This period also saw total exports of goods and services drop sharply from $49.9bn in 2010 to $18.4bn in 2011, and subsequent unrest coupled with the Covid-19 pandemic has prevented the country from reaching consistently high trade volumes, though total exports recovered to $30.8bn in 2021.
Nonetheless, well-established trade links with Europe have consolidated Italy as the country’s main trading partner. In the first 11 months of 2022 bilateral trade jumped 67.4% year-on-year to €11.1bn, with Italy accounting for 27.7% of all Libyan exports, followed by Spain and Germany, which accounted for 10.5% and 9.6%, respectively. Similarly, Italy represented 13.1% of imports in the first 10 months of 2022, behind Turkey and China, which accounted for 16.4% and 13.3%, respectively (see Trade & Industry section).
In a measure aimed at reducing corruption and improving the business environment, the UN Development Programme launched the Stabilisation Facility for Libya (SFL) in 2016. The SFL has provided support for the rehabilitation of critical infrastructure, such as airports, schools and hospitals, and has extended access to grants for small and medium-sized enterprises (SMEs) in order to support economic growth and recovery.
The cost of conflict has impaired Libya’s ability to attract foreign direct investment, which has remained low since it reached its highest point in 2007, at 6.9% of GDP. To reverse this trend, the EU4PSL Project was launched in the same year with the mission to improve the business climate. Funded by the EU, the programme operated under four main areas: capacity building for Libyan institutions; support for the economic empowerment of young people and women; improved access to financing for SMEs and start-ups; and support for education and business. Some of the major accomplishments of the project, which culminated in 2022, include eJraat, an online portal to simplify the establishment of businesses; a six-month acceleration programme for start-ups; grants for young entrepreneurs; and a new collaboration between the private sector and universities.
Despite global economic challenges and supply chain constraints, Libya’s shipping and manufacturing industries have the potential to play a significant role in diversifying the economy and creating new business opportunities. Reducing the country’s reliance on oil is increasingly critical for the economy to catch up with global clean energy trends, and improving its resilience to factors that could disrupt oil production or cause a drop in prices. As public debt amounted to as much as 70.4% of GDP and 126% of government revenue in 2022, according to World Bank estimates, new sources of revenue and employment are required to support longterm growth. With a 46% internet penetration rate, this figure continues to climb every year, positioning Libya to capitalise on digital economy opportunities and further nurture its emerging start-up ecosystem.
Some headwinds have emerged, including the temporary suspension of trademark registrations by foreign applicants in November 2022, which could weigh on potential investment. Similarly, while the reopening of oilfields and ports in 2021 has provided some economic relief, security and stability concerns in some areas, a lack of transparency and bureaucratic red tape remain key challenges. As the SFL and Libyan Investment Authority work to boost the overall business environment, sustained efforts to attract foreign direct investment remain essential. With the right policies in place, new investment could help drive economic growth and create a more prosperous future for the country.
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