Libya: Healthy Economic Environments to Stimulate Entrepreneurial Activities
“We need a more active private sector. The private sector must engage with the government to let them know the need to address the job issue so as to get massive investment to create job opportunities for the youths.”Tony O. Elumelu, CON
Libya has recently experienced significant political, social and economic changes in its state and society. Due to decades of state dominance on most of economic activities under the former regime, the country’s private sector has been small and marked as informal (Ali and Omar, 2015). In the context of Libya’s oil-dominated economy and continued large role of the state as an employer (with the public sector employing some 75% of the country’s labor force), there is little understanding of the propensity for significant and sustained entrepreneurial activity.
The situation is changing rapidly as more Libyans can see new opportunities in the emerging private sector. Even though some efforts towards creating a more private sector – oriented economy have already occurred, there are still significant difficulties in actively supporting these aspirations in the emerging private sector.
“Young people’s idea of the ‘dream job’ is changing because of the economic situation and the reality they are facing in Libya. They realize that the kind of job they would like to have is hard to get so they conclude that they would rather create that job themselves to do what they love and what is best for the society,” Amir Neihoum, Tatweer Entrepreneurship Campus (TEC) manager.
Our chairman was absolutely right when he said, “Young entrepreneurs and those they inspire are the lifeblood of Africa’s rise.”
There is a general agreement in entrepreneurial research that entrepreneurship fosters economic growth, creates new jobs, opportunities and generates prosperity in an economy. In addition to launching new products and services, entrepreneurial activities support innovation and are capable of effecting social change.
A further crucial point is that entrepreneurship with its above-mentioned abilities can be a key driver in the upcoming peace building – and stabilization process for the country. Hence, creating a more private sector – oriented economy would be of upmost importance since a well-functioning private sector contributes to an encouraging business environment, which in turn fosters entrepreneurship.
The National Expert Survey by the Global Entrepreneurship Monitor (GEM) studies environmental factors—in GEM’s terminology— Entrepreneurial Framework Conditions (EFCs) that were proved to influence the development of entrepreneurial activity and quality of entrepreneurship in a country. These include; entrepreneurial finance, government policy, government entrepreneurship programmes, entrepreneurship education and training, commercial and legal infrastructure, entry regulations, Physical infrastructure, Culture and social norms, Research and Development. The level of entrepreneurial activity in Libya depends, among others, on the quality of the respective EFCs in the country.
Some authors (Omar, A., Ali, F., & Imhamed, S. 2020.) have provided recommendations in their scholarly paper on how to provide good and actionable insights into possible improvement opportunities for making the Libyan entrepreneurship environment more positive and attractive and able to enhance the start-ups.
The followings represent policy implications suggested for Libya:
- Libyan government should adopt SMEs development policy that seeks to improve the performance of SMEs and enhance the Libyan entrepreneurship environment in general. This policy should include a strategy for strengthening the overall legal and institutional framework. It should also promote enterprises creation and their diversification, which can provide employment and income opportunities and contribute to economic growth.
- There is an urgent need to make a shift in the current Libyan education system – on what is being taught at all levels of education system and methods used in teaching at these levels. To this end, entrepreneurship education and training can have a role, where entrepreneurship should be taught, at this early stage, at the higher education level in all academic disciplines. In addition, entrepreneurship training should be available for all graduates, with a more focus on knowledge and skills needed to manage a new business. It should provide a better understanding of the entrepreneurial capacity of Libya. Hence, education and training related to entrepreneurship should perhaps pay more attention to EFCs in Libya and the relevant aspects that may get limited attention but could play an important role for entrepreneurs.
- It is becoming clear that all unfavorable factors of EFCs in the Libyan business environment can be directly linked to the major weaknesses and limitations from which the national innovation system in Libya suffers for a long time. The main aspects of these weaknesses and limitations are reflected in the absence of some important institutions and the weak linkages and interactions between the existing relevant institutions. These represent obstacles that can hinder the growth of entrepreneurial activities in Libya, especially high-growth businesses. Thus, specific improvements need to be urgently applied to develop relevant elements of the national innovation system, where the propriety should be given to reforming the education and funding systems and government regulations related to entrepreneurship.
~ Author: Eniye Aduwari