Libya: The Next Frontier

Does Libya really need Cinnabon, a US fast food chain which specialises in warm cinnamon rolls worth half a person’s daily allowance of fat?

Probably not, but after 42 years of autocratic rule under Muammar Gaddafi’s which isolated Libya’s economy from much foreign competition, the prospect of a more open market is a huge attraction for new entrants.

Cinnabon’s debut into Libya may reek of American capitalism spreading across Africa.  But for foreign investors, it’s a welcome sign that Libya is open for business.  It is likely to propel the country into the investor spotlight, like Wal-mart’s acquisition of Massmart in South Africa earlier this year, the expansion of British retail chain Debenhams into Pakistan, and even the emergence of  high-end luxury retail in Mongolia.

It seems nothing illustrates a new land of opportunity better than an international outlet.

In Deloitte’s Hidden Heroes report, ten countries including five from Africa (Algeria, South Africa, Kenya, Nigeria, Morocco) are listed as having potential for massive retail growth because of their fast growing economies, young and growing populations and fragmented retail sector.

Deloitte says each of these markets is “set to experience rapid retail development in the coming years, aided by the growing presence of global retailers and a handful of  strong local players”.    

This could be Libya, with a wealthy population of about 6 million with a penchant for sweet goods (apparently Libyans love Nutella-filled croissants for breakfast).   That is if it weren’t for two huge obstacles standing in the way; a lack of basic infrastructure and rampant corruption.

Although oil companies were the first to return to Libya post-uprising and have helped it climb back close to pre-war output levels of 1.6 million barrels per day, the country is crying out for basic infrastructure development as well as investment in property and telecoms after a fifth of transmitter stations were destroyed in the war.   It also needs foreign investment and expertise to improve oil and gas production.

But one of the most difficult choices facing the new Libya is how far and how fast to dig into the corruption of the former regime, which US cables have described as a “kleptocracy“.

Husni Bey Husni, a Libyan business tycoon who told of the corrupt business practices under Gaddafi, has come to “perfectly encapsulate the problems of a country moving from dictatorship through revolution and into a highly uncertain future. He may have as much or more to contribute to Libya’s bid to join the stable economies of the world as anyone, but he must also answer questions about his past”, Sarah A. Topol writes in her Bloomberg Businessweek article.

“If I’m a crook, why do they want to be like me?”, Bey says of the “many kids, youth and grown ups” who he says see him as a “role model.”

For Libya’s sake, let’s hope Bey isn’t viewed as the role model he claims to be.

One Comment

  • Posted August 23, 2012 at 10:39 pm | Permalink

    Great post!

    I will get behind Cinnabon in Libya only if they can compete with the quality standards set by KFC’s first franchisers in Azerbaijan. The key is using ‘only qualitative local materials’. It also demands somehow getting a hold of ‘special cookies and potato products used in the preparation of sandwich.The last require special accuracy of cutting for accordance of it with accepted standards. Our Poland supplier corresponds to these standards much more’. Forgive me if I remain hopeful, but sceptical.

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