Libyan manufacturing historically focused on processing domestic crops, livestock products and handicrafts. Benghazi and Tripoli were the country’s primary centres of industry, with Italians owning a significant share of many enterprises. After the 1969 revolution the government reconfigured its industrial policy to gain control over sensitive and large-scale production and reduce foreign influence. They required local trading companies to be Libyan-owned and nationalised those owned by Italians.
The government then shifted its focus to developing light processing and petrochemical industries. Food processing was also a priority, resulting in the construction of numerous factories in the 1970s. Notable projects of the era included textile complexes, an oil refinery, petrochemical plants, a fertiliser factory and an electrical cable plant. High oil prices in the lead-up to 1981 allowed import-dependent heavy industry to benefit from favourable energy costs and sufficient foreign exchange for raw material imports. However, the subsequent decline in oil prices in the 1980s diminished these advantages, causing production and capacity ratios to fluctuate throughout much of the decade based on the availability of imported raw materials.
Nonetheless, manufacturing’s share of the economy has increased considerably over the decades. From a 2.4% contribution in 1979, the industry experienced 9% average annual growth in the 1980s, which saw its share of GDP rise to 5.4% in 1985 and 7.3% in 1988. In the 1990s manufacturing value added grew by an annual average of 5.2%, leading to a peak GDP share of 9.5% in 1993. In the 2000s it rose by 20.8% per annum, and by 2009 value added totalled LD5.45bn, with the sector contributing 6.3% to GDP.
Today, manufacturing is a key driver of the economy in Misrata, with subsectors such as construction materials, plastics, automotive and food processing contributing significantly. Major industrial sectors in the region include manufacturing, port and maritime activities, and oil and gas.
Misrata has sought to diversify by attracting investment and fostering growth in targeted sectors. The establishment of the Misurata Free Zone (MFZ) in 2000 has been a major catalyst for industrial development, offering tax incentives and attracting both local and international companies. Key players active in the region include the Libyan Iron and Steel Company (LISCO), vehicle assembly giants Toyota and Kia, and plastics producer Azaitona Alkhadraa, among others. The Port of Misrata is another vital conduit for industry in the region, facilitating trade and serving as a gateway for imports and exports, and positioning Misrata as an efficient and cost-effective place to invest in manufacturing facilities.
Libya’s manufacturing segment generated a value added per person of $66.80 in 2017, compared to an average of $436.30 in the Arab world, pointing to substantial room for growth in value addition in the years ahead. As capacity expands, continued development of transport networks and power supply will be important growth enablers, as will ensuring reliable access to finance and skilled labour.
Read More from OBG
