Long a no-go zone for most Americans, Libya is opening up. Oil companies are piling into the country, and Western businesspeople and tourists are starting to check out a place that had been, as one Libyan hotelier put it, "a blank space" on the map of North Africa.
For the oil industry the attractions are obvious—large troves of oil and gas, and good possibilities that many more could be found. Libya has only been about 30% explored. The Sirte Basin in the center of the country accounts for 95% of the oil that has been located. Though that area may be mature, oil companies are now moving into new zones, such as Ghadames and Murzuq in the southwest, where big fields have already been discovered, and the waters off the coast and Khofra in the desert wastes of the southeast, which haven't yet been well probed.
"Basins like Ghadames and Murzuq are immature in terms of their exploration maturity and will likely yield new discoveries," says Bindra Thusu, a geologist at University College London, who has been working in Libya for decades.
Investing in Human Resources
Other industries are less of a slam dunk. Private business, which was severely restricted during Muammar Qaddafi's period of radical social experimentation in the late 1970s and early 1980s, remains weak. Negotiating investments in Libya is tough going, and low government salaries mean that Libyans, many of whom work in the public sector, don't have much purchasing power, although Qaddafi now vows to put through big increases.
Qaddafi's son, Saif al-Islam, has been pushing hard to bring the long-isolated country into the world economy. He has even brought in Harvard Business School professor Michael Porter and the Monitor Group, a consulting firm that Porter co-founded, to help figure out ways to spur Libya's private sector. On Feb. 22, Porter and the younger Qaddafi launched a Libyan Economic Development Board intended to diversify the economy away from oil by promoting private business and entrepreneurship (see BusinessWeek.com, 2/20/07, "Harvard Guru to Help Libya").
According to a senior Libyan official, the government plans to spend "billions" of dollars on training citizens in the English language and the use of computers, among other basic business skills. Saif and his advisers think training is the quickest way to get a return on the government's investment. Later, they hope to revamp the education system, which doesn't give graduates the right skills to cope with the 21st-century economy.
Offering Atmosphere and Charm
One industry that shows promise is tourism, which is already thriving in a small way. Libya's few hotels are often fully booked with a strange mix of oilmen and European tourists.
Fortunately, the Mediterranean nation isn't a sterile oil state like some of those around the Persian Gulf. Just down the hill from the main business hub, the Corinthia Bab Africa hotel, is the bustling Medina, or old city, with plenty of atmosphere and historic buildings. Not far to the east of Tripoli on the coast lies Leptis Magnus, site of some of the most impressive Roman era ruins on the planet. Another ancient city with considerable charm, Sabratha, is about an hour's drive to the east along the coast highway.
BusinessWeek's London bureau chief recently visited Libya. Click here for a slide show of pictures from his trip.