The Central Bank of Libya (CBL) announced today that it is to begin to receive applications for establishing companies wishing to obtain licenses to practice Financial Leasing activity.
The CBL said it will start accepting applications from Sunday 26 January through a special link on its official website.
The CBL said the decision comes based on the provisions of Law No. (1) of 2005, regarding banks and its amendments, and on the Financial Leasing Law No. (15) of 2010 and its executive regulations. It also comes with reference to the decision of the CBL Board of Directors at its first 2024 meeting to adopt the guide, regulations and forms for establishing Financial Leasing companies
A copy of the application form and the establishment procedures guide and the regulations for financial leasing contracts are listed on the CBL website.
Comment – A move that is long overdue
The move by the CBL to finally allow Financial Leasing companies to start operating in Libya is seen by most analysts and businesspeople as ‘‘well overdue’’. Afterall, the law was approved back in 2010 – just before the 2011 revolution.
The availability of financial leasing will provide a new form or tool of financing for businesses, SMEs and startups – in a country that suffers from a lack of forms of business finance.
Leasing will help businesses to reduce the startup capital needed to purchase equipment and machinery and allow for payment to be spread out over a much longer period.
More needs to be done
At least three other tools need to be introduced or activated in the short term to jump start Libya’s business sector.
Parliament needs to pass a law guaranteeing banks’ rights to confiscate property/businesses if debtors fail to pay back their loans. Secondly, the much-discussed Credit Check Bureau (since the Qaddafi era) needs to be activated, and finally, the SME/Startup Loan Guarantee Fund (also since the Qaddafi era) needs to be put into operation.
Libya’s banks, and especially its state banks which are sitting on mountains of cash in the billions, will only start to proactively give out business credit/loans if their loans are secured by law and they are able to do a credit check on potential debtors – and they will only likely lend to high risk SMEs/Startups if the state shares the risk.
The initiative is seen as yet another thumbs up to the new proactive CBL Governor Naji Issa, and his Board of Directors.
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