Kawthar Zantour
No stranger to rivalries, the governor of the Central Bank of Libya is technocrat who has had to develop his political wiles, most recently clashing with the prime minister. Is this the next Gaddafi?
When he is in the country, Sadiq al-Kabir works in an office in an historic building on Tripoli’s seafront, but he is just as likely to be working from hotel suites in Tunisia, Malta, or Turkey.
Custodian of Libya’s finances, al-Kabir does not need familiar surroundings to do his job. He needs SWIFT codes (to make international transfers), a network of regional alliances (to provide support), and a knack for networking and striking deals.
Dressed elegantly in Italian suits, al-Kabir exudes a quiet calm with an easy smile, but he is cautious in the information he offers, and gives little away when questioned.
Al-Kabir has long shown that he has what it takes, having run Libya’s finances for 13 years, building support and interest in global financial circles. After all, this benighted North African country still has much to offer.
Doing well at his job for this length of time has permanently raised the governor’s profile. By contrast, most central bankers become known to the wider public only in times of financial crisis.
Ultimate survivor
During al-Kabir’s tenure, Libya has seen two civil wars and near constant political turmoil. The only institution to function throughout has been the central bank. Indeed, he appears immoveable.
Since he was appointed in 2011, six prime ministers have come and gone. Most have tried to remove him, but to no avail. This has slowly led to a shift in power, not least because high oil prices have kept billions of dollars flowing into the treasury, and he holds the keys.
Al-Kabir’s decisions cover a growing area of influence, from the traditional finance remit of a central bank to economic and investment issues, development areas, and, increasingly, diplomatic and security fields. He even has a say on military matters.
The governor’s most recent spat—with Libya’s internationally recognised prime minister, Abdul Hamid Dbeibeh—is merely the latest round of the now well-known struggle to control Libya’s significant financial resources.
In March, al-Kabir effectively devalued the dinar currency and asked parliament’s speaker to approve a more unified government. This was interpreted as a direct challenge to Dbeibeh in Tripoli, with whom he is at odds.
Al-Kabir has taken a particular dislike to off-the-books spending by the Government of National Unity (GNU), which is recognised internationally but not by Khalifa Haftar’s House of Representatives parliament in Libya’s east.
Around 2.4 million Libyans (out of a total population of 7 million) are on the public payroll, so when Dbeibeh announced public sector pay rises recently, al-Kabir was quick to squash this. It is al-Kabir, ultimately who pay their wages.
Guarding the vault
Foreign exchange reserves were valued at around $82bn at the end of 2022. Libya also has one of Africa’s high gold reserves, estimated at around 140 tonnes. Al-Kabir has built up the national pot, not reduced it, but corruption remains a big problem.
Last month, the heads of the customs authority and of Misrata Airport were arrested along with others for trying to smuggle 26 tonnes of gold out of the country. The bullion, which was recovered, is valued at around $2bn.
Accessing the central bank’s reserves has been politicians’ goal since the 2011 fall of Muammar Qaddafi, who ruled Libya for 42 years, having led a military coup to depose the country’s monarchy and proclaim the state as a republic.
Al-Kabir was a member of Gaddafi’s regime but turned against it early in the revolution. This gave him legitimacy after it fell.
Today, his role is that of banker, statesman, guardian of the nation’s gold and currency reserves, and an ally of the United States, with internationally sound credentials. If he keeps seeing off rivals, analysts wonder whether he may be a new Gaddafi.
Public spending
The current dispute with Dbeibeh over public spending broke out last year, interrupting a period of relative calm in Libya’s rambunctious post-Gaddafi politics.
Al-Kabir said there was an agreement between him and the government that the central bank would help public spending reach $87bn during Dbeibeh’s three-year tenure. Later, he felt forced to criticise “parallel spending from unknown sources”.
Libya’s recent history suggests the governor is more likely to emerge the winner in any fight with the government, and al-Kabir has some significant global backing, including from the International Monetary Fund (IMF).
In May, the IMF signalled its support for him and his policies. It noted an expansion in public spending last year due to wage rises and bigger fuel subsidies, but said foreign reserves remained “comfortably significant”.
The central bank tried to limit the use of foreign currency by tightening controls on letters of credit, reducing available limits for personal foreign currency purchases, and imposing a temporary 27% tax on the official exchange rate of foreign currencies.
In Libya, al-Kabir divides opinion. Some see him as a statesman, others see him as a thief. He is described as the last of the revolutionaries and a political kingmaker.
A senior banker who worked with him for years told Al Majalla that al-Kabir was “a competent banker”, adding that “keeping him at the central bank for years might be the best for Libya”.
They continued that “despite the criticisms, mistakes, and deviations, in my opinion, looking objectively, considering the available resources and the country’s situation, al-Kabir has proven highly skilled in preserving Libya’s reserves and wealth.”
With help from friends
Al-Kabir, whose rise owes something to luck, grew up in the Belkheir neighbourhood of central Tripoli, just metres away from the central bank building.
He built important relationships with central figures who helped shape his destiny, including Muhammad Al-Bukhari, a finance minister under Gaddafi, and Abdel-Razzaq Al-Awadi, a businessman and former leader of the Muslim Brotherhood.
In 1988, al-Bukhari entered al-Kabir into Libya’s elite, appointing him chairman of Umma Bank (the largest state-owned bank) when al-Kabir was in his early 30s.
Nepotism gave him a golden start, but he soon had a major setback, when it became clear that al-Kabir was among the senior figures to have signed off loans and real estate deals that went sour, leading to the bank’s collapse.
He was sentenced to three years in prison in the early 1990s, but served three months before going to Tunisia, where he took up a position at a bank in which Libya was a major shareholder.
Al-Kabir’s adversaries brought this up when he was appointed head of Libya’s central bank. His backers say that, during that period, there was simply no realistic alternative but to follow Gadaffi’s orders.
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