Ahmed Maher
‘Whoever wants to win should come’ as the oil-rich nation rebuilds and opens up to the world, Mohammed Ali Al-Hawij tells Al Majalla.
Libya is stuck in a political impasse, with the country split between rival power centres claiming legitimacy to control the nation.
Talks over a constitutional framework to help set up elections that could restore a unified government have yet to reach any agreement. This uncertainty persists after the country has been hit by the shockwaves from a range of factors, from the COVID-19 pandemic to Russia’s invasion of Ukraine.
Then came the catastrophic floods in September. They killed at least 5,000 people in the eastern city of Derna and left behind significant challenges related to reconstruction. A quarter of the city’s neighbourhoods were wiped off the map. Thousands of people are still missing.
It adds to a sense of fragility rooted in the political division that followed the 2011 civil war, which has already had far-reaching economic implications. Libya’s gross domestic product per capita fell by 50% between 2011 and 2020, when if it had continued on its pre-conflict trajectory, it would have risen by 68%, according to the findings of a recent report from the World Bank produced after the Derna disaster.
Floods in September in Libya killed at least 5,000 people in the eastern city of Derna and left behind significant challenges related to reconstruction.
Libya has significant potential if it can leverage its considerable financial resources.
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That message was conveyed in an interview with the minister for economy and trade in the internationally recognised Government of National Unity – Mohammed Ali Al-Hawij – who spoke exclusively to Al Majalla.
Here is the conversation, which was held in Tripoli.
Did the Derna disaster reveal the depth of Libya’s political crisis?
Disasters occur in all countries, especially because of floods. Still, in Libya, we suffer from the negative impact of divisions among state institutions, political instability, the suspension of projects since 2010, the cessation of maintenance programmes for dams and other facilities, and the lack of legislatively approved budgets.
This may have led to the emergence of corruption, which isn’t limited to financial corruption. This is a clear indication of the divisions marring Libyan institutions, and this may lead to some damage, such as the lack of maintenance of dams, for example, and the cessation of development projects.
What do you think of the International Monetary Fund’s warning of Libya against complete dependence on oil despite increased production?
We started with a new vision: to diversify a national economy that isn’t dependent on oil. We try to see more agricultural activities to boost food security – examples include wheat production, olive oil production, and cereal production or industrial activities, relying on national raw materials. We know that Libya’s strategic location helps in this direction, and Libya has many resources. Hopefully, after seven years, the Libyan economy will be one of the best in the new vision.
Are you still facing a challenging investment environment due to the political division, despite the dealings of several large countries with the Government of National Unity?
All fields are open to foreign companies, whether European, American, or Arab.
Now we offer them all facilities, whether 100% foreign or in partnership with Libyans, especially in technology. Libya’s geographical location is rich in transit trade, solar energy, and proximity to Europe and Africa. Libya is a rare investment opportunity in the Mediterranean and even the world.
Now, the opportunity is available to all countries. We have no reservations about any government or any sector, including oil. Oil is also available for foreign companies to invest in exploration and other activities. All sectors are open.
The law is a guarantor, and there are great incentives. Law 109/2010, with its fortified articles, is known among international laws. There’s no priority for one over another, and controls and conditions are set by the National Oil Corporation (NOC).
Libya is trying to raise its oil production rates and reach normal levels during the first quarter of next year.
We now produce 1.2m bpd , and OPEC has set our quota at 1.4m bpd. The NOC has set its goal of 2m bpd in the short term; we must now develop our fields to reach that goal; the main target is 3m bpd, but we’re talking about the target in the short term.
Now, the opportunity is available to all countries. We have no reservations about any government or any sector, including oil. Oil is also available for foreign companies to invest in exploration and other activities. All sectors are open.
This programme has really been influential in development, so any company that enters into exploration or drilling with us from any country is welcome. Higher oil prices have positive effects on any oil-dependent economy; it increases fiscal reserves. It also helps cover expenses.
As I told you, oil and gas finance 98% of the Libyan budget; the higher the oil price, the higher the revenue and the more the financial reserves. Oil is a commodity we sell, and if prices increase, we will not object.
Libya is entering a reconstruction phase in all fields, especially in Derna. Hence, financing is needed. Where would it come from?
Either from domestic oil and gas resources, from the private sector, or foreign investment – there are three primary resources from international banks: the Islamic Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development.
Today, these are some of the sources of funding.
What are your main goals in the next five years?
We have three goals.
First, political stability. This is number one; the countries of the world are helping us in political stability that leads to the unification of institutions.
Second, economic development, which comes by diversifying the economy so that we don’t depend on oil only. Therefore, the outside world gives us stability, so that we can achieve economic development; economic development contributes to foreign investment, which we welcome – from funds, international and Arab banks, such as the Islamic Development Bank, the Kuwait Fund for Arab Economic Development, and others.
Third, the international community is helping us by contributing to management and the provision of a vision. The 10-year vision for Libya depends on diversifying the resources of the economy, as I said, such as agricultural and industrial activities, services, petrochemicals, and so on.
The international community is helping us. The 10-year vision for Libya depends on diversifying the economy’s resources, such as agricultural and industrial activities, services, petrochemicals, and so on.
Because of the period of instability in Libya, international reconstruction funds can engage with us, primarily like those of the Gulf countries, and their contribution to either investments or reconstruction funds to finance major infrastructure projects.
We’re part of this world, so we ask the countries of the Arab League, the European Union, North America and countries like China to engage with us in the reconstruction of Libya in all fields.
Two years ago, Libyan Prime Minister Abdul Hamid Dbeibeh announced the launch of the “Return of Life” scheme for development programmes and projects in Libya. Where does this plan stand now?
There was no stability in the previous phase, but today, we have projects that the Government of National Unity collectively called the “Return of Life.”
There were large contracts in the past that were put on hold in 2010-2011; Turkey, for example, has large contracts that will be relaunched, and the Government of National Unity is now seeking to revive all old projects such as railways, highways, airports, housing, city development, and universities.
These are all aimed at reconstruction, especially in frozen old contracts with Korea, Italy, and Turkey. We’re now, as a government of national unity, reviving these projects and developing new ones. It’s important to engage the private sector and its capital. We’ve now moved from dependence on the State to dependence on the private sector, whether it is a local private sector or a foreign private sector. We’ll rise in a short time because we want to save time.
In the relevant ministries – the Ministry of Economy, the Ministry of Planning, the Ministry of Finance – we’ve started to develop a vision to diversify the economy with the aim of reducing the contribution of oil to GDP.
We want to decrease this contribution from 70% to 40% only, and we want oil, instead of being sold as a raw material, to be converted here into industrial products. As you know, alternative energies, such as green energy and solar energy, have begun to compete with oil. We have focused on solar energy to generate electricity, the construction of half a million housing units, airports, transit trade facilities, and roads.
We’ve started to develop a vision to diversify the economy with the aim of reducing the contribution of oil to GDP. We want to decrease this contribution from 70% to 40%, and we want oil, instead of being sold as a raw material, to be converted here into industrial products.
We are considering a road between Misrata and Niger and a road from Benghazi to Port Sudan. This is in addition to completing universities and sports facilities. This is in terms of infrastructure. As for wheat production in the south, we encourage the private sector in southern Libya to pursue projects in this regard for us to be self-sufficient with wheat.
The oil sector was also dead; now, life is returning to it, and oil services are provided by Libyan labour.
So it seems the investors who come to Libya today will win first?
We’re entering the investment stage, and we welcome everyone. First come, first serve.
We mean the Gulf states. We have ports, for example, and this is an investment that we must welcome. Also, we have some industrial sectors. Libya is a gateway to Africa and a gateway to Europe, and it has many sectors. We’re waiting because investment is still weak. Hence, we encourage it.
In the past, it was all governmental, but now we encourage the private sector and all countries that invest in Libya in all fields – there’s no reservation in any sector.
Libya has a lot of wealth, but what about security while armed groups loyal to two governments deploy in the east and west of the country?
Currently, we’re investing in areas with arrangements, such as free zones in Misrata, Benghazi, and Tobruk – all considered safe.
Even the south is safe. We’re addressing a misconception that has taken root in the minds of many over the past years. On the contrary, these places are all secured by armed forces.
We’re addressing a misconception that has taken root in the minds of many over the past years that Libya is not safe. On the contrary, these places are all secured by armed forces.
Unlike previous years, investors are secure in any place they choose for their project. We also secure investors from a legal point of view.
Ultimately, whoever comes now will win now… Whoever wants to win should come to Libya. As I said in the beginning, the oil sector was also dead; now, life is returning to it, and oil services are being provided by Libyan labour.
As I said, the NOC has established a promising scheme under the prime minister’s guidance. I would also like to emphasise that investment is safe again, and as I mentioned, we invest in some sectors and encourage investment in other sectors, especially agriculture.
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