14 - 20 December 2000
Issue No.512
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Al-Ahram Weekly On-line 14 - 20 December 2000 Issue No.512 |
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Tapping the global economy
Uncharacteristically, the streets of Tripoli, Libya's ordinarily sleepy seaside capital, buzz with activity these days. The United States sanctions against investments in Libya are still in force, having been renewed only last week, but the influx of European and Canadian visitors has turned Libya, once firmly closed to Westerners, into something of a Mediterranean Cuba.
Tripoli took on a drab and dreary façade during the ten year United Nations economic and trade embargo. Now the bulldozers and fork-lifts at work around construction sites throughout the city seem to be giving the capital a face-lift. Shops are flooded with imported luxury and consumer goods which until only a year ago were in very short supply. Exquisitely appointed seafood restaurants crammed with European businessmen and women are mushrooming around the city and its coastal environs.
The hotels, staffed by Moroccans, Tunisians and black Africans, are teeming with European tourists who spend a couple of days sightseeing in Tripoli before heading to other parts of the country to take in Libya's other attractions. Topping tourist itineraries are the amphitheatres of Leptis Magna, the largest complete ruin of a Roman city outside Europe and a veritable open air museum a mere two hours drive from Tripoli, and the oasis town of Ghat 650 kilometres south of the capital. Package groups of desert tourists go further afield to inspect the unique Berber architecture and cave dwellings of Jebel Nafousa south of the Libyan capital.
Even more dramatic scenery awaits the intrepid explorer from Europe in Cyraenica and the Green Mountains of eastern Libya's ancient Greek Pentapolis cities and the pre-historic engravings of Fezzan and Ghadames in the far south. Visa requirements are still rather stringent and entry visas difficult to obtain, but such obstacles do not seem to deter the determined businessman or curious visitor.
Listening to proceedings at the gathering on 14-15 November of over 170 businessmen, bankers and brokers from Europe, Canada, South Africa and Asia, it looked as though major economic policy matters in Libya centre on African affairs. The Libyan leader Muammar Gaddafi made a surprise appearance on the second day of the conference and addressed the meeting. "We want to encourage foreign investment and partnerships not only for the benefit of Libya but in the interests of the entire African continent. Joint ventures with foreign companies are most welcome, especially for projects that will provide consumer goods for Libyans and for export to African countries. Libya is Africa's gateway to Europe," he told participants.
Media commentaries in Libya are focused almost exclusively on African concerns. The reason behind this tendency is understandable. In recent years, Gaddafi has emerged as the leading champion of African economic and political union. Over one million immigrants from African countries both north and south of the Sahara, accounting for a sixth of the population of barely six million, currently work in Libya. Violence between guest workers and their Libyan hosts erupted after a fracas following a football match in September. A couple of thousand Africans were repatriated and the returnees reported that they were subjected to beatings, arson and racial slurs.
"We regret the skirmishes that took place among brothers because there are hidden hands which took advantage of the circumstances," Gaddafi told meeting participants. "The enemies" must not be given the "opportunity to block African union," he said. Conference chairman Omar Muntasser, head of Libya's Planning Council, concurred, but revealed that the number of new employment permits for foreign workers was decreased following the incident and the number of guest workers permitted each year has been capped at 46,000. Nevertheless, Libya remains committed to strengthening ties with Africa south of the Sahara. The Chinese are building road and rail networks linking Libya to its southern neighbours Niger and Chad to facilitate economic and trade links with central and West Africa.
Saleh Abdullah Abu Khrais, chairman of the Benghazi Chamber of Commerce and an executive member of the board of Libya's General Federation of Chambers of Commerce, told Al-Ahram Weekly, "Libya's 1997 Law No 5 encourages foreign investment in all sectors of the Libyan economy including the exploitation of non-oil mineral deposits, agriculture, manufacturing, tourism and telecommunications." Libya's antiquated infrastructure, transport and telecommunications sectors are in dire need of upgrading.
With a US$3 billion trade surplus and no increase in public debt for the past five years, Libya is embarking on its third five-year development plan starting next year. Under this ambitious plan, a staggering US$35 billion are earmarked for investment in 2001 alone. "Foreign participation in the plan is not only welcome, but necessary. We are determined to create the right atmosphere for foreign investors. Already we have perhaps the most liberal investment code in northern Africa," Abu Khrais said.
However, a major impediment to investment is Libya's three-tiered exchange rate system. The commercial rate is US$1 to the Libyan dinar (LD), the corporate rate is US$1 to 0.55 LD, and there is a third special rate for government transactions. Weaknesses in the tax and commercial code also act as deterrents to foreign direct investment (FDI).
Oil wealth has been a double-edged sword. It was the main reason that FDI was put on the back burner in the past. Today, Libya hopes to use its mineral riches, including hydrocarbons, to attract foreign investment. The non-oil sector accounts for 12 per cent of Libya's gross domestic product and local industry supplies almost 30 per cent of Libya's requirements for basic manufactured goods. The process of deregulation has already enticed foreign companies, but the Libyan government is aiming for far greater foreign participation, or so its officials say. The big question now is how much further this trend will continue. At any rate, having opened the door, Libya will find it hard to slam it entirely shut again, even if political entanglements and bureaucratic constraints do seriously slow the pace of change.
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