Interview: Mohamed Al Faqih
How does infrastructure in Misrata support manufacturing, and what role do large infrastructure projects play in supporting local industries?
MOHAMED AL FAQIH: Manufacturing has been confronted with the challenge of intermittent electricity supply in recent years. However, the improved consistency of power supply has resulted in an increase in production output, highlighting how our physical infrastructure is capable of supporting the current level of manufacturing activity. As the development of infrastructure continues, the city’s infrastructure should be able to meet the expanding needs of the economy.
The port of Misrata, the largest in Libya, provides access to global export markets, while the road and logistics infrastructure supports domestic distribution. However, there is an ongoing need to rebuild and develop the country’s infrastructure with a focus on large government-backed projects. These will stimulate demand for domestic manufacturing in the short term. Looking ahead, a thriving private sector will have the potential to drive substantial growth in the domestic market, although this transformation will take time.
Which factors have contributed to the growth of steel and iron exports from Libya?
AL FAQIH: Locally manufactured iron and steel have garnered significant demand in various export markets. However, regulatory requirements give precedence to domestic needs and ensure that prices are not destabilised due to exports. Price stability is closely linked to the production levels of reinforced steel and iron products, both of which have substantially increased and can be partly attributed to a more consistent electricity supply and the availability of natural gas.
In the current economic landscape, local market demand primarily relies on large-scale, government-led projects, as the private sector currently meets a small percentage of the overall demand. As the private sector evolves and becomes a more prominent driver of wider economic growth, local demand for iron and steel products is also expected to increase.
What challenges do local manufacturers face in competing with regional and global imports?
AL FAQIH: Libya has experienced economic volatility and instability in recent years, similar to many countries around the world dealing with various challenges such as the Covid-19 pandemic, disruptions in the global supply chain, fluctuations in oil and gas prices, and Russia’s invasion of Ukraine. There has been an increase in political divisions in Libya, leading to heightened regulatory uncertainty. This lack of clarity has created significant challenges for businesses, making it difficult for them to plan and time their investment effectively.
It is important to note that despite these issues, since 2022 Libya has experienced enhanced stability and economic growth, mainly driven by large government-owned companies and increasing private participation. However, competition from imports from Turkey, China and Europe has been growing. While local companies demonstrate cost competitiveness in areas such as iron production, they could gain further advantage over foreign imports if regulatory policies were refined and provided greater clarity.
Despite Libya’s abundant energy resources, disruptions in the distribution of electricity have hampered the country’s ability to leverage its competitive advantage in terms of energy costs. Nevertheless, the ongoing efforts directed towards rebuilding and development present an opportunity for manufacturers with local knowledge of infrastructure and construction materials. In the near to medium term, manufacturing is expected to drive demand and provide a competitive edge to the local industry, allowing them to outperform much of the foreign competition.