Libya's Investment Law VS Startup Activities

Libya's Investment Law VS Startup Activities

Law Ft Startup

It is almost impossible to find a nation, no matter the continent, without an investment law.  The law is meant to guard and stimulate investment activities within the nation. Often this law highlights the requirement to invest and possible fees and levies to be paid by companies willing to launch in the nation, especially via business.

It is also important for startups to take note of investment or business laws of the land. This gives them an overview of the type of community they are about to launch into. They are acquainted with the requirements needed for them to function as a law-abiding business within the state.

Investment and Promotion in Libya; An Overview

Just like other nations, Libya also has its own version of investment law which it called the “Investment and Promotion” law. Established in 2010 this law has since guided investment activities in Libya, including startup activities.

Over the years Libya had relied heavily on its oil sector for revenue. Reports note that about 90% of the nation’s revenue comes from the oil sector.  Before the revolution, the country produced about a 1.3million barrels per day (BPD) without the interference of insurgencies. Currently, the nation struggles to produce 1.2 million BPD as political and security instability increases within the state.

It is obvious that the nation needs another source of revenue, since its major source struggles, hence the focus on international investment. According to Law No 9 of the 2010 investment promotion law, investments are allowed in every sector except in the exploration and extraction of oil. The enactment of the law alone opens the door to other investments and national development, yes, including technology.

According to the incentives highlighted and some previous restrictions lifted, It’s obvious Libya is welcoming foreign direct investments (FDI).  This makes one wonder “why aren’t there enough startups in the country?”

Investment realities

The reality of the Investment Promotion law is not correlating with the intentions of the establishment, especially in the tech ecosystem. While the ecosystem should see major investment take place, at least with funding activities, the opposite is the situation.

Even when the investment promotion law is offering incentives such as 5 years income tax waiver, custom fee exemption on imported equipment and many more, yet, international startups are not enticed to come to Libya.  If it seems international startups are farfetched then what happened to indigenous startups? The law is already accommodating enough to give room for business growth, giving a 5-year exemption for income taxes.

Recognized indigenous startups in Libya are not more than 10.  While only less than 30% of the startups have been able to secure funding to establish growth.  Tripoli, Libya’s capital has a population of over 3 million while the country as a whole is home to over 6 million people. The country has a land mass of 1.76 million km, these are features of a commercial gold pot. The realities after the investment law as related to tech are not manifesting as the nation probably expected.

Additional Factors Of Current Realities

While it seems the law is really accommodating of upcoming enterprises and startups, there are other factors that have the tendencies to discourage startups. Even if the nation is recovering from the 2010 revolution, security and political instability still remain a threat to businesses.

In 2021, the presidential election which was proposed to unify the nation was indefinitely postponed, causing a national uproar. The country also lacks consensus on critical issues which is tantamount lack of accountability in major sectors.

Reports also have it that corruption plays a significant role in discouraging prospective investors or startups. While laws are being established, regulating authorities given the power to enact the law are often acquitted of bribery. This is as customs and regulation workers are alleged to demand personal payments before they carry out their duties.

Libya’s investment law is evidence that one could genuinely want progress and change, yet, there are other factors that could hinder such desire. Hopefully, the nation can witness a change in environmental instability soon. Such change will depict genuine accommodation of international investment.