Libya's Main Business Sectors
Libya is one of North Africa's largest countries, and it boasts large natural gas and oil reserves, as well as a consumer market that's six million strong. Since the United States reestablished diplomatic relations with the country in 2004, it has lifted sanctions and removed Libya from the list of countries that are deemed to be terrorism sponsors. With these recent developments, Libya is now more open to foreign companies.
The market in Libya is both challenging and rewarding; with good planning, companies can avail themselves of business opportunities in sectors from gas and oil to tourism, telecommunications and agriculture. Libya's economy depends mostly on oil revenues, which contribute about 95% of earnings from exports and sixty percent of the public sector's wages. The recent spike in oil prices has allowed the country to amass a foreign exchange reserve of $50 billion US.
Despite recent economic growth in Libya, the country's unemployment rate remains very high. Couple that with an unclear legal system, arbitrary decision-making by the government, and a very large public sector, and it is easy to see how foreign investment has been impeded.
In the past few years, Libyan authorities have implemented economic reforms as a way to help ease the country back into the international community. Libya has a long and hard road ahead, in loosening the socialist grip on its economy. However, its application to the WTO, its reduction in subsidies, and its privatization plans have started the transition to an economy that is market-based.
Libya wants to reduce its dependency on oil as a revenue source, and to increase foreign investment into the tourism, agriculture, fishing, mining, and natural gas sectors. The manufacturing and construction sectors account for about one-fifth of the country's GDP; they've expanded from agricultural processing to include processing of aluminum, steel, iron and petroleum. The agricultural sector is a top priority for the government, as the country imports almost three-quarters of its food.
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