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

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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

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BMI View: Libya presents investors with a very high level of operational insecurity, therefore any business venture will remain very risky in the short term. Crime and terrorist risks are extremely high, which has greatly enhanced the vulnerability of foreign workers and businesses to attacks. 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, a large burden of red tape and limited educational attainment. 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 is one of the most uncompetitive performers in the overall BMI Operational Risk Index, scoring 30.2...

Libya Crime & Security

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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

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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

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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

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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 we see posed to foreign businesses wishing to operate in the country. At 23.8 out of 100, Libya's score ranks last in the Middle East and North Africa (MENA) region for Trade and Investment Risk.

The legacy of the Qadhafi era, combined with continuing instability in the aftermath of the civil war, restricts Libya's openness to...

Libya Industry Coverage (8)

Autos

Libya Autos

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Key Views

  • Most international carmakers have withdrawn their non-Libyan staff entirely from the Libyan market, given the ongoing operational and security challenges in the North African state.

  • The departure of one of the first foreign entrants to the Libyan auto sector - Egypt's Ghabbour Auto - reflects the still-worsening economic and political backdrop in the country.

  • Over the near term, it does not look as though the operational environment for foreign ca rmakers looking to sell within Libya will improve dramatically.

  • Should the security situation stabilise, which we do not expect to happen any time soon, then the local sales outlook would be encouraging for commercial vehicles, given the need for extensive reconstruction of infrastructure.

  • ...

Defence & Security

Libya Defence & Security

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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

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BMI View: Our forecasts on Libya's economy will put great pressure on the growth of the consumer sector. We forecast slow growth in Libya's food and drink industry as ongoing political instability will decrease spending in the public and private sector. As a result, the country's unstable political and security situation will decrease foreign investment. Cuts to food subsidies pose a major risk for our consumption forecasts.

Headline Industry Data (local currency)

  • Total food consumption growth in 2015: +4.8%; compound annual growth rate (CAGR) to 2019: +5.9%.

  • Per capita food...

Infrastructure

Libya Infrastructure

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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

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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 market in Libya remains in the very early stages of development, hampered both by the ongoing civil conflict and by pre-existing structural challenges such as the restricted domestic financial market and limited uptake of formal banking services. While we do expect to see some growth over the forecast period, forecasts remain weak and vulnerable to any further escalation of the conflict. Tunisia's insurance market, particularly the non life sector, is considerably more established, though it remains small by global standards. Short-term currency movements premiums are expected to contract over 2015 and potentially 2016, before returning to growth throughout the remainder of the forecast period.

...
Headline Insurance Forecasts (Libya 2012-2019)

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)
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Telecommunications

Libya Telecommunications

BMI View:

BMI View : North African telecommunications markets are rapidly evolving from voice-centric markets towards ones driven by data consumption, with mobile broadband being one of the core drivers in all markets. 3G services have been launched with success in Morocco, Algeria and Tunisia, and the licensing and rollout of 4G services is on track. Success is dependent on the overall macroeconomic situation, with higher purchasing power helping with the development of the telecoms market, while the security situation is always at the forefront in the region. All markets have a mix of public and private operators, though liberalisation is not present in all sectors, and the competition has always driven greater uptake in the region.

Latest Updates & Industry Developments

  • The ADSL market grew above 1mn in Morocco, with total 3G...

Latest Libya Articles

  • We have revised down our CME milk price forecast for 2016 and now see price...

  • We believe that there is currently disconnect between oil prices and fundam...

  • In line with the country's political turmoil, Libya's economy will remain i...

Latest Libya Blogs

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