Interview: Abdallah BenNaser
How have recent supply chain disruptions impacted raw material imports and manufacturing in Misrata and the broader region?
ABDALLAH BENNASER: The recent global disruptions resulting from the Covid-19 pandemic led to more than a 100% price increase for certain raw materials and higher shipping costs, particularly from China. Additionally, factory closures worldwide due to fuel and gas shortages brought on by Russia’s invasion of Ukraine contributed to a scarcity of other key inputs.
As for Libya, the current disturbances have not substantially affected raw material imports, since the banking sector remains stable, allowing for credit to import certain commodities. However, challenges persist in complex and lengthy banking procedures and foreign financial institutions’ lack of confidence in Libyan banks, causing delays in accessing credit to import raw materials. From 2014 to 2017 we faced a severe problem stemming from the large gap between the official exchange rate and the parallel market rate, which led to the rise of credit merchants controlling foreign exchange and imports.
What strategies can be implemented to enhance industrial growth in the region?
BENNASER: In terms of efforts to localise value chains, we recognise their significance for improving company performance and profitability. Value chains encompass a wide range of processes, including internal and external marketing operations, sales, after-sales services, human resource management, research and technological modernisation. To thrive in the current situation, Libya could benefit from diligently working to improve company performance through effective human resource management, robust marketing and sales activities, and engaging in real estate renovation and large infrastructure projects. Stimulating investment in these critical areas will play a pivotal role in our industry’s growth, especially in bolstering the supply of local building materials.
To what extent can regulations be enhanced to create a more favourable business environment for manufacturers in Misrata?
BENNASER: Owners of manufacturing firms face substantial challenges due to existing regulations that have remained unchanged since the Gaddafi era. These laws heavily favour government ownership and the public sector rather than empowering private enterprise. For instance, the requirement mandating 10 individuals as partners to establish a company hinders industrial development and investment. Therefore, it is crucial to eliminate bureaucratic barriers arising from outdated legislation to unlock the full potential of the private sector.
Despite the advantage of low energy costs in Libya, we encounter obstacles in capitalising on trade with African countries, accessing Mediterranean ports and exploring export opportunities. For example, our exchange agreement with Tunisia is imbalanced, as Tunisian goods enter Libya with relative ease, but Libyan products face difficulties entering Tunisia. While the Tunisian authorities strongly emphasise the entry of foreign goods, the implementation in practice is far from reciprocal per the trade agreement. This discrepancy highlights the importance of strong public institutions capable of enforcing reciprocal agreements to facilitate smoother trade operations and export access, which are currently lacking in Libya.
Policymakers must also proactively collaborate with manufacturers to establish and foster an enabling environment that capitalises on Libya’s strategic location. By effectively leveraging this competitive advantage, manufacturers can benefit from the opportunities presented by their proximity to Mediterranean ports and landlocked African countries.