Libya is taking steps to diversify its economy and create new business opportunities by exploring the potential of its shipping and manufacturing industries. The country’s long Mediterranean coastline and ports, including Tripoli, Benghazi and Misrata, make it a strategic nexus for the shipping industry.
The government is partnering with private investors to modernise and expand the ports, increasing their capacity to become centres for international trade.
Though political and economic instability have resulted in a slowdown across many sectors, the government is offering tax incentives and opening free zones to attract foreign investment, signalling significant potential for private sector participation and business growth.
The manufacturing sector has the potential to drive economic growth, thanks to the country’s availability of labour and abundant natural resources, including minerals such as iron ore, gypsum and limestone.
Another sector that has witnessed expansion is the automotive industry, with foreign automakers setting up operations in Libya. The country’s strategic location and access to key markets in Europe and Africa make it an attractive site for these companies.
There are other opportunities for growth in the construction sector, as there is a considerable need for new roads, bridges and other critical infrastructure. The government has launched a number of major projects, including the construction of a new international airport in Tripoli and a long-awaited railway line linking Tunisia to Egypt via the country’s major coastal cities.
As in many countries in the region, climate change and water scarcity pose a threat to economic development and sustainability. The 2021 Global Climate Risk Index ranked Libya 80th out of 180 countries, with 95% of its landmass classified as desert and 2% of its terrain receiving sufficient rainfall for agricultural purposes. Poor soil quality and limited access to water resources remain key obstacles to agricultural productivity. Moreover, the country is subject to severe weather phenomena, such as droughts, floods, sandstorms and dust storms. Libya ratified the Paris Agreement in 2021 and is currently developing its nationally determined contributions to help combat climate change.
Given these trends, renewable energy is a strategic area for potential growth. The country has abundant sunshine and wind, and the government has launched initiatives to increase the use of renewable energy. Private sector investment in renewables could create new jobs and reduce the country’s reliance on fossil fuels. The 2018-30 Renewable Energy Strategic Plan lays out Libya’s commitments to generate 22% of electricity from renewable sources by 2030.
While Libya possesses the necessary financial resources to respond to climate change, bolstering its institutional capacity and overcoming political instability are key to achieving long-term progress on climate action.
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