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Libya Takes Bold Leap from Chaos to Order

Libya Takes Bold Leap from Chaos to Order

Apr 9, 2024

Edoardo Campanile

Key Takeaways:

  • Long-standing Instability: Since the Arab uprisings, Libya has grappled with political, social, and economic instability. However, recent initiatives towards political reconciliation and stabilization hint at a possible improvement in economic performance.

  • Unified Government Talks: In March 2024, Libyan leaders discussed forming a unified government to supervise elections, a critical step toward resolving the country's political deadlock and stabilizing the nation.

  • Economic Recovery Potential: Libya's vast oil reserves and natural resources offer significant investment opportunities, with an optimistic projection of 8% GDP growth in 2024 signaling a potential economic upturn if stability is achieved.

  • The External Chess Game: The involvement of international and regional actors has exacerbated Libya's internal divisions, with their backing of various factions complicating the peace process and the path to stability.

  • Investment Climate Challenges: Political instability, security risks, and governance issues continue to deter investment, despite the potential for economic growth and development across multiple sectors beyond oil and gas.

  • High Stakes, High Rewards: Amidst its challenges, Libya's rich resources and untapped markets spell lucrative opportunities for the bold investor. 

  • Dialogue, the Key to Unlock Libya's Fortune: Strengthening political dialogue is key to improving Libya's financial outlook. The evolution of the political landscape will heavily influence Libya's economic future and its integration into the global market.


Since the 1970s, Libya has stood as a linchpin in the global oil market, ascending to the ranks of the world’s premier oil exporters. Yet, the winds of the Arab uprisings ushered in an era of profound instability, casting long shadows over its political, social, and economic landscapes. Despite these tumultuous times, the horizon may finally be brightening for Libya's quest for political stability.

In early March 2024, Libyan leaders representing the Presidential Council, the High Council of State, and the House of Representatives gathered in Cairo to discuss forming a unified government to supervise future elections.

This process occurred after the scheduled elections in 2021 did not materialise due to the inability to reach the necessary domestic consensus. Therefore, what happened in March represents a crucial step aimed at once again bridging divides and stabilising a nation plagued by political turmoil and conflict.

While this political process unfolds, Libya's vast natural resources offer lucrative opportunities for investors.  Depending on the outcome of the political process, Libya might offer renewed opportunities for businesses, investors, NGOs, and international organisations beyond the energy sector.

No economic prosperity without political stability:

Libya's political landscape underwent a dramatic transformation after 2011. Following Gaddafi's fall, a myriad of factions and armed militias vied for power, battling to secure resources and establish dominance, thus deepening fractures within the country. A distinctive feature of Libya is the presence of multiple power centres across its territory, each with its own agenda, support base, and armed forces.

Furthermore, the domestic power struggles have been exacerbated by the involvement of regional and international actors. Presently, countries such as Egypt, the UAE, Turkey, Russia, and various European states back specific factions, escalating tensions and hindering the path to peace.

While some nations, like Germany, actively advocate for political dialogue and stabilization, their efforts have been complicated by conflicting interests and divergent strategies for resolving the crisis.

The adverse effects of external intervention include proxy wars, resource exploitation, and the undermining of sovereignty. Addressing the political turmoil is a prerequisite for economic recovery and the attraction of investment.

However, with the persistence of domestic issues, particularly political fragmentation, security challenges, and financial instability, the strong presence of foreign interference makes it difficult to envision Libya fully enjoying peace and prosperity.


The agreement reached in March 2024 marks the first step in a long process that could significantly alter Libya's trajectory. Signs of recovery are already evident after decades of isolation, instability, and conflict.

For example, conflict-related incidents and casualties have decreased by 80% and 95%, respectively, compared to the averages of 2014-2021. Furthermore, the African Development Bank Group projects that Libya's real GDP will grow by 8% in 2024, with inflation remaining under control and recovery in the hydrocarbon sector boosting economic performance.

Libya's vast oil reserves have drawn the interest of international investors, keen to leverage the country's untapped potential. However, ongoing challenges such as political instability, poor governance, and security risks could impede progress and deter investment. Despite a flicker of hope, the situation remains fragile, volatile, and unpredictable.

The Government of National Unity, established under Abdul Hamid Dbeibeh in 2021, has elicited mixed responses. It achieved some success in unifying the country under a single government after seven years of division but has faced criticism for inadequately addressing security, economic reform, and political reconciliation.

Although peace is still a long way off, strengthening political dialogue will undoubtedly contribute to the country's financial standing. For these reasons, the evolution of the political developments in Cairo deserve close attention. Recognizing that without elections, Libya would risk disintegration, the country's three institutional heads agreed to supervise the electoral process while pledging to improve services for the Libyan people.

Libyan authorities have long sought to attract foreign investment, boost the economy, and upgrade infrastructure. These efforts continue to face obstacles from non-state armed groups and terrorist organizations, along with political division, corruption, and bureaucratic inefficiencies.

Against this backdrop, the implementation of Law No. 9, aimed at promoting foreign and domestic investment through various incentives, should be watched closely. The law, if leveraged in a more stable and peaceful environment, could serve as a magnet for investors, offering a glimpse into the potential for a revitalized Libya.


  • Investment Opportunities beyond Energy: Libya presents attractive investment opportunities, especially in the energy sector, for businesses and investors. Achieving success, however, necessitates careful navigation of the political and security risks previously discussed. 

    • Companies must conduct their activities with due diligence and consider forming partnerships with local entities to mitigate these challenges.

    • Beyond oil and gas, sectors like infrastructure development and telecommunications offer significant incentives. 

    • Furthermore, renewable energy, healthcare, and agriculture are sectors brimming with potential, yet they remain largely untapped.

  • The Misurata Free Trade Zone (MZF):  established in 2000 to stimulate the Libyan economy, attract investors, and generate employment. The trade zone remains operational. A resurgence of stability in the country would invigorate this zone, further enriching its appeal for economic activities.

  • European Union: With Libya's rise as a key oil exporter, the European Union stands to benefit from stronger economic ties with Tripoli. Nevertheless, prioritizing sustainable development and good governance is crucial to ensure the country's long-term stability and prosperity.

    • Italy, France, Germany, and Spain are among the European nations most engaged in Libya. However, their lack of coordination and occasional conflicting interests have hampered the development of a cohesive European strategy in the country.

  • Much work remains for NGOs: From regional development and environmental sustainability to improving food and water security, NGOs are needed.


    • The Euro-Libyan Trade Center stands out as a prime example of a non-profit working in Libya.  The organization is dedicated to improving economic relations between the northern and southern shores of the Mediterranean. 

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