Guest Post: Post-revolutionary Libyan investment in Africa

Jason Mosley

As the Libyan revolution enters its final stages, and the National Transitional Council (NTC) looks to make the transition from rebel movement to governing body, the question is emerging of post-revolutionary Libya’s relations with the rest of Africa.

Libya has been a major player, in investment and diplomatic terms, across much of the rest of the region.  Under the regime of Muammar al-Qadhafi, Libya regularly contributed almost 12.5% of the African Union’s annual budget — surpassing the contributions of much larger economies — reaching 15% in 2010.  Libya directly covered the membership dues of several poor African countries.  The government had a number of investment vehicles, such as the Libyan Arab African Investment Company (LAAICO), which made significant investments across several sectors in nearly two dozen African countries.  Rumours abound of Qadhafi’s less transparent financial support for individual leaders in other African countries, usually associated with the less democratic governments.

Libya’s focus on Africa was in part a reflection of Qadhafi’s influence building enterprise, having alienated the West and most of his fellow Arab governments during the course of his nearly 42 year rule.  The passing of his regime is hardly mourned by most other Arab League members.  However, it is having significant repercussions within the African Union.  Speculation is intense on the intentions of the NTC towards the rest of the continent.  One outcome being discussed is that a democratic Libya has a chance to bolster its relations and linkages with Africa even further, and to take a senior leadership role in the region — and one that would be largely ‘above board’.  As the country’s assets are unfrozen, it is conceivable that a more transparent and well-governed Libya could use its investment clout to build relationships, strengthen its influence and promote better governance across the region.

It is tempting to buy into this optimism.  However, even leaving aside the question of whether the NTC will prove able to manage the major challenge of retaining its coherence through the next phase of the revolution — a huge uncertainty for a disparate group held together mainly by its various factions’ common goal of pushing out the Qadhafi regime — there are some good reasons why the new Libya will not be focusing on its relations with Africa south of the Sahara for the foreseeable future.

The first and most obvious factor is the major socioeconomic strain that underpinned the revolution in the first place.  Like its neighbours, the country has a major youth bulge, and many of these young people are unemployed or underemployed.  Unemployment was officially running at about 21% in 2010, although the true figure was probably closer to 30%.  Along with many other countries, the population has experienced the pressures from globally high commodity prices, feeding through into domestic inflation.

A second major consideration will be the country’s reconstruction needs, following more than six months of conflict.  As funds become available, restarting health and social services, paying civil servant salaries and repairing infrastructure — including that related to the oil sector, some of which was targeted during the conflict.  The costs of reconstruction are still unknown, and it may be some time before they are fully assessed.

An added complication will be the state of the country’s finances, following sanctions and assets freezes in multiple jurisdictions.  Although some countries have started to lift restrictions, and repatriate assets to the NTC, the African Union has not yet recognised the NTC as the legitimate government of Libya (although several African nations have individually done so).  South Africa, for example, is maintaining its assets freeze.

The new leadership will be hard pressed to justify investments in Africa countries — and perhaps even in maintaining its current levels of support for African institutions, let alone growing them — under these circumstances.  And given the divisions in the NTC, it seems unlikely that any individual leaders will want to take a stance that appears not to prioritise Libya’s domestic needs, for fear of giving an opening to rivals.

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