The Honorable Chairman of the
World Islamic Call Society,
Dr. Mohamed Sheriff,
Ladies and Gentlemen:
At the outset, I wish to express our appreciation and gratitude for the invitation by the World Islamic Call Society through Dr. Sheriff. It is a great honor and at the same time a humbling experience to share and exchange knowledge and information with such knowledgeable guests and delegates to this conference. Libya is truly blessed by Allah because it is hardly affected by the global financial crisis and untouched by the swine flu or H1N1 virus. The United Nations’ sanctions which were intended to isolate Libya from the rest of the world turned out to be a saving grace and a blessing from Allah because it protected Libya from the aberrations of the global financial institutions.
Applying the SWOT (Strength, Weakness, Opportunity, and Threat) approach in Strategic planning, we can easily see that the strengths of Libya are:
· The oil resources.
· The revenues/petrodollars earned from the sale of oil.
· Absence of foreign loans which saves Libya from having a millstone tied on its neck dragging down the sea suffered by some Third World Countries in the last decades of the 20th century.
· Political, social, and economic stability which is a pre-condition to sustainable economic development. Thanks to the dynamic leadership of the Great Leader, Moammar Khadafy.
· The Gross Domestic Product (GDP) – the total output of goods and services in a year – reportedly has strong prospects. The GDP averaged 8% between 2003 and 2008, according to Libya’s Central Bank. It is expected to continue to grow by 8% from 2008 to 2011. The drivers of economic growth according to Libya’s Central Bank are “accommodating fiscal policy and strong private and foreign investment”. The trend is towards diversification to move away from a one-product economy, that is, oil, and to support and encourage private sector growth.
· Enviable geopolitical strategic location of Libya – being at the northernmost part of Africa, bounded by the Mediterranean Sea. It is only a few hours from centers of contemporary civilization – Rome, Paris, London, Berlin, Athens, and other capitals of Eastern and Southern Europe. Libya is the gateway to the Middle East and Asia. It is conveniently situated to reach the United States, Canada, South and Central America, and the Caribbean.
· Water resources. Water is increasingly becoming a global problem. Libya’s Great River Project provides water security.· Leadership of African Union. The Great Leader Moammar Khadafy has affirmed this strength by being the president of the African Union.
· Ongoing reforms to integrate itself back into the global community and attain cutting-edge modernization.· In its first credit rating done by Standard and Poor, Libya received an investment-grade rating of A- long-term and A-2 short-term foreign and local currency ratings. The sovereign ratings of Libya according to S &P credit analyst, Ben Faults, is “supported primarily by…one of the strongest balance sheets among A-rated sovereigns, comprising substantial public assets and negligible debt, relatively low financial contingent liabilities, and the solid medium-term growth prospects of the country’s energy sector”.
· Libya’s medium-term prospects are promising, according to S & P, and international oil companies have demonstrated great interest in Libya, attracted by low production costs and the fact that some 75% of Libya remains unexplored and consequently offers opportunities for development of infrastructure.
· In short, Libya’s outlook is stable.
· Small population is both a weakness and strength. It is a weakness in the sense it cannot meet all the demand for human resources for its economic growth in various industries. Hence, the need to import foreign workers, engineers, and other professionals. It has only a small domestic market, although it may have more purchasing power. Small population is strength because it is easier to provide each individual Libyan with social welfare services like free education, free medical services, etc. Growth rate of population, however, is placed at 2% per annum.
· Oil is a depleting resource.
· Standard and poor noted the constraints emanating from “limited transparency of official decision-making in Libya as well as the effectiveness of reforms to promote private sector development which are at an early stage of implementation”.
· S & P noted “the sharp oil price falls (from the level of &150 in 2008) and OPEC-driven production cuts will cause a significant contraction of Libya’s real and nominal GDP in 2009. However, Libya’s strong balance strengthened by rising oil prices and production in previous years gives it enough economic power to face up possible fiscal and current account deficits and “to moderate what could otherwise be a significant shock to the economy”. Still on the brighter side, “Libyan banks and companies are relatively sheltered from the global financial turmoil, as external liabilities are minimal”.
· Libya is an investment destination of European, American, Chinese, Japanese, and other multinational corporations. Since the lifting of the UN sanctions, hundreds of multinational corporations from different parts of the world have been scrambling to get a foothold in Libya.
· Construction is one sunshine industry because of demand for housing and offices. Some 400,000 square meters of new, international A-grade office tower space is expected to be constructed between 2010 and 2012.
· While the U.S. is having problem with subprime mortgages of its housing sector, the housing market in Libya caters to upscale buyers made up of high-net-worth expatriates and locals with rising incomes accompanied by decreasing household sizes.
· The modernization of Libya, like the Gulf States, is opening many opportunities in construction, telecommunications, information technology…
· With its mild Mediterranean climate and beautiful beaches, Tripoli will increasingly attract tourists from all parts of the world. Being heir to the legacy of mainstream civilizations from 7000 BC – Phoenician, Carthaginian, Greek, Roman, Arabic, Ottoman, and British – in addition to its indigenous culture, Libya has attracting power to bring in foreign visitors.
· Benign investment environment in the strategically important hydrocarbons sector.
· As far as military aggression is concerned, there are no threats to Libya in the horizon.
· Libya “remains relatively immune from the global financial crisis” Investments and deposits of Libya around the world have not suffered losses. The Libyan foreign investments policy makers are not greedy like some Wall Street investment banks that have caused the global financial crisis. They focused on low-risk projects with lower but good income, instead of going for high-risk investments promising higher income which may end up in losses.
· The sovereign wealth fund is intact and safe.
· Since the crisis is continuing globally and may take two or more years to attain “normalcy”, the challenge to Libya is how to devise or fashion a strategic plan to continually protect and conserve its sovereign funds and wealth, and augment its revenues from investments. The variables here are the level of risk, level of revenues, time or period of investments. Kind of balancing act may be necessary guided by desirable values.