Speaking during the second session of day two of the 6th Annual Banking Sector Development Forum held in Tunis, 7–8 December, Chairman of Tadawul Tech and former Chairman of ATIB Bank, Naaman Elbouri, addressed a critical question posed to him: Why are Libyan banks unable to provide the loans needed by businesses, start-ups, and young entrepreneurs?
“Banks are not gamblers”
Elbouri opened his remarks with a clear message: “Banks are not gamblers.” He emphasized that commercial banks operate using depositors’ funds not private investment capital. As custodians of public deposits banks are legally prohibited from investing customers money without explicit permission and therefore cannot risk these funds on unregulated or high-risk ventures.
Structural Barriers to Lending in Libya
Elbouri outlined several systemic challenges constraining the Libyan banking sector:
1. The nature of deposits:
The majority of deposits in Libyan banks are current “on call” accounts funds that customers may withdraw at any time. This prevents banks from committing these funds to medium- or long-term investment projects.
2. Impact of Law No. 1 of 2013:
The prohibition of interest-bearing accounts has removed banks’ ability to attract long term deposits. As a result, banks lack the stable financial base required for meaningful investment lending.
3. Absence of a diversified financing ecosystem:
In advanced economies financing is supported by venture capital funds investment banks seed investors and active capital markets. In Libya, by contrast, commercial banks are expected to perform all these functions under a single banking law – a task Elbouri described as unrealistic and structurally flawed.
The Case for Specialist Financing Institutions
Drawing on his experience leading ATIB Bank’s Namaa Tamweel initiative since 2019, Elbouri highlighted the unique challenges of financing start-ups and SMEs. These businesses typically lack:
- Financial track records
- Operational and managerial experience
- Assets or collateral
He noted that start-ups require hands on incubation mentoring and financial literacy training services that traditional high street banks are not designed to provide. For this reason, he stressed the urgent need for specialised financing entities operating under dedicated laws and regulatory frameworks.
Elbouri also discussed the Central Bank of Libya’s current treatment of high-risk loans. Because these loans lack collateral the CBL requires banks to set aside full provisions which can make it challenging to extend financing to young or innovative enterprises. He noted that establishing a distinct regulatory category for start-up and SME lending could enable banks to participate more effectively in this sector.
Investment Funds and Regulatory Obstacles
Elbouri noted ATIBs efforts to establish an investment fund to support risk-based financing. However, progress was hindered by:
- A legal cap limiting banks to a 10% investment in such funds
- Institutional conflict between the CBL and the Libyan Stock Market
- Libya’s broader political fragmentation
He reiterated that globally banks commonly channel investment through specialised arms or funds focused on sectors such as education healthcare housing and high risk innovation a model Libya must adopt.
Collateral Challenges: Real Estate and Land Use
Elbouri highlighted significant structural barriers to lending caused by:
- The continued closure of Libya’s Real Estate Registry since 2011 preventing banks from verifying ownership or encumbrances on properties offered as collateral
- Urban planning failures resulting in construction on land without clear legal designation
- The lingering effects of Law No. 4 of 1978 which entrenches disputed property ownership and prevents banks from enforcing collateral claims through the courts.
These issues make property-based lending, a global banking standard, nearly impossible in Libya.
The Absence of a Functional Credit Bureau
Elbouri stressed that no modern banking system can operate without a fully functional credit bureau. While such a bureau exists on paper in Libya, it remains incomplete and outdated preventing banks from accurately assessing borrower’s creditworthiness.
Conclusion: Banks Cannot Gamble with Depositors Money
In closing Elbouri expressed astonishment that despite these numerous legal structural and regulatory barriers the public continues to demand that Libyan banks provide unsecured loans to youth and start-ups.
“Banks are not gamblers. The money they lend is not their own it belongs to the depositors. Banks are entrusted with safeguarding this money and are legally obligated to manage it responsibly.” he stated.
Elbouri reaffirmed Tadawul Techs commitment to advancing modern financial solutions and advocating for the regulatory reforms needed to build a dynamic inclusive and sustainable financing ecosystem in Libya.
