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The Optimal Approach to Doing Business in Libya

The Optimal Approach to Doing Business in Libya
By Enric Jaimez

In the aftermath of a transformative ceasefire agreement in 2020, Libya has undergone through a significant economic recovery. Crucial data, including a reduction in conflict-induced incidents and casualties, as well as the establishment of the Government of National Unity in 2021, has paved the way for strengthened institutional synergies. This, coupled with favourable hydrocarbon prices, has resulted in a substantial transition from a GDP deficit to a surplus, setting the stage for a promising economic future.

This landscape is ripe for strategic investments that not only seek financial gains but also aim to foster sustainable socio-economic development, aligning with broader societal progress goals. Yet, amidst this burgeoning potential, how can one adeptly capitalize on the complex and evolving Libyan landscape?

An Uncrowded Market

Despite the recent positive developments, conducting business in Libya remains challenging due to limited openness to foreign capital, restricted free-market dynamics, and ongoing political instability. The absence of a constitution and the government’s limited monopoly of power further exacerbates the situation, presenting considerable challenges for investors.

Additionally, these factors contribute to a scarcity of reliable data, further hampered by bureaucratic inefficiencies and a lack of expertise in data management. Libya’s low ranking on the International Transparency Index highlights these challenges, underscoring the difficulties in achieving transparency and accountability.

“If you don’t know anything about Libya, don’t worry, no one does”

In a world where investments predominantly flow towards developed nations, there lies a compelling argument for seeking growth and profits in exotic locales such as Libya, which remain largely uncrowded in terms of investment and business.

“In the middle of every difficulty lies opportunity”

Developed markets offer stability, yet the real edge lies in the emerging and frontier markets, like Libya, where untapped potential abounds. These markets promise early-mover advantages and the potential for significant returns, unattainable in the crowded spaces of mature economies.

The absence of saturation in these markets allows for innovative ventures and strategic positioning, enabling investors to capitalize on the uncharted territories and contribute to the sustainable development of these exotic economies.

As global financial dynamics evolve, the appeal of frontier markets like Libya grows, offering sophisticated investors not only financial gains but also the excitement of pioneering economic growth in unconventional settings. But what are the implications of these evolving dynamics for navigating the complex business landscape that Libya presents?

Understanding Libya’s multifaceted business environment requires a nuanced approach to managing risks. Amidst political instability, economic fluctuations, security concerns, and cultural variances, it’s crucial to perform comprehensive risk assessments for informed decision-making. The essence of risks in Libya’s business domain is characterized by their omnipresence, raising questions about their fundamental role in business operations.

UK Foreign Commonwealth & Development Office Travel Advice for Libya.jpg

At its core, assessing economic risks in business entails a probabilistic evaluation that balances potential rewards against costs and the possible costs of risks. This involves considering the impact on human capital, reputation, financial outlays, and payment commitments. Such a detailed analysis aids in a methodical approach to risk versus reward, enhancing strategic choices in unpredictable environments.

By recognizing that minimizing financial outlays and payment commitments significantly lowers venture risks—thereby decreasing the potential cost of failure—we can pinpoint the most effective approach to conducting business within Libya.

Recognizing the Importance of Knowledge Transfer

While Libya boasts substantial liquidity, the key lies in facilitating knowledge transfer rather than mere monetary transactions.

Leveraging existing funds within the country and enabling the transfer of know-how can significantly mitigate the risks associated with conducting business in Libya.

Firstly, a significant portion of Libya’s business sector operates discreetly, with numerous companies generating substantial revenues, ranging from 10 to over 100 million, without any online presence or discernible corporate identity.

Moreover, our estimates suggest the existence of several hundred entities in a similar situation, earning annual incomes surpassing 100 million. The opaqueness of these enterprises, coupled with lenient tax and customs enforcement, complicates a precise economic evaluation, yet this continues to be the prevailing reality.

Witness the transportation of hundreds of millions in dollars, euros, and dinars using manual carretillas, a daily morning routine in Tripoli's city center.

Secondly, the prevailing circumstances have led to a scenario where many Libyans face challenges in transferring their wealth internationally. In the absence of means to justify the sources of their funds or comply with basic Anti-Money Laundering regulations abroad. Consequently, hundreds of billions of dollars remain concealed within the country.

This wealth is often invested in domestic land acquisitions, stored in safes, or even buried, a practice notably prevalent in the city of Zliten, restricting its broader economic utility.

Thirdly, with Libya’s foreign reserves projected to reach 90 billion USD by 2024, and minimal foreign debts, the nation is financially well-equipped, especially considering its modest population of less than 7 million. This substantial wealth not only facilitates the country’s reconstruction but also empowers Libya to secure liquidity in international markets by leveraging its assets as collateral.

It becomes evident that Libya’s challenge does not lie in the absence of liquidity; rather, the necessary resources are already in place. What is crucial, however, is the capability for knowledge transfer and the acquisition of essential expertise required for meaningful investments.

To operate optimally and minimize risks in Libya, foreign companies should prioritize the transfer of knowledge as the pivotal element of their business endeavors.

The Optimal Approach to Doing Business in Libya

In the public sector, risks are minimal due to several factors. Firstly, companies receive payment before initiating any work, ensuring a secure financial foundation. Secondly, the assets of the Libyan foreign investment fund, dispersed across various developed countries, serve as collateral in the event of potential non-payment.

It is vital to look beyond surface-level reports of substantial unpaid amounts owed by the Libyan state to foreign companies. Often, these delayed payments result from rigorous auditing procedures aimed at uncovering prevalent fraudulent activities within governmental contracts over the past decade.

Consequently, Libyan state institutions, particularly non-political entities like the National Oil Corporation, emerge as reliable and financially stable partners for business engagements following this approach.

In the private sector, a local capitalist partner assumes a critical role, while the foreign company acts as a conduit for knowledge transfer, thereby leveraging existing liquidity.

Moreover, this operation would be substantially collateralized against various risks, as the local partner mitigates potential challenges posed by non-governmental actors and navigates the complexities of state institutions, ensuring the optimal functionality of the business.

As a result, the principal challenges and risks in this undertaking revolve around ESG (Environmental, Social, and Governance) considerations and maintaining a positive reputation.


While doing business in Libya may pose numerous challenges, strategic and nuanced approaches that prioritize knowledge transfer, risk management, and alignment with national development goals can pave the way for a successful and sustainable business venture in the nation.

Despite the prevalent risks, Libya stands as an uncrowded market teeming with opportunities. The relatively low level of foreign direct investment and the limited presence of international businesses have created a unique landscape for pioneering ventures. This environment offers the prospect of early-mover advantages, enabling businesses to establish a strong foothold and build lasting relationships with local partners and stakeholders.

The country’s rich natural resources, coupled with its emerging market potential and the increasing demand for various goods and services, present an enticing opportunity for businesses willing to navigate the challenges and strategically position themselves for long-term growth and success.

Championing Synergistic Growth

The Euro-Libyan Trade Center (ELTC), is a non-partisan, non-profit trade promotion agency working in cooperation with the GUCC to strengthen economic relations between Europe and Libya.

ELTC strategically positions itself as an enabler of transcontinental economic activities, offering a structured platform for entities with vested regional commercial interests. We are dedicated to enhancing operational capacities, broadening market access, and heightening the competitive index of enterprises within the region.

For tailored organisational strategy consultation, kindly reach us at +44 207 193 5556 or submit an inquiry via the provided contact form.

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