The most recent World Bank report on Libya, published in April 2018, acknowledges relative economic growth after four years of recession (+27% GDP in 2017). However, the macroeconomic scenario remains weak and unstable due to high inflation, increasing budget expenditures and domestic debt, precarious public finances, inefficient subsidies, weak basic public services, shortage of food and commodities, rising prices, and an unstable balance of payments.
These weaknesses continue to deteriorate the well-being of ordinary Libyan citizens, worsening their living conditions and exacerbating poverty and social exclusion. Moreover, in addition to the immediate impact of the economic crisis, weak fundamentals hamper the prospects of medium- and long-term recovery. Third, the Libyan economy’s vulnerability negatively affects the political reconciliation process: by entrenching what Mr. Salame’ defines as “an economic system of predation”, economic instability feeds armed conflict and leaves no breathing room for constructive political solutions that can gain the support of the public opinion.
So far, both international community efforts and the UN-led process have been primarily focused on addressing security issues and the political strife, as these are paramount conditions to launch Libya on a finally stable and sound path. However, one can argue that setting-up a sustainable socio-economic agenda could lead to extremely positive results, not only for the economic growth itself but also as a key lever for a unified, peaceful and socially inclusive nation.
Before taking into consideration the beneficial impact on the political process, it is worth mentioning what promoting and implementing a sustainable socio-economic agenda consists of. Libyan leaders shall have an ambitious and broad goal in mind that is well-being of their citizens and, to succeed and pursue it effectively, shift from the limited definition of economic growth to the most comprehensive one of sustainable economic growth. In other words, it becomes crucial to put in place a decisive approach that goes beyond GDP and bring the country on track to improve prosperity and ultimately to convert its wealth and economic growth into well-being, therefore making progress in Libya sustainable, over time.
A sustainable socio-economic agenda for Libya aims at improving the living conditions of its people, by formulating an economic development strategy, ensuring clarity of goals and prioritizing targeted and concrete actions, consistent with the goals. To pave the way for improvements in well-being for Libyans, it is critical to favor steps that deliver the biggest impacts, acting on three elements: economics, investments and sustainability. Economics means creating and supporting a macroeconomic system that leads both to an appropriate and efficient allocation of Libyan resources and to entrepreneurial innovation. It calls for actions on income, economic stability and employment promotion. Investments are fundamental to foster human capital and physical assets and to clear the ground for a competitive economy that is open and rich of opportunities, for all the Libyan people. Investments in Libya shall reflect into effective initiatives on health, education and infrastructures, to make services available to everyone across the country. Lastly, sustainability refers to socio-economic inclusiveness and environmental protection, embracing powerful strategies on income equality, civil society and governance.
In other words, Libyan leaders and policy makers need to concentrate their efforts on a limited number of key priorities: promoting adequate investments in human and physical capitals; building up a stable fiscal and economic system; allocating public budgets toward basic services, such as education and health, in order to ensure good standards; strengthening the institutions that are accountable for the proper management of Libyan resources and assets and also facilitate the involvement of civil society into the process.
In an attempt to recommend a comprehensive vision with concrete actions to start relaunching the economic and social fabric in Libya, it is crucial to focus on the most immediate challenges that the country is facing. For example, developing infrastructures in Libya is vital as they facilitate both economic activities and well-being for its citizens. Electrical power grids and transportations, such as road and railways, are enablers for productivity and innovation. Improving education by providing a high-quality and unified education system across Libya, from primary schools to universities, is beneficial also in terms of expanding opportunities in the labor market, as human capital is the most valuable asset. Improving heath-care and implementing a unified system of hospitals and medical clinics in Libya also represents a priority, as health-care is one of the most powerful improvement of well-being for the people and it can also positively affects income equality and social inclusiveness. Other - hitherto overlooked - major drivers of the economy are the promotion of entrepreneurship in the business sector and private sector diversification, in order to boost jobs creation and attract foreign investments in Libya.
This suggested mix of strategies for Libya should also be accompanied by two key principles. It is important that Libyan stakeholders are clear about goals and priorities, as it is much easier to match them with targeted and concrete actions, during execution phase. Further, actions shall be feasible to implement, as ambitious goals empower change but pragmatism is a condition to succeed.
As briefly mentioned above, setting-up a socio-economic agenda for the next decade in Libya can be a catalyst for change, smoothing the transition towards a solid road-map and driving the nation into a promising future. At first, taking into consideration an economic program has the benefit of overcoming the political discord, as this agenda is necessarily oriented towards the potentials and growth of Libya itself, and therefore distant from any political obstacles and opposing factions. Second, pursuing a socio-economic agenda with the main goal of converting wealth into well-being for the Libyan people helps to establish and nourish a more inclusive climate for citizens, as they increasingly experience better living standards and therefore feel encouraged to take part into the democratic phase. Third, building-up a socio-economic agenda also means “planning” an overarching framework that links clear and ambitious goals with targeted strategies, capable of delivering tangible results for Libya.
Planning is therefore crucial as it allows the international community’s involvement and commitment, as it set the operating framework for a safe platform through which foreign investments are properly managed and channeled, in compliance with Libya’s socio-economic priorities. The same is true for Libyan financial levers and resources - such as frozen assets and oil revenues - that in this way can be “unlocked” and adequately used by the legitimate institutions to redistribute them equally among the people and create impact. Fourth, promoting the debate on the socio-economic agenda might foster and accelerate the political dialogue itself, towards a unified nation. Indeed, this agenda aims at pursuing the common good for Libya and the well-being for its people, through a list of priorities - such as education, health, infrastructures, etc. - that are binding elements for the nation and beyond the adverse centers of power, regional interests or any other political influence. Lastly, planning a socio-economic agenda in advance creates all favorable conditions in Libya for its accurate execution, as it allows periodical monitoring and checks, to successfully implement the concrete strategies and measure them.
It is therefore urgent to create and set the necessary conditions to launch a Libya Vision 2030.
The first condition is the restructuring of the main financial institutions from a national unity perspective: The Central Bank of Libya, Libyan Investment Authority (LIA), Economic and Social Development Fund (ESDF) and the entire banking system, with the goal, on one hand, to focus on the financial resources and, on the other hand, to guarantee the international community about the lifting of restrictions on the frozen assets. Decisive action must indeed be taken in order to put Libya’s legitimate institutions in control of the country’s key financial levers and resources. For example, the unification of the Central Bank of Libya is necessary to allow it to properly manage the budget and allocate resources according to the country’s key priorities. The Libyan Investment Authority shall be supported in restructuring efforts to map its own assets, organize and optimize them through a new transparent operating model that can also help LIA to overcome the “assets freeze” issue and to build credibility towards external stakeholders, at national and international levels. Similarly, the Economic and Social Development Fund, an essential lever of development in Libya, must be enabled and strenghtened thanks to the restructuring of its governance and portfolio, and the parallel definition of principles that can guide the operating framework of the fund and its priorities and concrete actions to deliver on the ground.
The second condition is the restructuring and unification of the National Oil Corporation (NOC), on one side to restore production at the highest level and, on the other, to attract international partners thanks to renovated contractual conditions. It is also important to relaunch investments on the hidrocarbons sector, to generate financial revenues and to foster Libya’s energetic needs.
The third condition is relaunching the local economy to diversify from oil and gas sector, through public investments (on infrastractures, health-care, defence, education, etc.) and private.
In conclusion, imagining and crafting a Libya Vision 2030 could serve as a powerful and encouraging lever to trigger a variety of processes, first of all the political one. It is realistic to think that the creation of a politically stable and socially inclusive Libya, focused on the well-being of Libyans, has to start from their most urgent and essential socio-economic needs on the ground.
By embracing this route, it will be possible for Libya to also address and achieve the goals for its sustainable growth, as envisioned by the United Nations with its Sustainable Development Goals.