Expertise France (EF) is a French public agency under the tutelage of the French Ministries of European and Foreign Affairs and Economy and Finance with a strong inter-ministerial vocation. EF offers project engineering and technical assistance by developing and implementing international cooperation actions worldwide. The agency operates in various fields of development and institutional cooperation including safety and security sector reform, post-crisis/stability, public health, human rights, strengthening of institutions and NGOs and governance. Carrying out large-scale, multi-stakeholder projects, EF can ensure the cooperation between individuals, teams and institutions with very different statuses, cultures and specialties. Besides, EF has acquired a sound experience in administrative and financial management of large-scale international projects and is accredited by the European Union for the management of delegated community funds.

2.1       General context

Since the Government of National Accord (GNA) came into power according to Skhirat agreement on the 17th of December 2015, the country’s security situation faced several challenges with the worst period being in April 2019. This is when a military campaign was launched by the Libyan National Army (LNA), led by General Haftar, to take over the capital, Tripoli. The LNA offensive against Tripoli resulted in an increased destabilization of Libya and completely unpredictable outcomes.

Despite this situation combined later on with the COVID-19 pandemic, which structurally affected all cooperation activities developed by the international community in Libya, Expertise France continued to implement its programs, using alternative channels and tools such as online features, or locating its activities elsewhere when the security/safety situation in the country was not allowing to do it there, as it happened for example for training or workshops together with the Libyan partners in Tunis.

Moreover, the European Commission and Expertise France's capitalization strategy for the implementation of successive projects permitted to reach great achievements of both EU-funded projects SLEIDSE (2016 - 2020) and EU4PSL (2019 - 2023).

Such favorable results encouraged the European Commission, at the beginning of 2022, to fund E-NABLE project (2023 - 2025), regardless of the political and security instability and having the objective to continue the relevant partnership established with the Libyan authorities and partners around the support to private sector development and economic and financial governance.

2.2       Implementation in parallel to EU4PSL program

E-NABLE project execution started in March 2022 in parallel with integrated activities of EU4PSL program. The four components of the EU4PSL projects were as follows::

·         Component 1: Strengthen the capacities of Libyan institutions to design and implement actions conductive to MSME and improve attractiveness of the Libyan economy for investment and Support to Chambers of Commerce for enhanced business support services and economic reforms.

·         Component 2: Support youth’s and women’s economic empowerment and start-up entrepreneurship.

·         Component 3: Improving access to finance for MSMEs and Startups

·         Component 4: Streaming entrepreneurship within the educational system

It lasted 48 months until the end of January 2023, with very relevant impact and achievements such as:

·         Creating the online portal (which is a step-by-step guide for administrative procedures in Libya) and simplifying the business creation procedure;

·         The inclusion of Libya officially in the Euromed Trade Help Desk for facilitating trade and investment between Libya, the EU and the Mediterranean region;

·         Published the survey of Libyan enterprise profile and needs with operational recommendations to help the government and international donors better shape support to Libyan enterprises;

·         Worked with 6 local CSOs from the west, east and south of Libya to build their capacities to support entrepreneurship in their regions;

·         3 national women entrepreneurs contests organised, two of them through a TV show;

·         CSOs collaborating with universities to organise entrepreneurship training bootcamps to their students, 240 students were trained in total;

·         17 startups mentored by international trainers in a business acceleration program called Boost it, more than 50% of these startups were women;

·         Establishing dedicated Units at 6 Libyan banks to support SMEs and startups;

·         Working on the establishment of a VC fund with CBL and Tadawul financial company;

·         First Microfinance Circular published by CBL in January 2022 – demanding banks to dedicate 10% of their portfolio to SMEs, and second Microfinance Circular published by CBL in March 2022 – demanding banks to adapt their services to meet the needs of micro and small enterprises;

·         Developed and launched an accredited entrepreneurship module in 12 Libyan universities with the support of Lyon 3 university, trained the local professors to deliver the module;

·         Trained and coached partner university staff to run entrepreneurship units inside their premises;

·         Created the first Junior Enterprises (10) inside partner universities from all Libyan regions, fully managed by students;

·         Working with the Ministry of Education after the appointment of an entrepreneurship focal point to develop the business education ecosystem.

Despite to the complex political and difficult working environment situation such as electricity cut or shortage of liquidity, EU4PSL program showed the commitment of most of the Libyan stakeholders particularly the Ministry of Economy and Trade, the Ministry of Higher Education and the Central Bank of Libya as well as the Private sector itself and the civil society.

Building on the understanding of the Libyan business environment needs that were addressed by Libyan stakeholders as well as on the tangible outcomes and achievements of EU4PSL program, the 3 E-NABLE project components were designed as follows:

1.     Component 1: enhancing public policies for economic diversification and enabling the business environment, targeting economic Institutions, stakeholders and partners., including the Ministry of Economy and Trade (MoET), the Ministry of Finance (MoF), the Ministry of Planning (MoP), the Tax Authority and the Chambers of Commerce;

2.     Component 2: taking up digital innovations related to economic governance among public institutions targeting the General Information Authority (GIA), Libyan Post Telecommunications & Information Technology Company (LIPTIC), the public and private telecommunication and tech companies and the Ministry of Economy and Trade (MoET);

3.     Component 3: improving services and products provided by financial institutions targeting the financial Institutions, the Central Bank of Libya (CBL), banks, investors, SMEs and start-ups.

In this situation and analyzing the three programs’ components as well as EU4PSL achievements and outcomes, it is obvious that such a parallel exercise allowed to maximize the impact as both complementary interventions were targeting the same beneficiaries but on a coordinated manner, and in order to endure too sustainability and robustness to specific actions developed under EU4PSL that E-NABLE could consolidate.

2.3       Political and security situation

On the 19th of December 2020, a new Presidential council was formed followed by the formalization of interim Government of National Unity (GNU) in February 2021. Libyan political dialogue forum then assured the ongoing ceasefire and facilitated the democratic process by parliamentary and presidential elections planned for December 2021 but the political fragmentation between the House of Representatives and the Government of National Unity continued and the planned election failed to be organized. On the other hand, the former Interior Minister Fathi Bashagha, was elected interim Prime Minister by the House of Representatives on the 10th of February 2022. The protracted political stalemate contributes to the country’s political, economic, and security instability.

Despite to some progress in electricity cut and liquidity as well as to the role of the 5+5 Joint Military Commission, including to facilitate the implementation of the 2020 ceasefire agreement, the fragile political and security context in Libya continued and global shocks such as the impact of the crisis in Ukraine did not permit such a positive evolution in the country.

During 2023, the volatility on politics and security / safety continued, illustrated by the events that happened the 26th and 27th of August, 2022, that resulted in more than 40 killed and 160 wounded.

That situation affected the capacity of E-NABLE program implementation as for example, following the events of August 2022, the team could not travel in Libya and some activities planned there were delayed. In the measure of possible, activities were maintained but relocated being in Tunisia or in other locations when suitable.

On a more continuous manner, it is important to underline that costs of security for international staff are also elevated, not to mention that some international institutions or experts were not, during the reporting period willing to travel to Libya for security reasons, which may have, in some situations represented a constraint in the capacity of mobilization of the related expertise or in the impossibility to organize the related activities in Libya.

Regarding the political instability, the fact that Expertise France signed, in October 2021, a cooperation agreement with the Ministry of Foreign Affairs (MoFA) and the Libyan government allows us not to be impacted by any specific situation, while respecting the conditions of this agreement. It is to mention that apart from slow processes in some situations, and lack of reactivity in others, no blockage of our activities can be mentioned during the reporting period due to administrative or institutional reasons.

2.4       Social and economic context

As indicated in the world Bank statistics data, Libya is a large country with about 1.750 million Km2 and a population of 6.95 million in 2021, including some 0.788 million non-Libyans, 90% of whom live in 10% of the coastal land area. According to UNICEF demographic projection for Libya, the overall population would reach 8.1 million by 2030.

In 2022, UNDP showed that Libya’s Human Development Index (HDI) was 0.718 in 2021, which ranked it 104 out of 189 countries. It is placed into a high category with a 2% increase from the previous value which is still relatively high in terms of HDI measurement which is based on three main areas: education, health and living standards.

Libya is considered a young nation, youth representing about 62% of the population, where about of 48% of youth age (25-34 years old) are unemployed. Both women and young people nowadays face complex challenges that are seemingly creating an intense negative impact. Youngsters are the most educated and skilled, yet they are the most at risk of unemployment and economic exclusion. Indeed, the quality of education still poses a concern as there is a lack of linkage between education systems and the employment needs of the private sector, leading to a significant demand-supply mismatch.

Libyan economy is still dominant by the public sector where out of 3.1 Million Libyan in working age, about 2.5 million are in the public sector according the Ministry of Finance Budget report 2022, representing around 75% of total active working labour market. According to IOM Libya (Labour Market Assessment report 2021), the rate for females working in the public sector is higher. In fact, it reaches around 97% in public sector and only about 3% in Private sector compared to 79% of working males in public sector and about 12% in private sector, whereas the rate of unemployment is about 19.3% as indicated in the Ministry of Labor survey 2021.

2.5       Economic diversification

Despite to the Libya rich national resources country, considered the world’s ninth largest oil reserves in the world, holding 3,9% of the global reserves and the third largest gas reserves among African countries the country faces an important challenge to diversify its economy. It boasts one of the highest solar radiations in the world, with a daily average solar radiation of 2,470 kWh/m2/day and a sun period of 3 500 hours per year. One of Libya’s economic problems, inherited from the Gaddafi era, is the total dependence on oil as the sole source of national income. Libya has one of the most undiversified productive structures in the world: hydrocarbons account for 70% of the GDP, more than 95% of exports, approximately 90% of government revenue, and determine decisively the economic performance of the country.

Several indicators have proven that Libyan industries are hardly competitive. In fact, Libya scores poorly on commonly cited business environment indices. For instance, since 2014, Libya has been in the bottom five economies at 186th position out of 190 countries in the World Bank Ease of Doing Business report 2020 and ranked number 114 of 131 most complex economy according to the Economic Complexity Index (ECI 2022). Furthermore, Libya is considered as the most poorly governed country among the 13 OPEC countries, in terms of the quality of governance in the oil, gas and mining industries, as indicated in the Resource Governance Index 2021.

Libyan Economy is not diversified whereas agriculture has historically contributed less than 3% of Libya’s GDP, making the country heavily dependent on importing food-items, as up to 90% of Libya’s grain is imported for consumption. Industry is less than 4.8% and construction is about 6% of the GDP.

2.6       Libyan economic competitiveness

The World Economic Competitiveness Index showed the drop of the economic competitiveness from 100 out of 139 countries in 2010 -2011 report to 126 over 144 countries in 2014- 2015. This index shows the poor quality of the Libyan basic requirement, such as physical infrastructure, information and communication technologies, the quality of business environment and innovation and the quality of labor market and financial market Therefore, to diversify the Libya’s income as well as move away from full dependency on oil and gas and keep up to achieve the SDG 2030, other sources of income must be considered. There is a big need to improve the Libyan competitiveness measures, for instance through using the public -private partnership scheme in the development of the Libyan basic requirement needs and other industries, including construction and building, smart technology, renewable energy, circular economy, tourism, fishery and blue economy sectors, transit trade, free zones, and agriculture. For all these industries to succeed, a relevant state- of-the-art infrastructure must also be developed.

2.7       Libyan banking sector

Libyan banking sector is still traditional and lacks the tools and skills for financing the SMEs sector. From the experience gained from SLEIDSE and EU4PSL programmes, we know SMEs in Libya face many growth constraints and have less access to formal sources of external finance, such as banks or the availability of alternative financial institutions. In Libya, banks are often unable or unwilling to give either long- or short-term loans to SMEs due to poor enabling environment discourages lending but even more critically the banks themselves have low internal competence for risk discrimination. Libya suffers from very low levels of credit risk management capacity, including credit analysis. Thanks to the EU Funding programs, including E-NABLE, the development of access to finance solutions through different financing tools (leasing, VC and microcredit for example) and the improvement of the e-payment services aims at facing this structural obstacle for the private sector development.

On the other hand, credit information suffers from a lack of reliable client financial information along with a poor audit and accounting infrastructure. Avoidance of taxes discourages transparency and independent auditors or rating agencies, which would encourage financial transparency, have yet to make headway in Libya. The CBL has set up a credit bureau, the Libyan Credit Information Center (LCIC), but its data set is limited and hampered by systemic information weaknesses.

The combination of high credit risk, liquidity volatility, and uncertainty regarding the rules and processes of shari’ah compliant financing has slashed the extension of bank credit. Banks’ assets have increasingly fled from lending, becoming less intermediaries and more safe deposit boxes, and not fully reliable ones at that. Loans were already a low proportion of total assets by global and MENA standards but have continued to shrink (Libya Financial Sector Review, 2020).

2.8       Digitalization in the Libyan context

According to the United Nations E-Government Index (EGDI). 2020, Libya has been classified in the medium category (M2 (0.3743)) for digital services indicators which measures governments use of information and communication technology in providing government services: this is considered weak, and Libya’s global ranking was only (162) out of (193) countries.

Despite to the number of higher education institutions (27 Universities and 139 high technical institute) as well as more that 35 information and documentation centers, Libya still lacks adequate digital education institutions as well as the qualified digital skills particularly in e-governance, data science, and digital application in both public and private sectors. The tech community in the country is growing, being progressively reinforced, but it cannot suffer the comparison with other neighbours countries such as Tunisia, for example regarding the robustness of the digital businesses, their capacity of internationalisation, but also the maturity of the intermediary bodies such as R&D centers or dedicated incubators.

2.9       Project overview