Libya presents a challenging investment climate. Reconstruction needs, severely underserved consumer demand, and abundant natural resources provide many opportunities for domestic and foreign investors, and the Government of National Unity (GNU), which took office in March 2021, has expressed a strong desire to receive greater foreign investment and partner with foreign companies. Nonetheless, the country’s prospects for foreign investment continue to be hampered by security risks posed by the presence of non-state militias, foreign mercenaries, and extremist and terrorist groups, and opaque bureaucracy, onerous regulations, and widespread rent-seeking activity in public administration. The Libyan government has a long history of not honoring contracts and payments, and several U.S. firms continue to be owed back payments for work done before and after the 2011 revolution. The sectors that have historically attracted the most significant investment into Libya are oil and gas, electricity, and infrastructure.
Following years of civil conflict, Libya’s warring parties signed a ceasefire in October 2020 that paved the way for a United Nations-facilitated political process that resulted in the country’s first unified national government since 2014. The GNU is an interim government charged with leading the country toward national elections that were scheduled for December 2021, but ultimately postponed. Since the postponement of elections Libya has entered a new period of political uncertainty that has slowed down any attempts to improve the business climate.
Libya holds Africa’s largest (and the world’s ninth largest) proven oil reserves and Africa’s fifth largest gas reserves. Most government revenues derive from the sale of crude oil. Libya’s oil production has been making a gradual recovery from repeated attacks on oil infrastructure by ISIS-Libya and other armed groups in 2016 and a nine-month forced shutdown in 2020 due to the civil conflict. Production has reached 1.2 million barrels per day (bpd) as of March 2022. Technocrats heading the NOC, an independent, apolitical institution, continue to lay the groundwork for the long-term development and stabilization of the energy sector. The Ministry of Oil and Gas has attempted to exert political control over the NOC, at times complicating matters for companies working in the sector.
The Privatization and Investment Board (PIB), supervised by the Ministry of Economy, is the primary governmental body for encouraging private foreign investment in Libya.The Investment Law of 2010 provides the primary legal framework for foreign investment promotion. Passed prior to the 2011 revolution that toppled the Qadhafi regime, the law lifted many FDI restrictions and provided a series of incentives to encourage private investment. No significant laws related to investment have been passed since the revolution. No pandemic- or green-related measures have been instituted that can affect the investment climate.
Perceived corruption is deeply embedded in Libya and is widespread at all levels of public administration. The lack of transparency or accountability mechanisms in the management of oil reserves and revenues, the issuance of government contracts, and the enforcement of often ambiguous regulations continue to provide government officials with substantial opportunities for rent-seeking activities.
|TI Corruption Perceptions Index||2021||172 of 180||http://www.transparency.org/research/cpi/overview|
|Global Innovation Index||N/A||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country (USD Millions, historical stock positions)||2020||341||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita (in USD PPP)||2020||11,250||https://data.worldbank.org/indicator/NY.GNP.PCAP.CD|