Skip to main content
  • News
  • Events
  • Blog
  • Search

Natural Resource Governance Institute

  • Topics
    Beneficial ownership
    Economic diversification
    Mandatory payment disclosure
    Revenue sharing
    Civic space
    Energy transition
    Measurement of environmental and social impacts
    Sovereign wealth funds
    Commodity prices
    Gender
    Measurement of governance
    State-owned enterprises
    Contract transparency and monitoring
    Global initiatives
    Open data
    Subnational governance
    Coronavirus
    Legislation and regulation
    Revenue management
    Tax policy and revenue collection
    Corruption
    Licensing and negotiation
  • Approach
    • Stakeholders
      • Civil society actors
      • Government officials
      • Journalists and media
      • Parliaments and political parties
      • Private sector
    • Natural Resource Charter
    • Regional knowledge hubs
  • Countries
    NRGI Priority Countries
    Colombia
    Guinea
    Nigeria
    Tanzania
    Dem. Rep. of Congo
    Mexico
    Peru
    Tunisia
    Ghana
    Mongolia
    Senegal
    Uganda
    OTHER COUNTRIES
  • Learning
    • Training
      • Residential training courses
        • Executive
        • Anglophone Africa
        • Francophone Africa
      • Online training courses
        • Advanced
        • Negotiating Contracts
        • Massive open online course (MOOC)
        • Interactive course: Petronia
      • Trainers' modules
        • (empty)
    • Primers
    • Glossary
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
      • 2020-2025 Strategy
      • Country prioritization
    • NRGI impact
    • Board of Directors
    • Emeritus Board Members
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Grant-making
    • Financials
    • Privacy policy
    • Contact us
  • News
  • Events
  • Blog

You are here

  1. Home
  2. Blog

New Libyan Oil Wealth Fund Chief Talks Reform, Transparency

30 September 2016
Author
Yusser AL-Gayed
Topics
CorruptionLegislation and regulationRevenue management
Countries
Libya
Stakeholders
Civil society actorsGovernment officialsJournalists and mediaParliaments and political partiesPrivate sector
Precepts
P1 P2 P9 What are Natural Resource Charter precepts?
Social Sharing

Oil and the revenues it brings shape Libya’s economic and political landscape. The Libyan Investment Authority (LIA) and its management, therefore, are of central focus for good governance advocates inside and outside the country.

The LIA manages assets worth more than USD 64 billion, invested in 55 countries. Over the past two years, its organizational structure has fractured, leading to a split into two parallel authorities: one based in Malta, the other in Tripoli. Country observers see this as an entirely politicized development that disregards the LIA’s role as guardian of the Libyan people’s money.

Data on LIA management and performance is scarce. As an ongoing exercise, NRGI is carrying out a “health test” on the authority. In addition to the LIA's core investments, NRGI is reviewing the authority's five subsidiaries: the Libyan Arab Foreign Investment Company (LAFICO); the Libyan African Investment Company (LAICO); Libyan African Investment Portfolio (LAP); the Long-Term Investment Portfolio (LTP); and the Libyan Local Investment and Development Fund (LLIDF). NRGI has concluded that the LIA is non-compliant with the Santiago Principles and meets just four of 16 regulatory standards essential for promoting good sovereign wealth fund governance.

In 2012, the government expressed interest in reforming the LIA’s structure. As the political tug of war over the authority continued, however, possible changes were abandoned. In an effort to reunite various sovereign institutions such as the National Oil Corporation, the Central Bank of Libya and LIA, the internationally recognized Presidential Council (PC) in August appointed a steering committee to run LIA on an interim basis, with Dr. Ali Mahmoud acting as chairman.

In September 2016, I spoke with Mahmoud to ask about some of NRGI’s findings thus far, and what plans he and his committee have to improve the LIA’s governance.

Yusser AL-Gayed: Is it safe to assume that you and the LIA steering committee have complete control of the LIA at this point?

Ali Mahmoud: While there are still some administrative procedures to follow, we are going to great lengths to build bridges across the various divisions that had occurred over the past two years. On 25 September, we met with [LIA] subsidiaries from all over Libya and abroad and we have started to reduce the institutional and political gaps with the aim of uniting the subsidiaries. We have, however, already come to a preliminary agreement with all parties and made an official announcement.


What do you see as the biggest challenge that faces Libya’s sovereign wealth fund?

Preserving the money of the Libyan people. Unfortunately, frozen assets lose value. But there is a tradeoff between that and assets being seized by political factions and used either to fuel further conflict or to finance wasteful recurrent expenditure items, such as salaries and subsidies which isn’t what the LIA was established to do.

Our initial findings indicate that the LIA is compliant on withdrawal rules, revenue deposits, public disclosure of audit reports and coordinating with other government agencies in managing funds. This leaves a lot to be desired—LIA lacks significant investment standards, operational and management standards and last, but not least, transparency and accountability standards.

Do you think that given the political situation today, you and your committee will be able to manage positive change in a year’s time?

Governance of the LIA is stipulated in law 13 of 2010. We understand that there are probably violations of the law due to the political divisions in Libya today. Some also argue that the law needs to be revisited. This would require legislative changes that probably aren’t feasible in the current climate. We are very much aware of the internal failings of LIA. These areas are operational, investment-related and managerial in nature. Transparency and accountability will most definitely be a priority for us over the next year. Libyans need to know how their money is managed, where it is invested and by whom.

During NRGI’s sixth Transparency Working Group meeting in Libya last November, we discussed how the LIA and its subsidiaries could help bring stability to Libya. Do you think there is merit in using the LLIDF as a stabilization facility to provide the Presidential Council with resources to develop desperately needed infrastructure?

While there is merit in this, the LLIDF’s mandate is to diversify the economic base of the country and provide jobs. Ultimately, it is an investment vehicle and is profit-driven. We are exploring mechanisms for this to work—through public-private partnerships, for example—but we do think that the LLIDF’s investment portfolio should take into account wider stabilization efforts that meet the immediate needs of the country.

NRGI is assisting Libya to improve governance throughout the natural resource value chain. NRGI will host a 26 October workshop to present its findings to the LIA steering committee and other stakeholders.

Yusser AL-Gayed is NRGI’s senior advisor for the Middle East and North Africa. He is also a core governments functions advisor in governance and fragility at the United Nations Development Programme.

Related content

NRGI’s Top 10 Blog Posts in 2016

13 December 2016

Oil, Order and Diversification in Libya

Yusser AL-Gayed
12 August 2016

Carole Nakhle on the Global Oil Market, Prospects for the Middle East, and Women in Oil and Gas

Max Brett
7 December 2016

Countries Struggling with Governance Manage $1.2 Trillion in Resource Wealth

David MihalyiAnna Fleming
8 September 2017

At International Anti-Corruption Conference, Calls for Sustained—and Heightened—Vigilance

Max George-Wagner
16 December 2016
Helping people to realize the benefits of their countries’ endowments of oil, gas and minerals.
Follow on Facebook Follow on Twitter Subscribe to Updates
  • Topics
    Beneficial ownership
    Civic space
    Commodity prices
    Contract transparency and monitoring
    Coronavirus
    Corruption
    Economic diversification
    Energy transition
    Gender
    Global initiatives
    Legislation and regulation
    Licensing and negotiation
    Mandatory payment disclosure
    Measurement of environmental and social impacts
    Measurement of governance
    Open data
    Revenue management
    Revenue sharing
    Sovereign wealth funds
    State-owned enterprises
    Subnational governance
    Tax policy and revenue collection
  • Approach
    • Stakeholders
    • Natural Resource Charter
    • Regional knowledge hubs
  • Priority
    Countries
    • Colombia
    • Dem. Rep. of Congo
    • Ghana
    • Guinea
    • Mexico
    • Mongolia
    • Nigeria
    • Peru
    • Senegal
    • Tanzania
    • Tunisia
    • Uganda
  • Learning
    • Training
    • Primers
  • Analysis & Tools
    • Publications
    • Tools
    • Economic models
  • About Us
    • What we do
    • NRGI impact
    • Board of Directors
    • Emeritus Board Members
    • Advisory Council
    • Leadership team
    • Experts and staff
    • Careers and opportunities
    • Grant-making
    • Financials
    • Privacy policy
    • Contact us
  • News
  • Blog
  • Events
  • Search