By Sami Zaptia
Tripoli, 11 December 2013:
At the Tripoli Chamber of Commerce organized conference on the “Shadow Economy – Phenomenon, . . .[restrict]effects and solutions” held in Tripoli on Monday, Economy Minister Mustafa Abufunas confirmed that five SME funds had been created in five cities.
“We are working on the details of the laws and regulations”, he explained, adding that Libya had not had “a process for loans based on Islamic banking” and that this was being worked on.
The Minister further explained that the plan was for the five funds to be based in Libya’s five main cities (Tripoli, Benghazi, Sebha, Misrata and Zawyia) and that Libya was in contact with “numerous” local and international banks for cooperation in this project. He did not reveal the names of these banks.
Libya’s current banking sector is equally awaiting government reform. The current regulations provide no incentive for the sector to lend to the private sector, let alone the risky SME/start-up sector.
Libyan banks, especially the state-owned banks, are happy to continue acting as the safe deposit for the Libyan government until the Qaddafi-era laws which offer little legal capability to recover their assets are reformed.
For example, they await the Central Bank of Libya’s completion of its credit bureau which would enable them to carry out a standard credit check on loan/credit applicants.
It is worth noting that many analysts see an important link between Libya’s ability to provide employment and business opportunities for its youthful population, and its current security situation.
Many of Libya’s unemployed youth were the thuwar or militias that took part in the armed uprising against the Qaddafi regime in February 2011. It is felt that unless the Libyan government is able to offer business opportunities including loans, it would be difficult to convince the thousands or even tens of thousands of armed militias to give up their weapons and return to civilian life.
Therefore, a viable SME policy and a system of micro loans for start-ups is deemed as an essential pre-requisite to a vibrant small business sector and Libyan political stability and security.