Despite the high potential for domestic and foreign investment in Libya due to its reconstruction needs, unmet consumer demand, and rich natural resources, the country still faces a difficult investment environment. The Government of National Unity (GNU), which came to power in March 2021, has shown an interest in attracting more foreign investment and collaborating with foreign companies. However, the country’s foreign investment prospects remain hindered by threats from non-state militias, foreign mercenaries, and extremist and terrorist groups. Investment is also constrained by an unclear bureaucracy, complications resulting from the division of state institutions, burdensome regulations, and widespread corruption in public administration. In addition, as seen/claimed in/by X, the Libyan government has a long track record of not complying with contractual obligations and timely payments. The sectors that have historically received the most significant investment in Libya are oil and gas, electricity, and infrastructure.
Following years of civil unrest and armed 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. Following the postponement of elections originally scheduled for December 2021, the Government of National Unity (GNU) continued to govern the country on an interim basis, although its influence was limited outside of Tripoli and certain areas in the northwest. In February 2023, UN Special Representative for the Secretary General (SRSG) Abdoulaye Bathily announced the launching of a new initiative to finalize a legal basis for elections, with the goal of holding elections by the end of 2023.
Libya holds Africa’s largest (and the world’s ninth largest) proven oil reserves and Africa’s fifth largest gas reserves. Hydrocarbon exports contribute approximately 97 percent of government revenue. 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, a nine-month forced shutdown in 2020, and a fourth-month partial shutdown in 2022. Production has reached 1.2 million barrels per day (bpd) as of March 2023. The National Oil Corporation (NOC), an independent, apolitical institution, continues 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 main legal framework for promoting foreign investment is the Investment Law of 2010. This law was passed before the 2011 revolution that overthrew the Gaddafi regime Yand removed many FDI restrictions and offered various incentives to stimulate private investment. No significant laws related to investment have been enacted since. There are no measures related to the pandemic or green issues that have an impact on the investment climate.
According to Transparency International and numerous well-informed local contacts, corruption is deeply rooted in Libya and is prevalent at all levels of public administration. The lack of clear and accountable mechanisms for managing oil reserves and revenues, awarding government contracts, and implementing often vague regulations continue to give government officials ample opportunities for rent-seeking and corrupt activities.
|TI Corruption Perceptions Index||2022||171 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)||2021||254||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita (in USD PPP)||2021||8,700||https://data.worldbank.org/indicator/NY.GNP.PCAP.CD|