The document outlines Libya's SME development strategy and short-term action plan for post-conflict economic recovery, highlighting the country's over-dependence on hydrocarbons and significant challenges, including high youth unemployment. It emphasizes the need for economic diversification, the establishment of a credit guarantee agency, and regional investment funds to stimulate the private sector, while also detailing essential policies to support SMEs. The proposed short-term action plan includes improving the financing mechanism for SMEs, enhancing legal frameworks, and fostering collaboration among local and international stakeholders.

1. SME DEVELOPMENT STRATEGY IN LIBYA
Project Steering Committee
& Short Term Action Plan
Tunis, 8 December 2016

2. • Highlights from the report SMEs in Libya’s
Reconstruction. Preparing for a post-conflict
economy
• Project update
• Questions to PSC members

3. 3
Libya’s economy is over-dependent on hydrocarbons and
dominated by the public sector, with a small private sector
• Oil, gas and related sectors
represented 65% of GDP, 95% of
exports and 96% of budget revenues.
• Before 2011 about 80% of the labour
force was employed in the public
sector.
• 26% of the population is under 15,
while youth unemployment was 48.7%
• The private sector was estimated to
account for 5% of Libya’s GDP.

4. 4
Level and rate of change of Libyan GDP
GDP per capita compared to GDP in constant prices
Government revenue from oil and non-oil sources
Composition of non-oil government revenues in the Libyan public budget
The impact of conflict has been magnified due to pre-
existing structural problems. Income per capita was cut by
half and government revenue drastically dropped

5. Economic diversification is a long term goal that
should be embedded even in short term measures
5
A revealed comparative advantage analysis of product community classifications

6. Mechanism Status Way forward
Credit
guarantee
scheme
• Libyan Guarantee Lending Fund (2008):
Ministry of Ec. & Libya Enterprise. Not
fully operational. High default rates. 6-7
years for recovery in case of default. Not
an independent entity.
• Establish a credit guarantee
agency
• Good practices: Caisse Centrale
de Garantie (Morocco); Kafalat
(Lebanon)
Microfinance
• No regulatory framework
• Rural Bank
• IsDB and Ministry of Economy USD 50
million on Islamic microfinance to
unemployed Libyan youth
• Good practices: Morocco; Egypt
Concessional
financing
• Libyan Loan Fund (2010): EUR 188mn.
Under National Council for Economic and
Social Development.
• LLIDF & ESDF: But focus on large
projects.
• Institutionally independent
• Clear strategic value
• Commercial criteria when
possible
Regional SME
funds
• 5 Regional Investment Funds (Tripoli,
Benghazi, Misrata, Dernia and Sebha):
USD 150 million each. Leverage local
banks and include business co-funding.
Not operational.
• Independence and clear
structure
Venture capital • No private equity or venture capital • Incentives

7. Main Libyan institutions working on SME policies
7
Ministry of
Economy
Ministry of
Planning
Ministry of
Labour
Ministry of
Finance
SME
steering
committee
Libya Enterprise
The Libyan
Programme for
Reintegration and
Development
(LPRD)
Prime Minister’s
Office
SME Policy
Unit
LGLF
Business
centres
LECs
Business
incubators
Ministry of Local
Governance
Ministry of
Industry
Libyan municipalities
Industrial Development
Authority
Business
incubators
Libyan
Industrial Union

8. 8
Sequencing will be critical when planning for economic
recovery
Long term
Strategic action and more sophisticated planning
Developing a vibrant private sector and diversifying the economy
Medium term
Rebuilding the institutions and regulatory framework
Rebuilding the SMEs fabric
Short term
Stabilizing the system and allowing normal operations to resume
Supporting survival of companies

9. 9
The list of policies needed to support SMEs and private
sector is long. Prioritizing for the short term is needed.
Finance
• Ensure payments
system
• Complete dual
banking reform
Inclusion
• Create jobs for youth
and ex-combatants
• Ensure regional
balance
Markets
• SME procurement in
reconstruction
• Trade agreements
and export programs
Regulatory framework
• Real Estate Register
• Regional business
registration one-stop
shops
Capacities
• Government officials
• Entrepreneurs and
businesses

10. • Highlights from the report SMEs in Libya’s
Reconstruction. Preparing for a post-conflict
economy
• Project update
• Questions to PSC members

11. Component 2:
Short-Term
Action Plan
• Produce Short-
Term Action
Plan to support
SME policies
with Libyan &
international
stakeholders.
Component 3:
Legal framework
• Broad
consultation of
stakeholders
and good
practices.
• Peer review
and sharing
international
examples.
Component 4:
Assistance in
implementation
• Assistance
implementing
the Short-Term
Action Plan
through
capacity
building.
Component 5:
Access to
finance for SMEs
• Assessment
and assistance
for the
establishment
of an SME
funding
mechanism.
Project end date: September 2018
Phase II: Restructured components

12. • Highlights from the report SMEs in Libya’s
Reconstruction. Preparing for a post-conflict
economy
• Project update
• Questions to PSC members

13. • Do you have any suggestions on the components of the
project under Phase II?
• Are there ongoing initiatives with potential synergies for the
OECD’s project?
• Should the OECD include additional institutions or
stakeholders in the project?
• How can the project mitigate the risks related to the current
uncertain political context?
Questions to Project Steering Committee

14. ANNEX