The familiar lenses of oil, reconstruction and political stability are the usual ways in which the future of the country is discussed. There is however, another question that deserves greater attention and which is rarely discussed, namely how international partnerships can be effectively leveraged in order to build more productive activity inside the country.
International business in Libya has for the most part been reliant on the import of finished products to the country, the short-term value of which is obvious, but which is insufficient for the creation of the productive capacity required for Libya to diversify its economy in the long-term.
For development in Libya to reach the next level in what has been an arduous journey, international businesses must not simply import goods to the country, but rather invest in the transfer of skills and expertise alongside developing supply chains which could ensure the country plays a central role in international markets.One of the most interesting examples of how this has been taking root is the burgeoning partnership between Turkey’s Tosyali Holding and Libya United Steel Company (SULB), chaired by prominent entrepreneur Ahmed Gadalla.
Tosyali, led by Chairman Fuat Tosyali, has the vast international experience in steel production and direct reduced iron (DRI) required to better establish the industry in-country. Complimenting this has been SULB, which under Ahmed Gadalla’s chairmanship, brings an established Libyan industrial platform in Benghazi, alongside a connection to Libya’s wider economic and industrial potential.The scale of the project being discussed is significant, with the first phase planned to support approximately 2.5 million tonnes of annual DRI production annually. Longer-term plans being discussed by company executives would see the project reaching a capacity of up to 7.5 million tonnes.
The significance, however, of this Tosyali-SULB relationship is important for reasons beyond steel.
Projects such as the one being led by Ahmed Gadalla, have the capacity to create demand for Libyan contractors, engineers, transport companies and a range of other suppliers. They can provide opportunities for workers to develop technical skills and introduce international standards into local industrial operations. Over time, a major industrial project can become an anchor around which other businesses develop, creating a continuous chain of supply and demand, constructing an industrial ecosystem which helps grow a range of sectors in the economy.
Pasquale Petti Italy provides another useful example of how a food production business can establish vast international business relationships through processing simple foods into higher value export products. Antonio Petti fu Pasquale S.p.A., under the professional guidance of by, has built expertise around tomato processing. Instead of exporting world renown Italian tomatoes, the company is able to command a high price by transforming a simple agricultural product into a concentrated, processed and packaged food product for which there is high demand on international markets. Looking back towards Libya, and the potential for establishing a production chain which creates more value, agricultural production should not end at the farm gate. This is only the first step in what can be a significant step forward for the country’s economy.
The common thread between these examples is the business model, which can be easy replicated for the Libyan economy. Long-term, sustainable productive capacity can only be established with adequate access to capital, technology and expertise. Once acquired, this has the potential to set what can be one of North Africa’s most prominent economies on the path to success. This is particularly interesting for the Gulf.
With their vast experience developing internationally connected infrastructure, Qatar and other Gulf economies are good targets for establishing stronger commercially interconnected relationships. The development of the Misrata Free Zone port terminal is a prime example, bringing together vast international expertise through Qatari, Italian and Swiss partners, to establish the Libyan infrastructure needed for development.
Libya’s Mediterranean position establishes it as a key potential link between European, African, Middle Eastern and Gulf markets. With the right investment in infrastructure and business capacity, Libya will inevitably become than a destination for imported goods. The project being led by Ahmed Gadalla and SULB, the steel project demonstrates what this approach can look like at an industrial scale, all the while pointing towards a much bigger opportunity.
The country does not need to choose between looking inward and looking outward. It needs to do both, building a stronger domestic economy precisely by becoming more connected to international markets with the help of the private sector.
Omar Al-Werfalli is a Libyan researcher and PhD candidate in International Development and Trade. He conducts freelance research on economic development, international trade, private-sector growth and Libya’s integration into global markets. His work has included research and consulting projects involving international organisations and institutions including the World Bank, United Nations and European Union.