OECD SME DEVELOPMENT STRATEGY IN LIBYA

SME DEVELOPMENT STRATEGY IN LIBYA

Project Steering Committee & Short Term Action Plan

Tunis, 8 December 2016

• Highlights from the report SMEs in Libya’s Reconstruction. Preparing for a post-conflict economy

• Project update

• Questions to PSC members

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Libya’s economy is over-dependent on hydrocarbons and dominated by the public sector, with a small private sector

• Oil, gas and related sectors represented 65% of GDP, 95% of exports and 96% of budget revenues.

• Before 2011 about 80% of the labour force was employed in the public sector.

• 26% of the population is under 15, while youth unemployment was 48.7%

• The private sector was estimated to account for 5% of Libya’s GDP.

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Level and rate of change of Libyan GDP

GDP per capita compared to GDP in constant prices

Government revenue from oil and non-oil sources

Composition of non-oil government revenues in the Libyan public budget

The impact of conflict has been magnified due to pre-existing structural problems. Income per capita was cut by half and government revenue drastically dropped

Economic diversification is a long term goal that should be embedded even in short term measures

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A revealed comparative advantage analysis of product community classifications

Mechanism Status Way forward

Credit guarantee scheme

• Libyan Guarantee Lending Fund (2008): Ministry of Ec. & Libya Enterprise. Not fully operational. High default rates. 6-7 years for recovery in case of default. Not an independent entity.

• Establish a credit guarantee agency

• Good practices: Caisse Centrale de Garantie (Morocco); Kafalat (Lebanon)

Microfinance

• No regulatory framework • Rural Bank • IsDB and Ministry of Economy USD 50

million on Islamic microfinance to unemployed Libyan youth

• Good practices: Morocco; Egypt

Concessional financing

• Libyan Loan Fund (2010): EUR 188mn. Under National Council for Economic and Social Development.

• LLIDF & ESDF: But focus on large projects.

• Institutionally independent • Clear strategic value • Commercial criteria when

possible

Regional SME funds

• 5 Regional Investment Funds (Tripoli, Benghazi, Misrata, Dernia and Sebha): USD 150 million each. Leverage local banks and include business co-funding. Not operational.

• Independence and clear structure

Venture capital • No private equity or venture capital • Incentives

Main Libyan institutions working on SME policies

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Ministry of Economy

Ministry of Planning

Ministry of Labour

Ministry of Finance

SME steering

committee Libya Enterprise

The Libyan Programme for

Reintegration and Development

(LPRD)

Prime Minister’s Office

SME Policy Unit

LGLF

Business centres

LECs

Business incubators

Ministry of Local Governance

Ministry of Industry

Libyan municipalities

Industrial Development Authority

Business incubators

Libyan Industrial Union

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Sequencing will be critical when planning for economic recovery

Long term

Strategic action and more sophisticated planning

Developing a vibrant private sector and diversifying the economy

Medium term

Rebuilding the institutions and regulatory framework

Rebuilding the SMEs fabric

Short term

Stabilizing the system and allowing normal operations to resume

Supporting survival of companies

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The list of policies needed to support SMEs and private sector is long. Prioritizing for the short term is needed.

Finance

• Ensure payments system

• Complete dual banking reform

Inclusion

• Create jobs for youth and ex-combatants

• Ensure regional balance

Markets

• SME procurement in reconstruction

• Trade agreements and export programs

Regulatory framework

• Real Estate Register

• Regional business registration one-stop shops

Capacities

• Government officials

• Entrepreneurs and businesses

• Highlights from the report SMEs in Libya’s Reconstruction. Preparing for a post-conflict economy

• Project update

• Questions to PSC members

Component 2: Short-Term Action Plan

• Produce Short-Term Action Plan to support SME policies with Libyan & international stakeholders.

Component 3: Legal framework

• Broad consultation of stakeholders and good practices.

• Peer review and sharing international examples.

Component 4: Assistance in implementation

• Assistance implementing the Short-Term Action Plan through capacity building.

Component 5: Access to finance for SMEs

• Assessment and assistance for the establishment of an SME funding mechanism.

Project end date: September 2018

Phase II: Restructured components

• Highlights from the report SMEs in Libya’s Reconstruction. Preparing for a post-conflict economy

• Project update

• Questions to PSC members

• Do you have any suggestions on the components of the project under Phase II?

• Are there ongoing initiatives with potential synergies for the OECD’s project?

• Should the OECD include additional institutions or stakeholders in the project?

• How can the project mitigate the risks related to the current uncertain political context?

Questions to Project Steering Committee

ANNEX