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Libya’s investment highway in Africa: Will it leave potholes? 1

As the calls for democracy, regime change and revolutions are sweeping across North and West Africa. Individuals, interested parties and organisations have started wondering about the new political and economic face of these regions. One thing for sure is that it will take sometime for countries at the spotlight to recover or for them to see blossoms of any sort.

In Libya, for example where no town has been left untouched the situation looks not only bad but it gives people a reason to doubt if the country will recover soon from the damages it has acquired in the past months.

Perhaps this march to democracy in the Middle East and North Africa and in this case Libya will not only affect that country but also the entire continent of Africa. The rebuilding Libya’s is likely to impact on investment projects doted across Africa. What will happen if Muammar Gaddafi goes? Will the investments go on? These are some of the questions being asked.

According to data obtained from the African Development Bank, Libya now has about $370 million in its account. Apart from that it is one of the bank’s leading regional shareholders with 4 percent voting power.

It is one of the biggest contributors to the budget of the African Union, the 53-country body which is supposed to function along the lines of the European Union. Libya is one of the five countries along side Algeria, Egypt, Nigeria and South Africa who cover 75 percent of the union’s budget.

The Business Council for Africa West & Southern (BCA W&S) a UK based non-profit organisation and think tank says that Libya provides 15 percent of AU funding and also covers the dues of a number of smaller African states, which were badly hit by the 2008 financial crisis.

The organisations further states that this commitment is around $40 million annually although it says that paying dues for other cash-strapped African countries is not necessarily unique to Libya.

And according to a senior African Union official Libya’s contribution to AU funds which not all countries do, buys its influence. Notwithstanding its investment and financial support is not only one sided as one would say. It has touched even communities and close to 30 countries. Hence it is a head to tile and vice-versa.

In July 2007, its telecom arm, LAP Green took a 61 percent stake in the African Development Bank-backed Regional African Satellite Communications Organisation Members (Rascom) project, which provides point- to multi-point telecommunications services across the continent.

Last year Gaddafi said he would invest $97 billion in the continent to free it from Western influence on condition that African states rid themselves of corruption and nepotism. This money is about the amount Libya holds in foreign currency reserves, according to official data. The countries that benefit, and many independent observers, say Libya is bringing real benefits for Africa.

The country also holds billions of dollars in assets across the continent through subsidiaries of its $70 billion sovereign wealth fund. The money is invested through the $5 billion Libya Arab Africa Investment Co (Laaico), through Libya Oil Holdings, Libya African Investment Portfolio and Libyan Foreign Investment Company (Lafico).

Another of the fund’s projects is LAP Green Networks, a mobile phone operator which has commercial operations in Zambia, Niger, Ivory coast, Uganda and Rwanda with operations in Chad, Sierra Leone, Togo and southern Sudan underway.

The golden question is. What might happen in case Gandalf leaves? Richard Mbewe, a Zambian professor of International Economics based in Poland says the out come is twofold. The first thing he points out is that since Gaddafi was behind all these investment decisions. In light of a new nationalist government taking over, these investments could be cancelled off and the money taken back to Libya?

Mbewe says that the second element is a risk of a power vacuum upon Gaddafi’s departure. Islamic fundamentalists might fill this he says might want to keep intact these investments (especially in telecommunications) in order to foster their further development of Islam in these countries where LAP Green is operating, especially in Africa south of the Sahara.

Libya, which also has important investments in other parts of the world, including Europe, which has made EU leaders uncomfortable in the wake of the violence. Might leave a very big pothole in Africa’s investment high way.

By Joe M. L. Kaluba – Afronline

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  1. steve Chongo says:

    The ripple effects of gaddaffi’s departure are obvious.it will definitely cause some economic and political quakes in african countries whose presidents benefited from the man.It was there for all to see that some of the presidents recieved ‘camels’ from him,which made them nod to all that he said.

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