Companies looking for business in Libya ‘must focus on country’s immediate needs’
By Hui Shan Khoo | 18 November 2011
“Companies first have to ensure that there is a sound political and legal framework for investment” – Jane Kinninmont, senior research fellow, Chatham House
Companies are being warned against “piling into” Libya in the hope of winning lots of lucrative business. The note of caution comes from the head of a trade body that specialises in the Middle East.
Charles Hollis, director general of the Middle East Association (MEA), told Exaro: “Businesses tend to think that if they pile into the country right now, they will make a lot of money. But authorities will focus on immediate needs rather than long-term services and products the companies are able to provide.
“It will not be terribly long – probably next year – before general UK companies are able to find potential opportunities in Libya too, especially after the post-war reconstruction work is done.”
He was speaking after Exaro two weeks ago revealed a leaked report drawn up by the National Transitional Council (NTC), Libya’s interim government, which outlined plans to double health-care spending to overhaul the country’s war-ravaged hospitals.
Libya’s new government must rebuild the country following the death of Muammar Gaddafi and the collapse of his ruling regime. On a separate issue, Exaro revealed last month that Britain has secured a secret deal with the NTC to pay compensation for victims of terrorist attacks carried out in the UK by the IRA with Gaddafi-supplied explosives.
Big business from around the world is preparing to cash in following the fall of Gaddafi. In early September, countries began jockeying to secure deals during a Paris summit on Libya with the UK’s foreign secretary, William Hague, promising that British companies would not be “left behind” by European rivals.
The construction industry, for example, is anticipating the return of big projects to Libya, such as the five-star hotel in Benghazi pictured above, the construction of which was suspended before the outbreak of the civil war.
Hollis said: “Gaddafi’s death brought about the normalisation of Libya and sped up the restoration process. Before he died, one was never sure when exactly – or if – the civil war was going to end. His death re-delivered a sense of certainty and stability that businesses favour and require.
“The political, legal and business climates are still a little unclear at the moment, but they are developing. The risks are no less than they were a few months ago: the UK Foreign and Commonwealth Office still considers it unsafe for people to travel to Libya. But we all have to remember that the country has just gone through eight months of war.
“Nonetheless, the people are pulling together to create a new society, which is always an encouraging sign.”
Members of the MEA include Shell, HSBC and AMEC, the engineering company. According to Hollis, companies considering operating in the country should recognise a “constraint in Libya’s decision-making capacity”. He added: “The authorities do not want to make decisions on unimportant matters.”
Jane Kinninmont, senior research fellow at Chatham House, the international-affairs think-tank, told Exaro: “Libya is still a high-risk country at the moment, and it is difficult to predict what the situation will be like in the next few months, so a lot of UK companies will wait to see what happens before planning to invest in Libya.
“Moreover, this recent civil war has brought about a more radical change than what has happened in Egypt and Tunisia, so companies first have to ensure that there is a sound political and legal framework for investment.
“Companies will have to take into consideration things like political stability and security risks. Oil companies might be accustomed to working in high-risk environments, but that does not apply to the health-care and education sectors, and other infrastructure companies.
“It is also important for companies to create training and job opportunities for the Libyans rather than simply try to make profits for themselves.”