Privatization leads the way to take-off
INTRODUCTION THE YEARS OF ISOLATION ARE AT AN END FOLLOWING THE LIFTING OF SANCTIONS AND, AS U.S. DOLLARS FLOOD BACK INTO THE OIL SECTOR, LIBYA IS LIBERALIZING ITS ECONOMY IN A BID TO RELAUNCH ITSELF IN THE GLOBAL MARKETPLACE.

Roman ruins such as the ancient city of Leptis Magna could help make Libya highly marketable as a tourist destination.

EVEN before its acceptance back into the international community, Libya had begun moving towards a free market system. The lifting of U.S. and UN sanctions has given new impetus to the process of modernization and liberalization, and the government is actively seeking foreign investment as Colonel Qaddafi’s north African state re-enters the world economy.

Officials in Tripoli are drawing up a five-year plan that will articulate economic policy up to 2011, at the center of which is an all-sector development program. The overall objectives are to free the economy from state control, stimulate the development of private enterprise, and build up the country’s infrastructure.

A massive privatization program is already under way. A total of 360 state-run companies, ranging from small and medium-sized firms to major enterprises, are to be transferred to the private sector in three phases, due for completion by 2008.

ABDULGADER ELKHAIR
ABDULGADER ELKHAIR
Secretary of the General People’s Committee for Economy and Trade
TAHER JEHAIMI
TAHER JEHAIMI
Secretary of the General People’s Committee for Planning

Abdulgader Elkhair, Secretary of the General People’s Committee for Economy and Trade, acknowledges that such a radical reorientation of the economy will bring short-term consequences. But he sees a brighter future ahead. He says, “We expect some difficulties in the first few years, but in the long term many new jobs will be created and if foreign investment makes its way into Libya we do not have anything to worry about.”

Taher Jehaimi, Secretary of the General People’s Committee for Planning, says the challenge over the next five years will be to ensure that the privatization program is carried out in a socially responsible and economically effective manner.

The government is launching a lending program by which credit and loans are being made available on easy terms for small- and medium-sized businesses and for home building.

Libya’s economy is heavily dependent on oil, which accounts for most of its exports and for 60% of government income.

Libya is the second-largest oil producer in Africa and, inevitably, it is the oil sector, with its potential for huge new discoveries, that has attracted the most attention since the U.S. government cleared the way for a return of American investment.

However, Libya needs to move away from almost total reliance on the oil and gas industry, and to build up other sources of revenue to secure a sustainable economic future.

The government is hoping for an average growth of 5.3% in gross domestic product, excluding oil revenues, this year, and a 6.7% increase in investment. The Libyan authorities are eager to attract foreign capital and know-how into non-oil sectors such as tourism, infrastructure, agriculture, health, and education among others.
“I do not think that the economy will come to rely on these sectors any time soon,” says Dr. Jehaimi. “But they have the potential to grow and become viable contributors to the economy.”

Moves to diversify and build up non-oil sectors of the economy

The Planning Secretary believes that Libya’s economy will eventually become service-oriented. “Historically, the service sectors are those in which Libyans have excelled.”

Tourism, neglected in the past, is seen as a potential high earner, once the infrastructure is in place. “We have been involved in discussions with foreign interested parties and we expect some deals to be reached with some of these investors,” says Dr. Jehaimi.

Monetary and financial restructuring will be a prominent feature of the government’s new five-year plan, with the modernization of the banking sector an essential component. Recently, the General People’s Congress passed a law allowing foreign commercial banks to invest in the country.

Mohamed H. Kanoun, Chairman of the General Union of Chambers of Commerce, Industry and Agriculture, says investment is the key to development. He is confident it will come. “We are doing all that we can to ensure development in all sectors of our economy. It will happen.”

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