Prospects for Libya’s Economic Transformation

The Fall of Gaddafi’s regime in Libya and after 42 years of corrupt socialist governance influenced by the practices of communism and Gaddafi’s own Green Book represents a precious and crucial period for Libya’s economic prosperity and transformation.
Despite all the security and political challenges facing Libya, the economic outlook for the country seems to be more positive. Libya can capitalise on a wealth of natural resources and top tourist attractions of Roman ruins to the remaining of older civilisations in the desert and the beautiful small Mediterranean Islands and beaches. Most importantly, Libya can capitalise on its youthful and enthusiastic population with strong desire and drive for success and entrepreneurship.
Post revolution Libya is required to end decades of mismanagement of public funds, decentralized and frail economic model characterised by damaging corruption and corrupt practices of nepotism and favouritism. Such mismanagement and corruption led to resentment by the Libyan people who witnessed certain groups with enormous wealth while others struggled for life’s essentials. Libya’s economy was in effect based on the mood swings of Gaddafi and his men and was never based on sound foundations to serve the national interest of the Libyan people.
With a population of just over six millions, Libyans are eager to see their economic wellbeing improve. However, these aspirations are faced with security and political and social difficulties. Unlike neighbouring Egypt and Tunisia, Libya will be starting from scratch in rebuilding its political, economic, and security institutions. Libya’s future will depend heavily on the next couple of years and the ability of its new leaders to contain the situation and unite the country as they move forward. The new leaders will be required to take essential steps to ensure smooth transition and eventual prosperity for the country.
First, the new Libyan government is required to tackle the immediate economic expectations and aspirations of the population by providing means by which Libyans can improve their lifestyle and economic wellbeing. Throwing cash at the problems will not solve them, thus any incentives or benefits to Libyan families have to be in parallel with more robust and well-devised economic plans and strategy to better the economic wellbeing of Libyans.
The Libyan Government has already taken steps to support Libyan families during festive seasons by making one off payments to help families cope with the occasions, there has already been two one off payments to Libyan families of 2000 and 1000 Libyan Dinars for each family. In addition, all university students now receive a monthly payment of around 100 Libyan Dinars to help with their university expenses bearing in mind that higher education in Libya free.
Furthermore, the General National Congress (GNC) has approved a legislation to award Libyan families child benefits in the form of monthly payments of 100 Libyan Dinars per month per child, for boys until they reach 18 and for girls until they are married.
These steps and many others are crucial during this period, because the new Libyan leaders are required to meet some of the immediate expectations of the Libyan people post the revolution. Such felt change would help the new government gain more trust and credibility among Libyans. However, it is essential for sounder economic planning and controls to be put in place, like managing the increase in prices for essentials like food, clothes and medical supplies. In addition, the Libyan government is required to address the issue of housing in Libya and ensure controls are put in place to tackle the issue of increased land and building materials prices.
Second, the new government should ensure transparency and accountability especially in the oil and gas sector. Despite promises for increased transparency and accountability in the oil sector, the National Oil Corporation (NOC) recently refused to disclose details of the deals it had made during the year 2012. Many criticised the move and described it a setback for transparency in the new Libya. However, the NOC argued that they could not disclose the details of the deals made due to confidentiality commitments in their contracts with multinational oil and gas corporations. It is essential that the new authorities ensure protocols and safeguards in Libya’s oil and gas sector are independently implemented and audited.
Any corruption in the oil and gas sector that goes without accountability would be harmful to Libya’s economic progress and would hinder the government’s efforts to win the public’s trust and support and would ultimately lose its credibility. The same goes for Libya’s assets abroad, the issue requires transparency, openness, and measures in place for accountability and strict monitoring and auditing.
Third, Libya requires a long-term strategic plan to move the economy from complete dependency on the oil and gas sector. A strategy that would drive the economy towards diversification and encourage the private sector to take a more prominent role in leading Libya’s economic prosperity.
It would be hard and uneconomical to rely on the public sector to employ the increasing work force in the country. Instead, entrepreneurship and innovation should be encouraged as they form the drive for the private sector to flourish, along with good legislations and governance. Libya’s economy should be designed so that dynamic legal and banking systems ensure healthy competitiveness in the sector, as well as, a strong and independent regulatory and judicial body to oversee the implementation of contracts. The private sector should be at the heart of any economic roadmap in the near future and consultations should be the means by which private sector leaders and start-ups are engaged in shaping government policies.
Fourth, crucial and equally important is the training and education sector in Libya and the government should improve its strategy within the higher education and vocational training sectors. The courses should be accredited and directly linked to the market so that new graduates meet the job requirements and more importantly possess the skills that would add value to the wider economy.
The education and training sector in Libya requires an overhaul and job prospects should be at the heart of any new plans for the educational and training sectors. The courses should be designed with guaranteed job opportunities through co-ordination with the private and public sectors in order to meet demands and ensure employment for the new graduates.
Finally, Libya has valuable and promising opportunity to turn its economy around and steer it towards diversity and independence from oil and gas. The country has excellent financial resources to embark on economic transformation supported by young, driven and enthusiastic population eager to achieve independence and economic prosperity. Libya’s economic prosperity will only happen through consolidating democratic values, inclusiveness, transparency and accountability. Mohamed Eljarh is a UK based Libyan academic researcher and political, social development activist. He is from the city of Tobruk in Eastern Libya. Follow him on Twitter @Eljarh or email to: mohamed.eljarh@gmail.com