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Identifying Action to Improve Access to Finance for SMEs and Private Sector Development in Libya (EuropeAid FWC Lot 10 2017/393896)

Identifying Action to Improve Access to Finance for SMEs and Private Sector Development in Libya (EuropeAid FWC Lot 10 2017/393896)






February 2018 – May 2018


Pinto Consulting

Project Description

The scope of the project was to:

  • Conduct a preliminary assessment of the banking sector in Libya and more in general on the available sources of finance for local SMEs;
  • Identify the conditions, the modality of support to prepare and develop efficiently the private sector environment and access to finance conditions in Libya.

The assessment allowed the formulation of recommendations on possible fields of intervention for new initiatives supported by the European Commission in Libya.

The specific objective of the assignment was to conduct a thorough analysis of the existing Libyan Strategies, Policies and Programmes which aimed to facilitate or have a sustainable impact on access to finance and the development of the private sector.

The possible options for an EU intervention were drafted in close collaboration with the EU and the relevant Libyan stakeholders, with a view to improving the business and investment environment, including improved access to finance conditions, aiming at increasing the competitiveness, sustainability and job creation potential of SMEs. This work was complemented by the experts' own thorough analysis of the Libyan business environment and conditions to access to finance, as well as government strategies and policies in support of the private sector development and the ongoing and future interventions of other donors.

We produced a detailed design of a possible EU support programme, structured around the following intervention areas:

1) Banking sector

  • Financial supervision: the role of the Central Bank in this sense and the available financial infrastructure;
  • Number of financial institutions licensed and operating in the market;
  • The governance and capital structure;
  • Market shares and concentration of capital;
  • Typology of the MSME lending portfolio per institution (% of total, lending conditions, non- performance loans, etc.);
  • Availability of SME access to finance products (e.g., equity/ lending/leasing, short and long-term, collateral requirements);
  • Main sources of financing for Libyan SMEs (banking / non-banking / own resources, domestic versus international capital including remittances);
  • Main constraints hampering access to banking finance;
  • Type of finance needed according to the sector of operation;
  • The potential for developing programs of public guarantees for MSMEs.

2) Non–banking financial institutions

  • We provided a review of the non–banking financial institutions operating in the market, products they offer to SMEs, and the prospect for developing other forms of non-banking financing (factoring, leasing etc.), including alternative forms (crowdfunding, peer-to-peer lending, etc.).

3) Private sector

  • An overview of the state of play of private sector and key factors that are holding back its development in Libya (as analysed in donors public reports);
  • An overview of ongoing or planned initiatives addressing private sector development issues in Libya, implemented by national authorities, the EU and other donors;
  • A “needs assessment/gap analysis” of the private sector to identify needs and constraints (skills, access to finance, support services etc.);
  • An overview of strengths/opportunities of the Libyan private sector, with emphasis on the areas with a stronger potential for immediate growth;
  • A methodology for the EU delegation team interested in developing projects/programmes on private sector development in Libya.

Services Provided

  • Analysed key constraints and development opportunities
  • Reviewed lessons learned from past experience
  • Interviewed key stakeholders and civil society
  • Submitted a political economy analysis (including drivers for change, possible obstacles in relation to the reform agenda, analysis of the stakeholders and interest groups, as well as constraints to the Private Sector Development)
  • Justified acceptance and modification of the proposed support to the Government's programme
  • Selected preferred design option, including the financing modality on which to base the financing and implementation of the support
  • Prepared the basis for the future formulation of the proposed programme
  • Prepared complete documentation to allow further formulation of the preferred option
  • Formulated Draft Identification Fiche