GUEST POST: Interview With A ‘Rebel Economist’

“Boom times have arrived in Libya,” declares this analysis of the country’s economy in Revenue Watch.

The tangible and intangible proof is there. Cafes and restaurants are heaving and US franchises are choosing to open along Tripoli’s beautifully historic, and untouched streets.

There are high hopes for the future, Revenue Watch says:

In 2012, Libya’s economy grew by 122 percent, by far the fastest growth rate in the world. One reason for such high growth is the economy’s collapse during the revolution; however, GDP is expected to grow another 17 percent this year, faster than all but a handful of countries.

But much more needs to be done, say economists and bankers on the ground.

Rebel Economy spoke to Alaa El Huni, a Libyan investment banker who was part of the opposition’s economic team during the revolution. Their work was often described as constituting the “Rebel Economy”.  He explains that Libya has a long way to go before boom times. 

  • 1) We are already seeing signs of major reconstruction along the coast and a boom in consumerism. As Libya rebuilds after its revolution, do you see the country transforming into a tourist haven with foreign companies taking a dominant role? 
Alaa El Huni: There are numerous elements that Libya must consider and work on to properly promote tourism in Libya. This is not currently being considered one of the key priorities for Libya. There is large scale investment in infrastructure in Libya, but this is more targeted at ‘redeveloping’ Libya due to the current state of the country. There has been very little investment in infrastructure in Libya, and the bulk of investments are targeted at improving the standard of living (housing, roads, ports, power, telecommunication, etc).
There is, and will continue to be, government-driven investment in hospitality and tourism but this is merely enough to bring Libya to basic touristic needs, both domestic and international. I firmly believe that for a proper industry to flourish in tourism, the following elements must be in existence:
A) Security: Due to the current post revolutionary security situation in Libya, the situation is not conducive to promotion of tourism.
B) Investment from the private sector: Coupled with investment from the government sector, private sector investment is a clear requirement. Complementary services from the hospitality industry are needed (restaurants, entertainment etc)
C) Travel and Logistics: Currently, Libya is seen as one of the toughest countries to secure a tourist visa for. The costs are very high, the procedure is very bureaucratic and opaque, and it applies to a very large amount to foreign countries.
  • 2) Is the government spending money in the right places?
AH: I think the issue of government spending is better defined as the governments ability to spend.

[caption id="attachment_1466" align="alignright" width="255"]Alaa El Huni Alaa El Huni[/caption]
There is a strict limit to the government’s abilities to truly spend the budgets that are being approved. The current systems are ones that have developed from the same systems in existence over the past 40 years in Libya. Current government budgets are nearly double those prior to the revolution, and unfortunately there is a limit to the ability of the government to spend these amounts properly.
These are bottlenecks, from the government’s perspective.  For example, there is a ceiling on the number of qualified, skilled and experienced people on the ground but there is a much larger demand than available.
There are also limits to how much our sea ports can receive and process, hence curbs how much can be imported, and how much work can be performed. This ultimately restricts our ability to work on additional infrastructure works, like building more ports.
I believe the key issue is that governmental infrastructure that had been previously put in place was based on an antiquated “old” regime that had been in power. This system still needs to be upgraded and expanded (technology, processes, systems, human capital etc), and as it currently stands it will be very difficult for the government to efficiently and effectively spend as per the recently approved budget.
  • 3) Libya will provide Egypt with the equivalent of one million barrels of crude per month at world prices to support the economy. It has also provided $2 billion to support Egypt’s central bank. How have Libyans reacted to this financial support at a time when their own country needs massive reconstruction and investment? 

AH: There was a clear public backlash, but I truly believe the real mistake was the PR and Communication initiative behind this decision. There was no clear message sent to the Libyan or Egyptian people regarding this matter.

Much of the Libyan public sentiment was that a deal was brokered between the Libyan and Egyptian governments. They believe that there is a direct correlation between the extradition of key members of the old Gaddafi regime that are residing in Egypt and the financial pledge from Libya to Egypt. In essence, it is like Egypt sold these people back to Libya. The key individual that Egypt was meant to hand over was Ahmed Qadhaf Al Dam. This belief is similar to the one voiced by the Libyan public over the hand over of Baghdadi (Tunisia) and Abdullah El Senussi (Mauritania).

Post a Comment

Your email is kept private. Required fields are marked *