By Sufyan Maghur.
8 November 2012:
It is clear that Libya’s economy has always been centralized and dependent on the central government for survival. This has created a complete failure of the private business specifically the small business sector. Libyan employees are always looking for a job in the government sector and as the current situation continues unemployment will increase and that guarantees the continuation of current turmoil.
Arms and militias are not Libya’s only current dilemma but rather a result of the unemployment epidemic and lack of experience that is plaguing the youth in the country. Libya needs more than ever a crucial municipal economic plan that will not only help the small business sector but rather to assist in training and hiring of youth currently being lured into militias and un-lawful groups.
Currently the Libyan economy or rather contract opportunities are all controlled by the central government represented by the Ministries, Army and GNC. This is the case also for tenders for work to be completed all across the country whether it is for a central agency and or municipal level such as garbage collection, road construction, housing projects, health projects and information technology projects.
This has created the need to restrict most of these projects to large companies with great experience which as a result excluded most Libyan companies for the following reasons: the limit of capital, small manpower capacity, lack of nation-wide geographical spread and lack of experience.
This void had easily attracted foreign companies, whether regional or international, and gave the central government an excuse to offer some projects exclusive to international bidders. This will never help the Libyan economy or address the un-employment problem. In fact it is increasing the unemployment amongst young Libyans and giving almost all crucial work to foreign workforce.
The Gaddafi regime had effectively put a halt to the small business sector and destroyed the private economy. There was no option for the youth but to look to the government for a job, car, housing or educational grant to study abroad. Mostly all of the programs and or options had no positive futuristic benefit to the individual or the economy – it also created an opportunity for corruption and the enrichment of the few.
The Libyan governments needs to look deeply and effectively at solutions that will ensure the enrichment of the local economy and assist in creating more jobs not only in main cities but across the municipal levels.
There are many options that the government has but I will point out some that in my opinion will help in creating the start of a solution.
Create smaller projects nationally (Across Municipal levels) instead of Centralized National Projects
Currently all government projects are considered strategic and are controlled by the central government. This is the main factor for recent calls for federation. The government must split all these projects into smaller municipal/regional work opportunities allowing companies to operate on a smaller project and restricted to their geographic location.
It is a fact that this can not be implemented for all the government projects but with a careful study it can be done in most of them. This has been tried and is being implemented all across the world and has proven its success.
I will give a strategic project as an example (The Driving Licence Issuance System). This is a centralized initiative that is to be implemented under the Ministry of Interior (Traffic Police Division). The project will be put forward as a national system only allowing multi-national companies to put forward a bid and will not only create a centralized solution but the work itself will limit Libyan workforce and exclude them from gaining experience.
Instead of placing one bid the Ministry Information Technology Department should come up with a document stating the mandatory standards required for this projects (Including the technical specifications and encoding requirements) and for the Ministry to forward these requirements and standards to each Municipal Office for implementation. This will allow local companies to work on a smaller scale with smaller projects and will allow the distribution of work while creating a national system that can be integrated in a central database once each municipal system is ready.
Develop an independent municipal administration governing policy.
Municipal governance is a great solution to limit the need for a complicated national policy to address all issues from Economy, Health, Security and Education. Libya is a vast country with different regions with complicated issues. It is a fact that an effective Municipal government structure will allow each region to control its local matters and empower itself.
The Libyan population did not only rise against the Gaddafi regime for national independence but most importantly for regional and municipal independence.
Create incentive programs for small Libyan business (Or international based in Libya) to hire young Libyans.
In many countries (such as Canada and the USA) there are many programs ranging from low tax and hiring assistance policies that not only encourage local small companies in getting work but rather to hire the country’s youth and recent graduates. They range from paid intern grants to minimum wage compensation to the companies.
Libya now needs to implement these programs to encourage Libyan companies and international companies based in Libya to hire the unemployed and create more job opportunities for Libya’s youth outside of the government sector.
Developing a national training assistance program for Libyan youth.
Libya has always been keen on creating education programs abroad ranging from M.Sc. to PhD and other specialized degrees but rather lacked the practical training programs. Libya’s youth has at least in most cases achieved a higher College or University Degree but in most cases lack the practical experience and knowledge.
The government needs to provide assistance programs in either monetary or specialized training programs and across the different regions to provide the most needed practical training in all fields. This may include IT, mechanical, electrical and health services allowing the youth to gain experience and knowledge needed for practical jobs and not only ready for office positions.
Establish a monetary fund for a loans and or grants program for local businesses and private projects.
Most Libyan private companies suffer from the limitation of working capital and this limits their operations and their hiring needs, which in turn create a smaller company preventing them from expansion and from bidding on bigger projects.
The Libyan government needs to create a fund that will allow small companies to access cash allowing them to expand and operate on a bigger scale. This is a guarantee for a successful private sector while guaranteeing the government a return with greater employment and tax revenue benefits.
None of the above can be implemented perfectly or without corruption and flaws, but it is a risk that the government has to take hand in hand with putting in place precautions and rules in an attempt to limit the negative side effects and increase the benefits.
Libyan youth are forced to either wait for the government to create jobs for them or face unemployment. The alternative now is to join a militia or create one for some who have the capability to do so. This situation will not be resolved by the use of force alone but rather it requires the government to address the situation in a more rational way that will not only eliminate the militias but also help the economy.