CRITICAL PERSPECTIVES ON THE EFFICIENT IMPLEMENTATION OF PRIVATISATION POLICIES IN LIBYA: ASSESSING FINANCIAL, ECONOMIC, LEGAL, ADMINISTRATIVE AND SOCIAL REQUIREMENTS

Abstract

Critical Perspectives on the Efficient Implementation of Privatisation Policies in Libya: Assessing Financial, Economic, Legal, Administrative and Social Requirements
By Hesham F. Shernanna
Abstract
Since the 1980s, due to the disappointing performance of public sector enterprises and state economies, privatisation has been considered an essential policy tool for economic transformation by privatising state-owned enterprises (SOEs) and restructuring the economy for the private sector and private investors to participate more extensively in economic activities.
Privatisation, however, as past experiences have proved, is not a simple issue, nor is it the same in all countries. Although in many industrialised and developing countries privatisation has achieved many positive results, in other developing and transitional countries the consequences of the experiment have been unsatisfactory. Worldwide experience has proved that there are several financial, economic, legal, administrative and social requirements that must be fulfilled in order to attain success and achieve the desired objectives of privatisation and economic transformation policies in an efficient and effective manner.
This study, therefore, aims to explore the availability of these conditions in Libya by evaluating the adequacy and effectiveness of the Libyan financial, economic, administrative and legal environment for the efficient implementation of the privatisation programme. The main focus is on the financial and economic requirements; including restructuring the financial sector such as establishing the stock exchange market, reforming the banking sector, in addition to liberalizing the market, reforming exchange rate policies. In addition, it aims to assess the effectiveness of the policies and actions taken by the former Libyan government to support and regulate the privatisation process, as well as to assess policies addressing the potential social impacts of privatisation, such as redundancy and effects on consumer welfare. Moreover, this study aims to evaluate the legal environment and its appropriateness for implementation of the privatisation policy, promotion of private investors’ participation, and regulation of the market economy.
The research methods used in this study are mainly based on qualitative techniques, and data were collected by two modes of data collection. The first is the collection of secondary data from documents including financial, economic and administrative reports, and laws and resolutions related to the topic in question. In addition, content analysis is used to analyse laws in order to examine the adequacy of the legal environment for successful privatisation and the transformation to a market economy. An attempt is also made to use statistical data in the form of secondary data to illustrate the developments and trends in privatisation policies and the impact of such policies. The second method of data collection used in this study is structured interviews, which targeted a variety of specialists and stakeholders of the privatisation process and economic policies in Libya.
Findings of the study reveal that decision-makers in the former regime did not show a clear desire and sufficient support for privatisation and the transformation to a market economy. In addition, findings show that many regulative and administrative difficulties prevented the transparent implementation of privatisation in Libya. Furthermore, findings obtained from document analysis and the interviews prove that, although many positive procedures were implemented and new institutions created by the governments of the former regime, including attempts to reform the banking sector, liberalise the market and establish a stock market, etc., many difficulties and challenges are still facing the new Libyan government in developing a proper financial and economic environment for privatisation and economic reform policies and also establishing an efficient market economy. Similarly, with regard to social aspects, findings of the study demonstrate that the former Libyan government paid explicit attention to some potentially negative social impacts of privatisation. However, there are still some shortcomings, especially with regard to the redundancy problem and consumer protection issues. With regard to the legal environment, the former government issued several important laws and legislations for privatisation, and to encourage private sector investment. However, the findings demonstrate that these measures were and still are insufficient, as there have been many inappropriate constitutional provisions, in addition to non-activation of several new essential laws.
This study, therefore, demonstrates that, although many positive procedures were implemented by the former Libyan government, many difficulties and challenges are still facing the government of the new regime to achieve the desired objectives of the privatisation programme and transformation to the market economy. The success of future governments will also be heavily dependent on their performance in creating an efficient market economy.