A study by the Deraya Initiative’s research team investigated the question: ‘‘Are Libyans ready to embrace entrepreneurship as a path toward economic empowerment?’’
The “Deraya – (دِرَايَــة) Entrepreneurship Initiative” for young entrepreneurs seeks to build a dynamic ecosystem of innovative entrepreneurs and startups in Libya. It was launched in May this year by UNDP Libya and the Ministry of Local Government, in collaboration with the European Union (EU) and the African Development Bank (AfDB).
The UNDP says young entrepreneurs in Libya (18 to 35 years-old) face many challenges, including accessing markets and financial resources, and navigating regulations and administrative procedures. The Deraya initiative is designed to equip entrepreneurs with the essential know-how to turn innovative ideas into successful startups.
Linked to the municipal business incubators
The initiative will also entail startup weekends in Tripoli, Benghazi, Sabha, and Derna, culminating with a pitch competition where the winning startups will receive financial support, financed by EU and AfDB, to further develop, grow, and take their business ideas to the next level. As a critical step towards sustainability, entrepreneurs will be linked to the municipal business incubators being set up with the Ministry of Local Government with UNDP’s technical support.
Status quo of startup ecosystem
In order to tailor the initiative’s events and activities to the needs of entrepreneurs in Libya, Deraya said the team collected data through a survey to analyse the status quo of the Libyan startup ecosystem. More than 1800 respondents in Libya of diverse ages, and backgrounds took part in the survey.
This was to assess the level of entrepreneurial awareness and readiness among existing and aspiring entrepreneurs who are shaping the future of the private sector in Libya; which in turn contributes to the country’s economic growth.
The survey was designed based on the following rubrics to assess entrepreneurship:
- Opportunity perception
- Risk-taking and fear of failure
- Networking and social connectedness
- Entrepreneurship awareness and skills
Deraya reported that the needs assessment survey was distributed through social media, e-mails, and on-ground university visits, and received a significant number of responses (1,824 responses) from all different educational, occupational, and residential backgrounds. This large sample size allowed for a comprehensive understanding of the challenges and opportunities in the Libyan entrepreneurship landscape and provided valuable insights into the sectors that hold promise for starting and growing businesses in the country.
The survey was promoted as a self-assessment test to help aspiring entrepreneurs and business owners evaluate their readiness for entrepreneurship and see if they have what it takes to build a successful business. The test was scored out of 100, and the respondents’ level of entrepreneurship readiness and awareness was determined based on the following scale:
- From 0% – 45%: Doesn’t have enough readiness to become an entrepreneur.
- From 45% – 85%: Capable of launching a business to some extent.
- Over 85%: Strongly capable of launching a business.
Entrepreneurship Readiness and Awareness Survey Findings
The survey’s findings, Deraya reported, indicated a very strong level of readiness and inclination towards entrepreneurship in Libya. On average, the survey participants attained a total score of 86% – which was calculated based on their scores in each of the above-mentioned entrepreneurship assessment rubrics.
The analysis of the survey’s results also revealed that most participants showed a high level of opportunity perception with an average score of 88%, which was the main factor driving the overall high score. Following closely behind were the fear of failure, networking, and entrepreneurship awareness factors with average scores of 86%, 86%, and 85% respectively.
Other Important Findings
- Tajoura centre in Tripoli had the highest average score for entrepreneurship readiness, followed by Misrata, Benghazi, Sabha, and Tripoli city centre.
- Refugees demonstrated the highest overall average score, indicating their outstanding readiness and awareness of entrepreneurship (85.8%). This surprising similarity in scores between refugees and Libyan citizens suggests that despite the challenges that refugees face, many of them have developed remarkable entrepreneurial skills and a strong drive to succeed.
- From the discrepancies in total average scores, it was observed that the level of education has minimal to no impact on entrepreneurship readiness among Libyans. Remarkably, even respondents without a formal degree demonstrated a high level of readiness and awareness in the context of entrepreneurship.
- Only a minor discrepancy in the average total score between genders, and between groups of different employment levels was observed.
These slight variations across different occupations, educational backgrounds, genders, and residential statuses highlight the common thread that Libyans, regardless of their gender, occupation, or educational background, exhibit a robust inclination toward entrepreneurship.
Several assumptions can be given to explain this high inclination, Deraya reported. Their dissatisfaction with economic conditions and the unfavourable business environment may contribute to this trend. Additionally, according to the World Bank, the labour market in Libya is characterized by high unemployment, with an official rate of 20.7% in 2022. More than 85% of those who work are employed in the public and informal sectors. Therefore, a closer examination is needed to delve into the reasons behind this high awareness and propensity towards entrepreneurship in Libya.
Challenges Impacting Entrepreneurship in Libya
Deraya reported that entrepreneurship in Libya faces unique challenges that impact its growth and development on multiple levels. However, these challenges are not insurmountable, and with the right strategies and support, they can be addressed to create a more promising environment for entrepreneurs in Libya.
The study said when the entrepreneurship readiness survey’s participants were asked to select from a list the challenges they faced/ think they will face once they start their businesses, the answers revealed discrepancies in the level of impact that each challenge has on entrepreneurs in Libya – which was reflected by the number of total selections received.
Based on the number of these selections, the challenges impacting entrepreneurship in Libya were divided from high impact to low as follows:
The main challenges faced by entrepreneurs in Libya include:
- Lack of financial institutions and access to funding
- Economic situation
- Political conditions
Challenges with moderate impact include:
- Libyan culture and the condition of local infrastructure in Libya
- Lack of marketing skills
- Lack of financial management skills
- Difficulty with legal regulations (registering a business)
Challenges with low impact were as follows:
- Fear of hiring the wrong people
- Lack of leadership and managerial skills
Refugees, asylum seekers, and immigrants
Refugees, asylum seekers, and immigrants in Libya find that one of the main challenges they face is the legal system in Libya, as it was the third most selected challenge for them, ahead of the lack of financial institutions and economic conditions.
The most faced challenges by females when starting a business in descending order are:
- Lack of financial institutions
- Economic conditions
- Challenges related to Libyan awareness & culture
- Lack of financial management skills
With regards to municipalities, the study reported that the top two challenges faced by entrepreneurs in Tripoli, Benghazi, Derna, and Sabha (i.e. lack of financial institutions and economic conditions) were similar to a large extent. However, there were some discrepancies among municipalities regarding the third and fourth-ranked challenges. These discrepancies are demonstrated as follows:
- Compared to Tripoli, Sabha, and Derna, Benghazi-based entrepreneurs face slightly more difficulties related to awareness and culture; as it was the third most selected challenge by the respondents in Benghazi.
- The lack of financial management skills challenge was the third most selected challenge by entrepreneurs in Sebha, while it ranked sixth in Tripoli, Derna, and Benghazi.
Most Promising Sectors to Start a Business in Libya
The survey said studying market trends and identifying the sectors that offer good potential for growth are crucial first steps in the process of creating and developing new businesses. Hence, survey participants were asked to select their most preferred sectors out of a list of 20 sectors that are pivotal in shaping the future of our world.
Based on the results of the survey, 7 sectors were identified as top sectors that hold promise for starting and growing businesses in Libya.
The top preferred sectors to start a business are as follows:
- Information and Communication Technologies
- Agriculture and Livestock
- Real estate
Respondents’ top selected sectors, the survey reported, were influenced by factors such as market needs, local economy, social and technological developments, and changes in demand and supply.
On a municipality level, sectors that have the highest scores and are common in Tripoli, Benghazi, Sebha and Derna are e-commerce and Marketing.
Some dissimilarities between different municipalities include:
- The Agriculture and Livestock sector is relatively more attractive for Libyans in Sebha, unlike other municipalities.
- The same goes for the Manufacturing and ICT sectors in (Unlike other municipalities, the Manufacturing sector comes in the fourth rank and ICT comes in the third rank in Tripoli)
- Unlike other municipalities, the Education sector comes in the third rank and Manufacturing comes in the fourth rank in Benghazi and Derna.
As for discrepancies on the gender level, the most selected sectors by females only are Education, E-commerce, Marketing, Wellness & Lifestyle, and Manufacturing.
The Deraya survey concluded that Libya’s high entrepreneurship readiness score suggests that while it possesses fertile ground for fostering entrepreneurship, ongoing efforts to nurture and sustain this environment are crucial to further enhance the readiness and success of budding entrepreneurs in the country.
Promoting an entrepreneurial culture from an early age, it adds, offering education in new technologies, facilitating access to financing, and creating support networks, such as mentoring programmes and collaborative workspaces are recommended to fast-track Libya’s entrepreneurial ecosystem development.