactive if the necessary legal structures of recourse and title are updated. The decision to change the entire system to Islamic finance by the beginning of next year, on the other hand, is over-optimistic and objectively quite unnecessary. Although this is an issue that Libya should decide for itself, there is no economic reason why a mix of conventional and Islamic finance structure could not be allowed to co-exist.
The process of change in Libya will undoubtedly happen, but it needs to take its due course, and most importantly, be endogenously determined. This is a holistic socio-economic-political challenge that requires hope, trust and commitment.
The world needs to be patient and be ready to provide all the necessary support so that Libya will become an active player in the global economy and be able to act positively as a member of the international community.
John C. Grech is a corporate leader and chairman of the Fimbank Group.
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