Download PDF - African Economic Outlook

LIBYA
2016
Kaouther Abderrahim-Ben Salah / [email protected]
www.africaneconomicoutlook.org
Libya
LIBYA
• GDP contracted by 6.0% in 2015 but in the event of a resolution to conflict and a rapid
resumption of oil production, economic growth could recover quickly.
• Prospects for a unity government have improved, although the coastal cities of Sirte
and Derna remain controlled by the Islamic State.
• The urban policies adopted in the 1970s have had positive effects on structural
transformation, in particular with the impulse of the industrial dynamism of cities
like Tobruk, Misrata, Zawya, Al Bayda and Derna.
Overview
Following months of delay, Libya’s House of Representatives (HoR) was elected in June 2014,
replacing the General National Congress (GNC), which had acted as Libya’s legislative body since
July 2012. The election of HoR was disputed by the Islamist factions who subsequently reconvened
the GNC in Tripoli in August. Consequently, there are currently two rival governments in Libya:
one linked to the HoR, the internationally recognised government, the other to the GNC, indicating
the depth of administrative and bureaucratic chaos in the country.
The United Nations and humanitarian partners estimate that 4.35 million people, almost
half the population, have been affected by the armed conflict. Political divisions and the intense
fighting between rival militias since August 2014 have cost hundreds lives, and displaced over
435 000 people. Most of the displaced are living in urban centres within host communities, with
just over 100 000 living in collective centres in the open or in makeshift buildings such as schools
and empty warehouses. The largest number of displaced are located in Benghazi, Al Jabal Al
GhaRbi, Al Zawiya, Tripoli and Misrata. The conflict has also caused serious damage in terms of
provision of and access to basic goods and services, especially health care, food, shelter, clean
water and sanitation and education in Tripoli and across the country.
The poor political and security situation has had serious consequences for the economy, public
finance and official reserves in 2015. The continuing clashes between tribal and militia associated
with different political factions around the oil sites have steadily reduced oil production and
exports by almost two-thirds, compared to pre-crisis levels. An average of 400 000 barrels per
day (bpd) were produced in 2015 and 1.8 million bpd in 2010. As a result, GDP contracted by an
estimated 6.0% in 2015, against a contraction of 23.5% in 2014, and is projected to show a decline
of 0.8% in 2016 if the security situation does not improve.
After several attempts, international efforts to forge a consensual roadmap succeeded in
December 2015 when the factions agreed on a national unity government deal at an UN-facilitated
meeting in Tunisia. A Government of National Accord (GNA) was announced on 19 January 2016,
and 32 ministers were proposed. However, the HoR parliament rejected the UN-backed unity
government because it included too many ministers and asked the Tunis-based Presidential
Council to propose a new, shorter list of ministers within 10 days. A revised and shorter list was
presented on 15 February but, by the end of the month, agreement had still not been reached.
The economic situation in 2016 will largely depend on the implementation of the Government
of National Accord and the extent of security stabilisation. In this context, the economic recovery
will proceed slowly, especially in the oil sector. In 2017, the implementation of an important
reforms programme could release substantial growth potential and significant improvements
in both the budget and current balances. This would stabilise Libya’s official reserves and help
create a climate of trust and confidence for potential investors.
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Libya
Figure 1. Real GDP growth
Real GDP growth (%)
%
North Africa (%)
Africa (%)
100
80
60
40
20
0
-20
-40
-60
-80
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015(e)
2016(p)
2017(p)
Source: AfDB, Statistics Department AEO. Estimates (e); projections (p).
Table 1. Macroeconomic development
2014
2015(e)
2016(p)
2017(p)
Real GDP growth
-23.5
-6.0
-0.8
3.9
Real GDP per capita growth
-23.4
-6.3
-1.6
3.1
2.4
8.6
9.7
5.8
Budget balance % GDP
-43.5
-58.9
-60.7
-56.8
Current account % GDP
-30.1
-51.0
-44.5
-33.3
CPI inflation
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.
Recent developments and prospects
Real GDP has been contracting since 2013, owing to the impact of falling oil production and
severe political uncertainty on business and consumer confidence. Since 2011, Libya has been
facing a difficult economic context due to a business environment that discourages investment.
The poor business climate and capital outflows have led to a chronic imbalance between the
supply and demand of goods and foreign exchange. Oil output was volatile in the first ten months
of 2015 and, according to the International Energy Agency, averaged 400 000 bpd. The departure
of most international oil company workers in 2015, the important decrease in international
oil prices, and the reduction of maintenance and capital investment has strongly affected the
economic activity. Real GDP growth is estimated to have contracted by 6.0% in 2015.
Public and private investment has significantly decreased in 2015, on the back of falling oil
output, weak consumer and business sentiment, and an increasingly contractionary fiscal policy.
Prior to the political conflict that started in June 2014, the government had planned to implement
investment programmes to build three green-field refineries and to promote the domestic
petrochemicals industry by expanding refinery capacity at an estimated cost of USD 60 billion.
However, with the existence of two rival governments, investment plans remained on hold.
Spending on infrastructure and economic diversification has been severely curtailed in order to
sustain high current expenditure. Long-delayed reconstruction works will likely not be revived
before the fighting ends and a GNA is in place.
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Libya is heavily reliant on the performance of the hydrocarbons sector. Oil production averaged
around 459 000 bpd in 2014 and 400 000 bpd in 2015, according to the International Energy Agency.
This corresponds to about a third of the country’s pre-conflict capacity of 1.55m bpd in 2010. As
a result, the government has proceeded with important cuts in public expenditures in order to
reduce the fiscal deficit, which is estimated to have reached 58.9% of GDP in 2015. The current
account balance has also suffered from the political crisis and the significant fall in international
oil prices, and is estimated to reach -51.0% in 2015. Both fiscal and trade balance deficits will
take a toll on official reserves, which have continued to decline since 2011 and are estimated to
amount to 31 months of imports in December 2015.
In 2015, inflation significantly increased to 8.6%, compared to 2.4% in 2014. It has been mainly
driven by supply-chain disruptions, which have more than offset the impact of high food and fuel
subsidies. The fragile security situation has had direct and indirect effects on food and housing
prices, which together make up 60% of the consumer price index basket. Due to the expansion of
the Islamic State in Libya, uncertainties about the security situation will remain in 2016 and 2017,
which will exert upward pressure on inflation. Hence, it is projected to increase to 9.1% in 2016.
Despite the underperformance recorded in 2015 in terms of oil production, the oil sector still
dominates the Libyan economy, and will continue to account for more than 90% of state revenue
during 2016 and 2017. The abundance of oil in Libya – around 48 billion barrels of proven reserves,
according to the US Energy Information Administration (EIA) – means that the sector will remain
the mainstay of the economy for the foreseeable future. Economic performance for 2016 and
beyond is highly dependent on the continuing political talks, the re-establishment of security
and the recovery of oil production to pre-2011 levels.
Table 2. GDP by sector (percentage of GDP at current prices)
2010
2013
Agriculture, forestry, fishing and hunting
2.7
0.9
of which fishing
…
…
55.4
60.8
Mining and quarrying
of which oil
…
…
Manufacturing
6.2
3.7
Electricity, gas and water
1.5
1.4
Construction
8.7
1.5
Wholesale and retail trade; Repair of vehicles household
goods; Restaurants and hotels
4.9
4.7
of which hotels and restaurants
0.2
0.2
Transport, storage and communication
4.8
3.5
Finance, real estate and business services
7.7
6.3
Public administration and defence
7.6
16.9
Other services
0.4
0.3
100.0
100.0
Gross domestic product at basic prices / factor cost
Source: Data from domestic authorities.
Macroeconomic policy
Fiscal policy
The growing division between the two governments in Libya has led to two different budgets
for 2015. In May the General National Congress (GNC) endorsed a 2015 budget of 42.9 billion dinars
(LYD). The breakdown indicated that almost LYD 19 billion was allocated to salaries, LYD 6.5 billion
to expenditure, while LYD 6.641 billion are to go for development projects and LYD 11 billion for
subsidies and price stabilisation.
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The decrease in oil production and exports to 10-15% of nominal capacity and the steep
drop in oil prices to USD 35 a barrel towards the end of December 2015, prompted the GNC to
take measures to rationalise expenses and to relieve some of the pressure on public finances. It
also approved, as part of the budget package, the implementation of decree N°.8 of 2014, which
demands a national ID number match for each item in the budget, noting that “article 25” foresees
replacing subsidies for food and fuel with monthly cash transfer of LYD 50 for every citizen.
Until 30 November 2015, total revenues amounted to LYD 15.9 billion against LYD 19.2 in 2014
and LYD 18.5 billion initially planned in May 2015. These revenues include LYD 9.9 billion of oil
revenues, LYD 555 million in taxes, and LYD 5.5 billion of balances from previous years. Total
public expenditures have also been lower than initially planned, as of November 30th, with a
total of LYD 28.4 billion against LYD 36.6 billion projected in May 2015. This decrease is due to
unpaid salaries because national ID numbers were not provided in certain sectors. The Central
Bank of Libya (CBL) based in Tripoli reported that the 2015 budget deficit is expected to decline by
46% compared with 2014, and reach LYD 12.5 billion up to 30 November 2015. This drop in fiscal
deficit is mainly due to the decrease in subsidy expenses and the cut in expenditures.
The House of Representative (HoR) approved a 2015 budget of LYD 41.2 billion in June. The
Parliament requested the revision of the budget from LYD 44 billion following the deficit of
LYD 30 billion in government revenues. Due to security constraints, the government will decrease
the expenditure envelope, and limit it to salaries and subsidies. The fiscal deficit is expected to
reach about 58.9% of GDP in 2015, as reported by both Central Banks.
Table 3. Public finances (percentage of GDP at current prices)
Total revenue and grants
2007
2012
2013
2014
2015(e)
2016(p)
2017(p)
40.7
62.3
72.3
65.7
40.9
41.8
41.4
Tax revenue
2.2
1.2
1.2
1.4
1.6
1.7
1.6
Oil revenues
0.9
0.0
0.0
0.0
0.0
0.0
0.0
Total expenditure and net lending (a)
36.3
44.5
69.8
84.4
100.7
102.1
97.5
Current expenditure
13.2
39.8
59.3
75.8
90.5
91.4
86.9
Excluding interest
13.2
39.8
59.3
75.8
90.5
91.4
86.9
Wages and salaries
8.6
16.0
30.2
45.1
54.6
56.1
53.6
Interest
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Capital expenditure
20.5
4.6
10.5
8.6
10.2
10.7
10.7
Primary balance
26.0
27.8
-4.0
-43.5
-58.9
-60.7
-56.8
Overall balance
26.0
27.8
-4.0
-43.5
-58.9
-60.7
-56.8
Note : a. Only major items are reported.
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.
Monetary policy
Due to the current existence of two competing ministries of finance affiliated to two rival
governments, there was no clear monetary policy for Libya in 2015. Despite substantial political
pressures, the Central Bank of Tripoli has tried to maintain an independent monetary policy.
However, the internationally recognised HoR government inaugurated a new Central Bank in Al
Bayda in June 2015, which created confusion around monetary policy.
During the period 2014-15, the Libyan governments tried to keep consumer prices low by
using price controls and subsidies on various consumer goods. However, as the security situation
and government finances deteriorated, consumer price pressures intensified. Inflation stood at
around 8.6% in 2015. Growth in broad money and credit to the economy are expected to remain
broadly at their current levels (respectively 4% and 1%) due to the slowdown in government
spending and non-oil economic activity.
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Libya
The important shortfall in oil production and exports in 2015 has resulted in a decline of
Libya’s revenues and official reserves. Official reserves decreased to 30 months of imports in
2015, against 50 and 43 months of imports respectively in 2013 and 2014, while the real value of
the national currency depreciated by 35% against the USD in 2015. If the security situation does
not improve and the production of oil does not return to pre-crisis levels in 2016, Libya’s official
reserves are projected to decline to less than 20 months of imports.
Economic co-operation, regional integration and trade
There is already a strong framework in place to pursue regional integration through trade.
Libya was one of the first countries in North Africa to strengthen economic and trade exchanges
with sub-Saharan Africa. In addition to the Greater Arab Free Trade Area (GAFTA) and to the Arab
Maghreb Union (AMU), Libya is a member of the community of Sahel-Saharan states (CEN-SAD)
and the common market for Eastern and Southern Africa (COMESA). Before the revolution, Libya
was actively participating in the process of economic co-operation and regional integration and
has played a prominent role in various regional organisations. Similar to other North African
countries, the EU continues to be the main destination for Libya’s exports (more than 80% in
2014). Only 2% of total exports are shipped to Tunisia and 5% to China.
The intense fighting between rival militias and the political divisions have significantly
reduced the country’s production and exports of oil over 2014-2015. The large and positive current
account balances enjoyed before 2014 have turned into deficits, including as a result of the sharp
drop in international oil prices. The current account deficit is estimated at 51.0% of GDP in 2015,
and projected to improve to 44.5% of GDP in 2016, if improvements in the political situation can
be achieved.
Table 4. Current account (percentage of GDP at current prices)
2007
2012
2013
2014
2015(e)
2016(p)
2017(p)
-22.9
Trade balance
47.1
43.3
30.5
-14.9
-35.8
-31.5
Exports of goods (f.o.b.)
72.6
74.5
70.2
33.3
17.9
17.1
21.4
Imports of goods (f.o.b.)
25.5
31.2
39.8
48.1
53.7
48.6
44.3
Services
-3.8
-8.4
-11.1
-13.5
-15.0
-13.2
-11.0
1.2
-2.4
-0.8
3.7
5.8
5.3
4.9
Current transfers
-0.3
-3.4
-5.0
-5.5
-6.0
-5.2
-4.3
Current account balance
44.2
29.1
13.6
-30.1
-51.0
-44.5
-33.3
Factor income
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.
Debt policy
Libya continues to have one of the lowest debt levels in the world. The latest estimates show
that the domestic debt stood at 6.1% of GDP in 2014 compared to 4.8% in 2013, and 4.1% in 2012.
Libya’s external debt stood at 13.5% of GDP at the end of 2014, compared to 9% of GDP a year
earlier. In December 2014, foreign reserves amounted to about USD 76.6 billion, twelve times
higher than Libya’s external debt, which ensures a comfortable position.
However, the substantial declines in government revenues in 2014 and 2015 left a sizeable fiscal
deficit and forces the governments to borrow in order to finance expenditure. The government
in Tobruk has already announced that it is operating on loans from the National Commercial
Bank. So far, in order to avoid further social breakdown, the two governments have maintained
their salary and subsidy expenditures, despite the decline in revenues. However, if oil revenues
do not recover towards their long-term average, there could be recurring gaps in government
expenditure, which may have to be financed through increased debt levels, especially in a context
of using foreign reserves to finance the two governments’ deficits. Such a situation would not be
sustainable in the medium term.
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Libya
Figure 2. Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services)
Outstanding debt (public and private) /GDP
%
Debt service/Exports
20
18
16
14
12
10
8
6
4
2
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source : IMF (WEO & Article IV).
Economic and political governance
Private sector
According to the Mo Ibrahim Index 2015, Libya is one of Africa’s poor-performing countries in
terms of business environment, scoring 16.4 out of 100 in 2014 compared to 40.3 in 2013, below the
African average of 40.7 and even below the regional average of 49.0 in North Africa. Libya ranks
very poorly in the 49th position out of 54 countries. Furthermore, according to the same Index,
Libya’s ranking in terms of efficiency of legal frameworks in settling disputes has deteriorated to
135 compared to 124 out of 148 in 2013-14. The World Bank report Doing Business 2016 ranks Libya
as the worst country in the world with no change (ranked 189 out of 189 economies) in terms
of resolving solvency. As a result of the difficult business climate, the economy is dominated
by the oil sector and an omnipresent state with more than 85% of the workforce employed in
the public sector. The poor record of private-sector development has also been held back by
low financial intermediation and poor access to finance. In the 2015 budget, more than 70% of
public expenditure was allocated to wages and subsidies, leaving few resources for developing
the necessary infrastructure for private-sector promotion. In addition, the political division has
created a lack of transparency of the two governments’ reform programmes for improving the
business environment and promoting private-sector investment in Libya.
Due to the fragile political and security situation, the business environment dramatically
deteriorated in 2015. Libya is ranked as the worst country in the world for getting credit and
dealing with construction permits. Moreover, according to a survey conducted by the World Bank
in 2015, 80% of firms ranked political and economic instability and corruption as the binding
constraints to business, and 60% of respondents considered that political instability had worsened,
given the escalation of the crisis in the country in the summer of 2014. Before the existence
of two governments fighting and claiming legitimacy, in 2013 the government had announced
plans to remove legislative uncertainty and improve the business environment by rationalising
the regulatory framework and reforming the financial sector to improve SMEs’ have access to
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finance. However, progress on these reforms has stalled and all plans have been postponed until
a permanent government will take power.
Financial sector
The Libyan financial sector has not been reformed and remains predominantly in the
hands of the state despite the 2011 revolution. It remains highly concentrated with the Central
Bank of Libya based in Tripoli overseeing the system. The sector is composed of a network of
15 commercial banks, the majority of which are state - or partially state - owned (Jumhouria Bank,
the National Commercial Bank, Wahda Bank and Sahara Bank holding more than 85% of banking
assets); four specialised credit institutions; five insurance companies; and a recently established
stock market. In 2015, lack of technical expertise continued to hamper the development of the
financial sector. Licenses to foreign banks seeking to operate in Libya are unlikely to be issued by
the Central Bank of Libya until a single national unity government is in place.
As in other sectors, the volatility of oil revenues has had negative implications for the stability
of the financial system. Although relevant data are not available, it is thought that, with many
businesses shifting their operations abroad due to the security situation, the banking sector has
felt the brunt of the current economic crisis. State-owned banks dominate the financial landscape.
The extent and diversity of financial services provided are limited and these state-owned banks,
though heavily capitalised, are not lending. Indeed, according to the Global Competitiveness
Index 2014-15, access to finance is the second most problematic factor for doing business in Libya,
after government instability.
Over the period 2014-15, Libya’s global ranking for financing deteriorated as access to local
finance remained poor. According to the Global Competitiveness Index, Libya ranks 144 out of
144 economies in the world in terms of the availability and affordability of financial services.
The World Bank’s Doing Business index ranked Libya 189 out of 189 economies on the ease of
getting credit, impeded by weak collateral and bankruptcy laws, and 188 out of 188 on protecting
investors.
According to the World Bank, financial services – both public and private – were estimated at
USD 900 million in 2014, representing 3% of total GDP. Since the start of the political conflict in
2014, most of the credit system has been frozen and very little, if any, credit has been allocated
to private companies, in particular to SMEs. The public banks do not really inject liquidity into
the market through loans, but only play the role of savings banks. Commercial banks have
USD 65 billion in assets of which half is held in certificates of deposit.
Public-sector management, institutions and reform
The fragile political situation has meant that no clear public policies are being formulated
in Libya, and the public administration is highly divided. Since August 2014, the level of policy
co-ordination and responsiveness has slowed down. The reconvening of the GNC in Tripoli, in
protest against the election of the HoR, has resulted in a dual governance structure. This has
contributed to reducing the level of co-ordination between the two competing governments.
In addition, and since June 2015, the existence of two central banks in Tripoli and in Al Bayda
has worsened the situation and has made co-ordination between the different institutions and
ministries even more difficult.
Since 2011, Libyan institutions and lines ministries are suffering from a lack of institutional
capacity, which affects the efficiency of their service delivery. According to the Global Integrity
Indicators, Libya’s performance on the Accountability and Transparency Index is weak with a
score of 24 out of 100 in 2015. Performance is particularly poor on measurements of civil service
integrity and access to information and openness. The existence of two parallel governments
claiming international legitimacy and control over state institutions and resources, the increasing
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power of militias with uncontrolled arms and the subsequent expansion of an informal economy
have considerably reduced the level of ethics in the political economy structure. Improving service
delivery will be one of the major areas of reform once a permanent government is in place.
Natural resource management and environment
Libya’s oil reserves are estimated at 47 billion barrels, the largest in Africa and the ninth
largest in the world. In 2010, Libya produced 1.8 million barrels a day, but civil war in 2011 and
the political division in 2014 caused production and exports to drop by almost two-thirds. Libya
is heavily dependent on oil, accounting respectively for 98% and 90% of exports and government
revenues. However, since mid-2014 and due to the poor security situation and the political
division, updated data on levels of production and revenue generated by the hydrocarbon sector
are not available. The Central Bank in Tripoli is the only institution that provides information
on hydrocarbon revenues, and produces annual records containing data on reserves, production
volumes, prices, and the value of resource exports. The inauguration of a new Central Bank by the
government in Tobruk has complicated data collection and production for the oil sector.
According to the National Resource Governance Institute, Libya’s performance on the Resource
Governance Index is very poor with a score of 19 out of 100 in 2014. Libya performed particularly
poorly on measurements of accountability and democracy and corruption control, leading to a
“failing” score of 10 out of 100. Libya’s poor performance on natural-resource management is
mainly due to the fragile political situation and the existing tensions between rival militias.
The environmental sustainability index for 2014 ranks Libya 120th out of 178 countries
with a score of 42 out of 100. This signifies a country with serious environmental degradation.
The country scored particularly poorly in terms of biodiversity protection (0.89 out of 100),
water-resource management (18.1 out of 100), and water and sanitation (37 out of 100). A major
environmental concern is the depletion of underground water because of overuse in agriculture,
causing salinity and sea-water penetration into the coastal aquifers. Moreover, Libya is Africa’s
most water-stressed country, with minimal surface water and no perennial rivers, and with only
95 cubic meters of available water per person per year.
Libya signed and ratified conventions on environmental protection before the revolution, in
particular, the Convention on Biological Diversity, the UN Framework Convention on Climate
Change, Climate Change-Kyoto Protocol, the UN Convention on Combating Desertification, and
the Cartagena Protocol on Biosafety. Libya has also adopted the Convention on International Trade
in Endangered Species and the Basel Convention on the Transportation of Hazardous Wastes, the
Vienna Convention for the Protection of the Ozone Layer and the RAMSAR Convention on Wetlands.
However, due to the political and security situation, environmental policies and regulations were
not a priority over the period 2014-15 and little progress has been made in formulating a strategy
to put in place the building blocks for sustainable economic and green growth.
Political context
In 2015, Libya had two governments in place claiming international legitimacy and control
over state institutions and resources. The GNC has its own government led by the Islamist-backed
Prime Minister Omar Al-Hassi in Tripoli, while the internationally recognised HoR government,
dominated by liberals and federalists, is led by Prime Minister Abdullah Al-Thinni in Tobruk.
However, the Tobruk-based government controls very little territory itself and is mostly
dependent on the forces of its ally General Hafter for military support. The struggle between the
two governments has created an extremely fragile security environment, which has facilitated
the emergence and presence of the Islamic State (IS) in the country.
In December 2015, Libyan leaders from the country’s two rival parliaments signed a national
unity agreement in the Moroccan town of Skhirat. Since the start of the political crisis, the
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United Nations Support Mission in Libya (UNSMIL) has hosted several rounds of political dialogue
aimed at putting an end to the deepening political and security crisis with an agreement on the
formation of a national unity government. Efforts have also been deployed during 2015 by the
Arab League, Libya’s neighbours (Egypt and Algeria), the United States and European countries
(notably Italy and the UK) to help resolve the crisis.
The new unity government with members from the internationally recognised government in
Tobruk and the GNC in Tripoli, announced on 19 January 2016, with 32 ministers was rejected by
the HoR on 25 January. A revised list of ministers in early February also failed to win agreement in
the Parliament in Tobruk. Meanwhile, control of the country remained divided between the two
goverrnments and a variety of splinter groups, militia groups and foreign-influenced movements.
Social context and human development
Building human resources
The armed conflict has led to a decrease in school enrolment rates since 2011. The nationwide
school assessment conducted by the Ministry of Education in 2015 reported an average drop of
21% across the country for boys and 17% for girls. Benghazi is the most affected province with
enrolment rates as low as 50% , which is primarily due to 73% of schools’ being no longer being
functional. Out of 239 establishments, 110 are inaccessible due to the conflict and 64 are occupied
by internally displaced persons; education for 57 500 children and students is disrupted as a
result. Across the country, 150 000 children are at risk of no longer having access to education
because of the security situation. In the Global Competitiveness Report 2014-15, Libya is ranked last
out of 144 countries in terms of the quality of education.
Health and protection needs have also significantly deteriorated with the political crisis.
Critical shortages of essential medicines and a run-down primary health-care system have been
reported since the start of the political division, with more than 62% of the population suffering
from low access to health services and essential medicines. The already fragile health system has
also been affected by the decreasing levels of investment in the health sector since 2014, which
was aggravated by the departure of most of the humanitarian and health-care NGOs as a result
of the intensification of the conflict and the expansion of the Islamic State terrorist group in the
country.
Like most North African countries, Libya has a HIV/AIDS prevalence rate that is relatively
low, compared to the rest of the continent. The adult HIV prevalence rate is less than 0.2% with
11 910 people estimated to be living with HIV/AIDS in 2011. However, the 2015 country progress
report for Libya by the National Centers for Disease Control (NCDC) states that the civil war has
resulted in the deterioration of essential services including drug rehabilitation centres, while
creating several additional risk factors with the potential to fuel HIV. In 2012, the HIV prevalence
among people who inject drugs in the Libyan capital Tripoli is at an alarming 87%, according to
the results from bio-behavioural surveys conducted by the Liverpool School of Tropical Medicine.
Poverty reduction, social protection and labour
There is a total lack of tools to measure poverty in Libya. The dramatic decline in government
revenues and spending in 2014 has threatened the state of social safety-net programmes.
Moreover, the civil war restricted access to goods and services including food and health care.
Attacks on commercial ports have disrupted critical food supplies and led to significant inflation.
The price of wheat and flour has increased by 500% and 350% respectively, compared to the precrisis levels. According to humanitarian partners, more than 1.3 million people face difficulties
in accessing food due to lack of resources. The provision of social safety nets is problematic
because of the fragility of the state and the prevailing political conflicts. Until now, oil revenues
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have constituted an immediate and unique financial resource to accelerate the implementation
of social safety programmes. Thus, poverty reduction and social protection are other areas that
depend on the resolution of the political and security situation as well as the economy’s recovery.
Libya ranks 133rd of 144 in terms labour market efficiency, according to the 2014-15 Global
Competitiveness Index. Although the labour law protects labour rights, including working hours,
minimum wage, and the freedom of association, the law does not protect the right of workers to
form and join independent unions. Moreover, the labour-market regulations really only concern
national workers, while the rules pertaining to foreign workers are unclear to most firms.
According to a report published in 2015 by the World Bank on “Labor Market Dynamics in Libya:
Reintegration for Recovery”, while 77% of firms employ foreign workers, only 28% understand the
regulations for employing foreign labour. The quota for Libyan nationals is officially 25% under
Article 51 of the Labour Code. In the private sector, most firms report a minimum quota of 33%
Libyan nationals as required. Prior to the 2014 conflict, a reform to the labour legislation had
begun. However, because of the instability and the fragile institutional environment, there is no
clear enforcement of basic labour standards and labor regulation is not considered as an obstacle
to private firms in Libya, according to the enterprise survey conducted by the World Bank in 2015.
Gender equality
There is equal access to primary and secondary education. However, the Ministry of
Education is paralysed and cannot enforce the commitment to compulsory education because
of the political context. Nonetheless, the latest education data shows no significant gap between
males and females. In fact, 55.6% of adult women have at least a secondary level of education,
compared to 44.0% of men, and there are almost as many women (32%) as men (33%) who hold a
university degree or higher.
Women’s access to economic resources remains. The female labour force participation rate
is still low in all economic sectors. According to the 2015 Global Integrity Report, women do not
have equal access to employment opportunities and benefits in the workplace in law. Female
participation in the labour market is only 30% compared to 76.4% for men. According to the “Libya
Status of Women Survey” 2013 conducted by the International Foundation for Electoral Systems
(IFES), the majority of currently or formerly married women do not have access to independent
economic resources. Indeed, 59% do not personally have financial savings, 64% do not own items
of high value, such as a car or jewellery, and only 12% own land or an apartment.
Equality is still guaranteed for men and women in law. According to the “Libya Status of
Women Survey” 2013, nearly two-thirds of women and men believe that women’s status is at
least somewhat good. In terms of their outlook for the future, 65% of women and 74% of men
believe that following the current conflict, women’s rights in Libya would improve. However,
domestic violence has potentially increased since 2011; there are no sufficient data sources or
statistics on the topic, but with the increased rate of criminality, weapons circulating and lack of
security and laws, women and girls are under greater risk of such violations.
Thematic analysis: Sustainable cities and structural transformation
Libya has undergone spectacular urban transformations since the 1970s, owing to petroleum
revenues. The urbanisation rate is among the highest in the World. In 2014, towns accounted
for 80% of the total population. The appearance of new urban centres and the development of
existing small towns has taken place mostly in the regions of Tripolitania and Cyrenaica, the two
major economic areas. In spite of a voluntarist policy during the last 30 years aimed at limiting
big urban concentrations, the bipolar system around Tripoli and Benghazi has been considerably
strengthened. These two cities alone total 41.3% of the urban population and 35.5% of the total
population.
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The unbalanced geographic distribution of the population and economic activities has
prompted the authorities in the 1970s to adopt territorial development policies for a better
redistribution of populations and enterprises over the entire territory. Urban policies operate at
different levels (territorial, regional and urban) and have successively implemented regional and
urban development tools, master plans for cities of different sizes, national urban development
schemes, and regional development schemes. These policies have had direct and indirect
impacts on regional development, on the recomposition of the urban fabric in the large cities. For
instance, three new industrial cities were established in the Gulf of Sirte, ensuring continuous
urbanisation between northeast and northwest along the coast. In the course of the regional and
territorial development plan launched in the 1970s, the Sirte region was also equipped with new
administrative functions with the transfer of most ministries and public organisations into the
city of Sirte, which has a privileged geographical location on the coastal motorway. Moreover,
the positive effect of the implementation of the urban policies implemented in 1969 became
evident with the impulse of the dynamism of cities like Tobruk, Misrata, Zawya, Al Bayda and
Derna. However, economic activities remain concentrated in Tripoli, Benghazi and Misrata, with
respectively 34%, 24% and 28% of large and medium enterprises according to the private sector
survey conducted by the World Bank in 2015.
Political instability means there are no clear policy lines on urbanisation plans. The public
administration is highly divided, which has led to a severe curtailing of reform plans, and
interrupted the design and implementation of public programmes until the fighting ends and
the implementation of a permanent government can revive long-delayed reconstruction works.
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© AfDB, OECD, UNDP 2016