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.
Libya Country Risk
Although Algeria is now turning to austerity, the country's remaining fiscal buffers will help to delay a more dramatic fiscal and economic adjustment. However, the next few years will see subdued growth and rising macroeconomic challenges. We forecast real growth to slow to 1.9% this year, down from an annualised 3.3% between 2010 and 2014.
The Algerian dinar will continue to gradually weaken against the US dollar throughout 2016, albeit at a slower pace. Oil prices are not set for a quick recovery, and the trade fundamentals of Algeria's economy remain bleak - factors that will weigh on the currency. However, the government will be reluctant to permit too great a slide of the dinar as pressures on households rise.
While lower oil prices will put further pressure on the Algerian regime over the coming years, we...
Libya Operational Risk Coverage (9)
Libya Operational Risk
Libya Operational Risk
The damage caused by the 2011 civil war has resulted in an already poor logistics network 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 34.7 out of 100 placing it 17th out of 19 countries in the Middle East and North Africa (MENA) region, above only the West Bank and...
Libya Crime & Security
Libya Crime & Security
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
Libya Labour Market
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...
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
Libya Trade & Investment
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 (9)
BMI View: The short-term outlook for new vehicle sales remains poor. This is primarily due to the uncertain security situation, which has now seen most foreign automakers leave the market.
|e/f = BMI estimate/forecast. Source: Renault, BMI|
Defence & Security
Libya Defence & Security
BMI View: Libyan defence expenditure will expand over the next five years; although growth is starting from a low base, and as such, the overall size of the defence budget remains small on a global scale. We expect political instability to be the norm over the coming years and rising Islamist militancy will create demand for military equipment across the ground, air and naval segments. However, major purchases will be delayed over the medium term due to severe financial constraints, the ongoing restructuring of the Libyan armed forces and the reluctance of the...
Food & Drink
Libya Food & Drink
BMI View: Libya's ongoing political instability will remain a key barrier to investment in the food and drink industry throughout our five-year forecast period to 2020. The weak outlook for economic growth in 2016 will weigh on consumer confidence as government and household spending fall on the back of declining oil revenues. Further, increasingly high terrorism risks will deter business confidence.
|Food and Drink Spending|
|f = BMI forecast. Source: BMI, national statistics|
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...
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....
BMI View: The Tunisian market is expected to experience strong growth over the next five years, though this is starting from a low base. Rising incomes will help to promote higher prices in the motor insurance sector.
Oil & Gas
Libya Oil & Gas
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.
BMI View: BMI has not made any forecast revisions in the latest Q3 2016 report update and we continue to maintain our view that the Moroccan mobile market is in a state of flux, between a mobile segment seeking profitability and a fixed segment looking for higher competition. The rollout of advanced data services and 3G has not resulted in significantly increased profits for operators at present. Furthermore, the recent decline in Q116 suggests that inactive accounts are being shed as the penetration rate begins to rise. On the other hand, the fixed market continues to be dominated by Maroc Telecom, with the lack of progression in unbundling hindering growth, competition and the development of the market.
|Robust Growth: 3G Subscribers (000)|
BMI View : The North African telecoms sector continues evolving from comprising primarily of voice-centric markets towards markets driven by data consumption. Mobile broadband is increasingly becoming one of the core drivers and offers the greatest future growth opportunities. 3G services have been successfully launched in Algeria and Tunisia, and the 4G services licensing and deployment is now underway in both markets. However, demand for these services still depends on the macroeconomic situation: higher purchasing power helps with the...