Libya is located in the Maghreb region of North Africa. It is the sixteenth biggest state in the world and fourth largest African state occupying an area of about 700,000 sq miles. The country has over 7,200,000 people with over a million Libyans living in Tripoli, the largest and capital city. The economy of Libya depends on revenue from the petroleum industry, which contributes over 95% of the revenue Libya earns from exports. Other important industries including mining, agriculture, and tourism.
History of the Libyan Economy
Libya became an independent kingdom under King Idris in 1951. King Idris I was dethroned by a bloodless military coup in 1969. Muammar Gaddafi took over and ruled Libya from 1969 to 2011 when he was overthrown and killed. After the civil war, two authorities took over the country; the General National Congress and the Council of Deputies. The two governments agreed to form an interim government in 2015 after a UN-led peace talk. Parts of the country are still not controlled by the government. These parts are controlled by numerous tribal, rebel, and Islamist militia ruling some regions. Talks are still continuing between the different governments to end the eight years long disagreement and establish a united country. Libya experienced a 10.6% growth in its GDP in 2010. The growth was disrupted by the civil war resulting in the Libyan economy contracting by 62% in the following year. The economy of Libya improved in 2012, but it declined again after the second civil war began in 2014.
The Biggest Industries In Libya
The petroleum sector accounts over 60% of the country’s GDP and about 75% of the Libyan government’s receipts. Libya exports over 85% of its oil to Europe. 11% of all the oil imported by the European Union members in 2010 was from Libya, making them the third largest oil exporter right behind Russia and Europe. Libya has the world’s ninth largest oil reserves. Over 80% of their reserves are in Sirte Basin. The National Oil Corporation (NOC) together with numerous subsidiaries dominates the oil industry in the country, and they are responsible for 50% of oil output in Libya. NOC is a state-owned company, and some of its biggest subsidiaries include Sirte, Zueitina, and Waha Oil Companies.
Libya has five local refineries with Ras Lanuf Refinery being the largest with a capacity of over 220,000 barrels per day. Libyan oil is classified as sweet crude due to its low sulfur level. Libya sells its oil to various companies including CEPSA, Tupras, Repsol YPF, Agip, and in small quantities to different South African and Asian companies.
The economic sanctions and falling oil prices during the early 1980s affected various Libyan economic activities. The Libyan GDP grew at an average of 2.6% per annum during the 1990s. The 2001 growth was due to increased foreign investment after the UN suspended all economic sanctions against Libya in 1999. The high oil revenue boosted the real GDP of Libya to 3.5% in 2005. Despite the UN sanctions being suspended, foreign investment in the Libyan oil industry was still being affected by the United States' Libya and Iran Sanction Act. The United States removed Libya from the list of countries it suspected to fund terrorism in 2006.
The Libyan mining industry doesn’t contribute significantly to the country’s economy, plus some of the minerals are situated in areas with limited accessibility. The large gypsum deposits in Libya produce over 150,000 tons annually. Iron ore has been discovered in Wadi ash-Shati' approximately 560 miles from the Mediterranean Sea. The reserve in Wadi ash-Shati has over 795 tons of iron ore, but it is not being mined due to the remoteness of the region. There are large salt pans in the northern parts of the country whose production in the 1980s amounted to over 11,000 tons annually. Substantial potassium and magnesium salt reserves have been found in Libya, but other than sulfur, phosphate rocks and magnetite, these salts have not been mined. Over 13,000 tons of sulfur is extracted annually as a byproduct of refining natural gas and petroleum.
Even though agriculture is the second biggest industry in the economy, Libya imports a considerable percentage of its food. Poor soils and climatic conditions limit agricultural output in the region with local food production, only meeting 25% of the total food demand in Libya. Numerous food projects in Libya like Kufra oasis depend on underground water with the Great Manmade River being the primary source of water for agriculture. The Libyan agricultural sector employs only 17% of the country’s workforce. Libya occupies a total area of about 700,000sq miles, but only 8,494sq miles of land is suitable for cultivation. About 923sq miles of the land suitable for farming is dedicated to irrigation while 5,985sq miles depend on the rain. Less than 4% of Libya is ideal for grazing, while only 2% is arable land. A considerable percentage of the arable land is situated in Jifara Plain and Jebel Akhdar region. The Jifara Plain has underground aquifers which makes irrigation possible in the area.
The tourism industry is one of the main sectors in Libya that was heavily affected by the Civil War. Before the war, the tourism industry accounted for less than 1% of the Libyan GDP. Libya received 149,000 visitors in 2004 and 180,000 tourists in 2007. Currently, Libya is not issuing tourist visas and their borders with Algeria, Sudan, Niger, and Chad are being closed. These borders are controlled by the Toubou and Tuareg people and not the Libyan government. Many countries, including China, the United Kingdom, and the United States among others, have advised their citizens against traveling to Libya. Libya is famous for its unique Roman and Greek ruins and the Sahara Desert scenery. Out of the five UNESCO World Heritage sites in Libya, three are archaic ruins. The Greek Cyrene ruins and the Roman cities of Leptis Magna and Sabratha are great tourist attractions in Libya.