Freighting Update – Libya Overcoming barriers to business


At the end of September the UK Export Credits Guarantee Department (ECGD) resumed cover for British exports to Libya, making it the first major ECA to do so. It has made up to US$250m available to underwrite exports.


THEmove will be crucial in overcoming one of the barriers to trade with Libya – Libyan banks have not been issuing Letters of Credit because of cash flow problems. There has been a shortage of bank notes because Libyans withdrew money


and stashed it when conflict broke out. New notes will only be available this month. In November the country’s Central Bank started allowing Libyans to buy up to US$2,000 per person, at a rate cheaper than the black market, to encour- age people to deposit cash. But Sami Zaptia, Managing Director of Know Libya, described a Catch 22 sit-


uation to a London conference last month. “They say we should put our money in the bank, but our response to them is why are they not opening Letters of Credit? Leading business men believe the Central Bank is being too conserva- tive. It is a vicious circle – people are waiting for the banks to open Letters of Credit and banks are waiting for people to put their money in.” Robin Lamb, Director General of the Libyan British Business Council, added


that the amount going into the bank was a “drop in the ocean”, adding: “£2,000 per person is not a lot when they need billions of dollars.” Another challenge to British businesses returning to Libya is the current secu-


rity situation. People have been warned not to travel unless it is essential. Edward Oakden,


Managing Director UK Trade and Investment Sectors Group, told delegates: “The reason is that it is not a predictable environment, things are still uncertain, there is a lot of firing up into the air and shrapnel coming down and a certain degree of lawlessness, depending on where you are, and the underlying possi- bility that a group of young men with guns will lose patience,”. “The UK and France are seen in a positive light, but if you come from a group who support- ed Gaddafi, you would take a different view.” The National Transitional Council (NTC) faces the challenge of disbanding


militia and disarming freedom fighters. Zaptia said the NTC had been quite suc- cessful using social networks and the media to call for a return of arms. “It is a very rare case that you see heavily armed vehicles in Tripoli.” But he questioned the prospects of disbanding the militia before employment was generated. Tarek Alwan, Managing Director of SOC Libya, agreed security was an


issue but expressed his surprise to find Tripoli “safer than expected” during a visit in October. “Although freedom fighters have no proper training, they


have disci- pline,” he said. Z a p t i a


a g r e e d . “There have been deaths and clashes. The point is they are quite isolated. Of course with western sensibilities you are not used to gunfire. Security is all about perception and I understand. But I see west- erners going down the street in Tripoli eating kebabs. I haven’t heard of any westerners being targeted. I don’t feel it is justified for westerners to be over- ly cautious about security.” He told the delegates that he expected a natural flow of expats after


Christmas. But travelling to Libya will not be easy. Some flights have resumed but the visa process is complicated and time-consuming and the Libyan authority has little administration to deal with large numbers of visitors. Visitors need the right contacts to smooth the process. Visas are also expen- sive. Normal travel insurance doesn’t apply and there is no proper British Embassy yet ( it was damaged during the uprising) although there is a small commercial team based in Tripoli who is working closely with the NTC. While there is no issue filling up with petrol in Tripoli, there is once you move out of the city. Currently not a huge amount of freight is going into the country, but all


the ports have logistics issues, said Zaptia. “Tripoli port is only operating at 25-30% of its capacity, there is a shortage of forklift trucks and personnel. There is equipment and manpower shortage. At this point there is not much pressure because goods are not moving at a fast rate. But if Letters of Credit open, they are going to be overrun. I’ve heard Misrata is operating at 40%, Al Khums at 40-60%. “Once things are up and running, I don’t see specific problems for logis-


tics companies. The barrier to business in Libya was always the government – they feared capital and money and were scared the private sector would challenge political hegemony.”


LBBC remains bullish on prospects for trade


LORD Trefgarne, Chairman of the Libyan British Business Council (LBBC), tells Lloyd’s Loading List about the effect of the past nine months on member companies. “Business stopped dead, almost from the end of February. At the


start of the year LBBC members were doing £350-400 million worth of business a year to Libya, in goods and financial services. But this is just beginning to come back. “Some companies who had Letters of Credit were alright but it has


not been easy for them.” LBBC has 150 members, many of which are smaller companies. “The


question members are asking us is ‘when can we go?’ The answer is: ‘watch this space’. I think the opportunities are there but the infrastruc- ture and funds to pay for contracts are strictly limited,” says Trefgarne. LBBC organised a small mission to Libya in September for companies


who were interested in finding out what had happed to their people and infrastructure. In January it will embark on its second mission. Trefgarne cautions against a cavalier approach to winning business in Libya. “We mustn’t pretend it will be handed to us on a plate, but the


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mood music has changed [for the better].” He is positive about the business environment going forward. “There


was a great deal of meddling by Gaddafi, and it has been said this will end. Before, everything was very un-transparent. The new people have assured us we won’t have any of that. So I welcome a more straight-for- ward business environment.” UK Trade and Investment will also be organising missions over the


next six months and is encouraging businesses to register so that the Libyan authorities and fellow British companies who want to form part- nerships are aware of them. It is also looking at how UK companies can partner with businesses from other countries such as the UAE and Turkey. While looking forward, the government is also looking back at debt


owed to UK companies. Edward Oakden, Managing Director UKTI Sectors Group, encouraged a softly-softly approach during a recent London conference: “We should be sensitive to Libyan capital con- straints. There are going to be uncertainties and therefore business will take longer.”


www.lloydsloadinglist.com Tripoli


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