Libya

In-depth country-focused analysis on Libya's economic, political and operational risk environment, complemented by detailed sector insight

Libya

As a result of ongoing political violence, a significant degree of productive capacity throughout the Libyan economy has been lost. Road, housing and utility infrastructure have suffered considerable damage and will take years to repair under even the most stable of political environments. Moreover, given the importance of the hydrocarbon industry, damage to oil production and refining infrastructure will pose significant long-term challenges.

Our coverage, using our unique Total Analysis model, ensures that our clients make sound business decisions in Libya. Our teams keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. We also provide in-depth analysis on seven of Libya's most important industries. Combining interactive data and forecasting with our expert research gives our clients the complete picture. We are confident that you will find doing business in Libya is made easier.

Country Risk

Libya Country Risk

BMI View:

Core Views

  • As a result of ongoing political violence, a significant degree of productive capacity (both physical and human) throughout the Libyan economy has been lost. Road, housing and utility infrastructure have suffered considerable damage and will take years to repair under even the most stable of political environments. Moreover, given the importance of the hydrocarbon industry, damage to oil production and refining infrastructure will pose significant long-term challenges.

  • Libya's political and security climate will remain volatile through 2016, as competing militias compete for control over the country's vast resource wealth.

  • A lack of institutional capacity will hamper reconstruction efforts. Libya lacks the institutions necessary to carry out much-needed investment projects.

  • Low...

Libya Operational Risk Coverage (9)

Libya Operational Risk

BMI View:

BMI View: Libya presents investors with a myriad of high risks that threaten the viability of any venture in the short term. Crime and terrorist risks are extremely high, and present significant security risks to infrastructure and the safety of foreign workers. Moreover, Libya's appeal as a hub for foreign investment was already limited prior to the civil war, owing to key risks such as a poorly-developed transport network, extensive red tape and a limited domestic labour force. Although Libya offers some trade and investment opportunities in the oil, gas and construction sector, developments have been delayed by persistent insecurity and sporadic fighting. Libya...

Libya Crime & Security

BMI View:

The ongoing civil war between the governments of Tripoli and Tobruk act as a major deterrent to investors and businesses, as it is unlikely to be resolved diplomatically and has led to the proliferation of armed fighters and criminal activities across the country. Businesses are threatened by frequent violent attacks affecting civilians and key infrastructure, disrupting trade across sectors. The country's porous borders are facilitating illicit trade and terrorist activities across the region, heightening tensions with neighbouring countries. As a result, Libya receives a very low score of 15.3 out of 100 for Crime and Security Risk, placing it in 17 th position out of 19 MENA countries, in front of just two war-torn countries; Yemen and Syria.

The greatest crime and security risks for investors emanate from Libya's unresolved domestic conflict, as the country is awash with weapons and rival militias fighting each...

Libya Labour Market

BMI View:

The labour market in Libya is fraught with potential risks for investors even before the effects of the 2011 revolution are taken into account. BMI highlights that the lack of job opportunities, poor quality of education, and onerous bureaucratic procedures associated with employing foreign workers combine to reduce the options for businesses in the domestic labour market and increase the costs of employing workers from within the country or from abroad. Libya therefore performs poorly in the BMI Labour Market Risks index, with a score of 43.3 out of 100 placing it 12 th out of 18 countries in MENA. Low labour taxes and a lack of regulations governing the local labour force are identified by BMI as among the few advantages for investors in this segment.

Libya's score of 44.2 for Education is the country's highest in the BMI Labour Market...

Libya Logistics

BMI View:

The damage caused by the 2011 civil war has resulted in an already poor logistics network in Libya deteriorating even further. The supply chain options in the country are severely limited by the lack of inland waterways, railways, or air freight, and the poor quality of the road network. In addition, importing goods to Libya can be time consuming and costly due to high levels of trade bureaucracy and the reliance of the country's ports on feeder services. BMI considers these factors to pose significant risks to businesses in terms of delays and additional costs involved with importing goods into Libya and establishing well-functioning internal supply chains.

As a result of these threats, Libya performs poorly in the BMI Logistics Risks Index, with an overall score of 39.0 out of 100 placing it second worst among 18 Middle Eastern and North African countries, above only Yemen. The few advantages...

Libya Trade & Investment

BMI View:

BMI View: Libya has not yet been able to fully open up to foreign investment, despite Colonel Qadhafi's removal from power in 2011. In fact, BMI notes that the instability affecting the country since the revolution has only added to an already hostile business environment, due to restrictions placed on foreign direct investment (FDI) by the new government and a bureaucracy struggling to retain full functionality. Libya's overall score in the BMI Trade and Investment Market Risks Index is therefore low, which is indicative of the numerous risks foreign businesses wishing to operate in the country are likely to face. At 26.2 out of 100, Libya's score...

Libya Industry Coverage (8)

Autos

Libya Autos

BMI View:

BMI View: The short-term outlook for the Libyan new vehicle sales market remains fairly negative. This is primarily due to the precarious security situation within the country, which has resulted in most foreign automakers departing the market.

Vehicle Sales
2014-2020
e/f = BMI estimate/forecast. Source: Renault, BMI

Key Views

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Defence & Security

Libya Defence & Security

BMI View:

BMI View: It is our belief that Libya finds itself in a troublesome predicament with strong rivalry existing between Islamist leaning factions and state security forces at both the political and military level. BMI views the Libyan crisis as a threat to wider regional stability where neighbouring countries concerned about security on their own borders are becoming increasingly involved.   We think that the international community, with the United Nations at the forefront, needs to pressure the political actors to the negotiating table...

Food & Drink

Libya Food & Drink

BMI View:

BMI View: We forecast Libya's food and drink industry will experience weak growth over our five-year forecast period to 2020. As oil revenues decline, government and household spending will decrease, which will dampen consumer confidence. We expect growing terrorism risk will impact negatively on the industry's high-end consumer, as the expatriate population leaves the country and businesses close their operations.

Food & Drink Spending
(2013-2020)
f =...

Infrastructure

Libya Infrastructure

BMI View:

BMI View : Libya's construction sector is forecast to grow at 12% y-o-y in 2016 and average 4.9% over our 10-year forecast period. A degree of stability has been restored to the industry following a severe contraction in 2015, though investors will remain cautious in entering or re-entering the market owing to political instability and widespread violence. Upgrades to transport infrastructure and construction of water utility plants will drive growth over the short term.

Key Forecasts And Themes:

  • We continue to forecast 12% real growth over 2016, 5.6% over the next five years and 4.9% over our full 10-year forecast period. The spike in growth in 2016 is owing to base...

Insurance

Libya Insurance

BMI View:

BMI View : We see significant potential in North Africa for insurers. However, continued economic constraints will hamper the full development of the sector over the short term, particularly the non-life segment. That being said, strong government impetus in much of the region to augment health insurance density will boost penetration over the medium term. However, we continue to expect life insurance will underperform in comparison to non-life insurance, owing to the disinclination among much of the population to purchase life insurance policies when household budgets are tight....

Libya Insurance

BMI View:

BMI View: The insurance sector of Libya would remain at an embryonic level of development in 2020 even in the absence of the ongoing civil conflict.

Headline Insurance Forecasts (Libya 2013-2020)
2013e 2014e 2015e 2016f 2017f 2018f ...

Oil & Gas

Libya Oil & Gas

BMI View:

BMI View : Despite continued progress in negotiations between the rival Libyan governments, the country's security and political outlook remains heavily clouded. This in turn will continue to dampen upstream production growth, due to the repeated targeting of oil and gas infrastructure; damage to wellhead, processing and export facilities; a lack of essential maintenance works; and chronic underinvestment in the sector. Exports will see a similarly slow recovery, with revenues further undercut by persistently low global commodity prices. The outlook on the downstream is equally bearish, with poor refining efficiencies and continued feedstock issues severely undermining overall utilisation rates.

Headline Forecasts (Libya 2013-2019)
...

Telecommunications

Libya Telecommunications

BMI View:

BMI View : North Africa's telecoms sectors are rapidly evolving from voice-centric markets towards ones driven by data consumption, with mobile broadband being one of the core drivers. 3G has been launched with success in Algeria and Tunisia, and the licensing and roll-out of 4G services is on track in both countries. Success depends on the macroeconomic situation: higher purchasing power helps with the development of the telecoms market, while the security situation is always at the forefront in the region.

Algeria The Largest Mobile Market
North Africa Mobile Market Forecasts
...

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