Libya is definitely a country on the move. It is now one of the world’s fastest growing economies, despite the increasing security concerns and political uncertainties, along with the end of the 42-year dictatorship. The country is being driven by growth in all sectors, with continued expansion expected at an average rate of 9.9% annually over the next three years.
Yet, the challenging economic climate continues to impact and dampen growth for global multinationals. As a result, many of these global firms are evaluating the prospect of entering this potentially lucrative market. Key ingredients of any successful entrance strategy however are patience, a reliable partner, and a deep knowledge of the political and business landscape of this country on the rise.
As Libya continues its post-conflict recovery and navigates a complex political roadmap, companies will inevitably run into some of the same challenges many Libyans have dealt with for years. These include, bureaucracy, frequent power outages, an antiquated banking system, and one of the world’s lowest Internet connection speeds. From an operational perspective, these factors regularly sabotage the best of project management efforts.
That said, the importance of a reliable partner with the requisite knowledge of the Libyan market cannot be understated.
Sustainable success in Libya is rooted in a deep understanding of the political and business landscape. While the political landscape remains fairly fluid as the elected General National Congress (GNC) continues to address its governing priorities, companies must be aware of regulatory requirements currently in place.
Libya’s infrastructure is in desperate need of repair as well, due to years of neglect. In response, large sums have been allocated to reconstruction and development projects. On the retail front, rising salaries and relaxed import restrictions have boosted demand for consumer goods among a youthful population that boasts the highest gross domestic product (GDP) per capita in North Africa, a figure expected to grow to US$18,429 by 2016. Moreover, measures taken by the Central Bank of Libya to keep the Libyan Dinar pegged to the IMF’s special drawing rights basket for the next three years should provide the exchange rate stability necessary to support a trade environment.
Rosy economic indicators aside, the reality is that Libya is still very much in post-conflict recovery mode. The country has been faced with many setbacks, yet appears determined to move forward. Companies willing to invest despite the uncertainty can expect to capitalize on one of the more lucrative emerging markets in the world, assuming they have the right partner, a good understanding of the environment, and a whole lot of patience.
By Robert O’Hanlon
Partner in charge for Audit Services, Deloitte Middle East