With China now, “respecting the choice of the Libyan people” almost 80 countries have accepted the National Transitional Council (NTC) as the legitimate Libyan (provisional) government. With this newly acquired authority, the NTC is now faced with the daunting task of organising democratic elections and attracting substantial sums of foreign direct investment to Libya in order to begin the process of reconstruction.
World Bank Recognises Libya's New Regime
As the World Bank now also recognises the new regime it joins the United Nations and the European Union in the task of coordinating assistance to Libya. In particular, the World Bank will lead the effort in the areas of “public expenditure and financial management, infrastructure repair, job creation for young people and service delivery particularly in the water and energy sectors.”
Libya's year Zero
A detailed report from the authoritative Economist Intelligence Unit, (EIU) aptly named Libya’s Year Zero: Finding opportunity as a country rebuilds, looks at a number of important sectors which include:
- Oil
- Finance
- Power and Water
- Telecommunications
- Tourism.
The EIU report rightly points out that the NTC is an interim body and the result of intended elections will have a direct effect on future business and investment in Libya. However, if a new government is able to maintain security and operate within a stable environment, business and investment opportunities in Libya will be available but perhaps initially only to a group of ‘favoured’ countries. Whether, as the possibility of another world recession looms, there will be an unseemly scramble to do business in Libya remains to be seen?
Doing Business in Libya
It is likely however that a number of existing contracts, signed during the Gaddafi regime will be honoured. Certainly reports from Rome, carried by Reuters (23 August), say that there is an expectation that Italian multi-Billion Euro defence and construction contracts will be honoured. Others will expect the same treatment. However according to Mustafa Adul Jalil, Chairman of the NTC all business deals signed during the previous regime will be reviewed. Already under threat is a $4 billion arms deal with Russia and there will almost certainly be others.
From a British perspective, the UK Trade and Investment (UKTI) has resumed operations in Tripoli and work to engage with the National Transitional Council and other business leaders has begun, although to date no new business opportunities in Libya have been posted on the UKTI website. Given the UK’s newfound ‘popularity’ in Libya it may well benefit from new trade deals and investment opportunities.
Existing Foreign Investment in Libya
According to the EIU, Libyan Law number 5 of 1997 opened up new sectors to foreign investors in Libya. As late as 2010, Law number 9, which addresses foreign and joint venture capital, superseded all previous legislation and attempted to stimulate investment and reinforce Libyan technical expertise.
Libya’s Oil Sector
This means that, despite the chaotic business conditions under Gaddafi, a number of joint venture initiatives already exist in the country, particularly in the oil sector. Currently Canadian, German, Italian, Spanish, French, US and UK organisations work with the Libyan state-owned National Oil Corporation (NOC) in a number of Libya’s oil fields, many of them in the Sirte basin.
In conclusion, the EIU has this to say, “In the early days of the post Gaddafi regime, business opportunities will be concentrated in oil and infrastructure as the new administration works to get the vital oil export business back on stream…. Further down the line, other areas of the economy will become increasingly open to investment…”
Sources
Economist Intelligence Unit, Libya’s year zero: Finding opportunity as a country rebuilds, site accessed 27 September 2011
World Bank press release, World Bank to help Libya Rebuild and Deliver Essential Services to Citizens, site accessed 27 September 2011
