Encouraging Economic Diversification in Libya Through Public‑Private Dialogues

2. Promoting Public Private Dialogue (PPD) in Libya

Introduction

In a context of ongoing fragility, fostering structured dialogue between the public and private sectors in Libya presents both urgent needs and significant challenges. Since 2020, the “Promoting Public-Private Dialogue in Libya” project has worked to lay the foundations for more inclusive, sustained engagement between government institutions and private sector actors. Operating in a post-conflict environment marked by limited state capacity, the project draws on international principles – such as the Kampala Principles on Effective Private Sector Engagement in Development Co-operation (2019) – to promote trust-building, joint problem-solving, and shared ownership of reform processes.

Public-Private Dialogue (PPD) refers to structured, institutionalised processes that bring together public and private stakeholders to identify constraints, co-create policy solutions, and support implementation (Box 2.1). In Libya, the project has used this approach to help surface key policy and regulatory challenges, introduce international experiences relevant to recovery and diversification, and build local familiarity with structured dialogue. Efforts have been made to expand participation beyond Tripoli, engaging regional and sectoral representatives in five key areas: agribusiness, banking and finance, ICT, infrastructure and construction, and transport and logistics. Dialogue has been supported through in-person consultations and a dedicated online platform offering learning resources and analytical tools. While PPD is not a substitute for strong institutions, in fragile settings like Libya it can provide a practical entry point for more inclusive policymaking and long-term resilience.

Box 2.1. PPD as a Tool for Economic Diversification and Private Sector Development

Public-Private Dialogue (PPD) helps address two major barriers to reform in fragile and transitioning economies: information asymmetry and fragmented policymaking. By convening diverse stakeholders, PPD aligns government priorities with private sector needs, grounding policy in market realities and supporting implementation through broader buy-in. It is particularly relevant in contexts focused on economic diversification. In centralised or resource-based economies like Libya, the private sector often lacks voice in policymaking. PPD can promote investment beyond dominant sectors (e.g. oil and gas), encourage competitive markets, and strengthen capacities in both public institutions and business communities.

When well-designed, PPD supports regulatory reform, SME development, sector coordination, and addresses constraints in finance, infrastructure, and labour, contributing to inclusive growth. However, it is not without risks – especially in fragile settings. These include rent-seeking, policy capture, marginalisation of SMEs and regions, or ineffective dialogues with no concrete outcomes (OECD, 2007[4]). PPDs may also become politicised or weaken public accountability if private interests dominate. To succeed, they must be transparent, inclusive, and guided by clear goals and accountability mechanisms. The OECD actively works to mitigate these risks and enhance the effectiveness of PPDs.

Beyond economic outputs, one of the most transformative aspects of PPD is its capacity to foster trust between public institutions and private actors. In post-conflict settings where institutions have weakened legitimacy and businesses operate in uncertainty, the lack of trust can be a major barrier to cooperation. PPD provides a neutral, transparent, and rules-based forum for dialogue, where actors can engage on equal footing. Over time, these structured exchanges help repair institutional relationships, reduce perceptions of arbitrariness in policymaking, and create momentum for sustained engagement. Key features of effective PPDs—such as the presence of impartial facilitators, inclusive stakeholder representation, and clearly defined objectives—contribute to establishing a culture of dialogue. This is essential not only for policy design, but for fostering long-term partnerships that extend beyond the dialogue itself.

The OECD PPD methodology, and the focus on fragile and conflict-affected contexts

The OECD has developed a structured approach to designing, implementing, and sustaining PPDs. This methodology is grounded in international best practices and adapted to the realities of the MENA region. It follows a three-phase process:

• Preparation – Mapping of stakeholders, identification of priority sectors or issues, and development of governance structures and facilitation mechanisms.

• Implementation – Organisation of structured and inclusive consultations, use of evidence-based policy papers to guide discussion, and facilitation of consensus-building across actors.

• Monitoring and Evaluation – Tracking outputs and outcomes, capturing lessons learned, and institutionalising mechanisms for dialogue and accountability.

PPD success depends on local ownership, continuity, and political commitment. The OECD approach emphasises the importance of “champions” within institutions and business communities who can drive the process forward, maintain trust, and ensure that dialogue leads to real policy changes.

The value of PPD is particularly acute in fragile settings, where political instability, institutional fragmentation, and low trust present serious obstacles to reform. In such environments, PPD plays a role in peacebuilding, establishing multi-stakeholder dialogue and collective action. Trust deficits and government instability hinder formal discussions, making it essential to involve technical-level officials and leverage informal communication channels for structured engagement offers a rare opportunity. In particular, PPD offers an opportunity to: i) Bridge public-private divides in contexts of weak formal coordination; ii) Build local ownership over reform by including actors from diverse regions and sectors; iii) Promote inclusive governance by amplifying the voices of SMEs, youth, and women entrepreneurs; iv) Deliver early wins through achievable, non-political policy changes, even when legislative progress is limited.

For these reasons, the OECD’s work in Libya and other fragile states has focused on tailoring the PPD process to the context—prioritising local implementation partners, decentralised dialogue formats, and realistic, consensus-based reform agendas. In Libya, this approach has helped restore channels of communication between public authorities and economic actors across regions, enabling the co-design of policy solutions in key sectors such as finance, agribusiness, ICT, infrastructure, and transport

Since its inception, the “Promoting Public-Private Dialogue in Libya” project has undertaken a range of targeted activities to foster inclusive engagement and build the foundations for structured dialogue. Over 200 representatives from both the public and private sectors have been directly involved in consultations, workshops, and exchanges to identify priorities areas for the project. Benefitting from the support of a local implementing partner, the project has mapped and developed sector-specific networks across five key sectors – agribusiness, banking and finance, ICT, infrastructure and construction, and transport and logistics – spanning four different regions of the country. This groundwork has enabled more tailored and regionally responsive engagement with key stakeholders.

To support learning and capacity-building, the project has delivered 45 PPD sessions and workshops, offering a platform for dialogue on public-private collaboration as a pathway to economic growth and diversification. Peer-learning sessions have helped reinforce national dialogue and build bridges to international experience, while policy recommendations and reform initiatives have been refined through targeted exchanges with regional practitioners. Feedback from Libyan stakeholders and donor partners underscored the project’s relevance and effectiveness, with many viewing it as a strong foundation for sustainable economic recovery and a broader political transition.

PPD as a tool for resilient policymaking, in regional Libya

Successful Public-Private Dialogue (PPD) hinges on inclusivity, a nuanced understanding of local power dynamics, and the presence of well-connected local facilitators who can build trust and ensure long-term sustainability. In fragile contexts, a persistent challenge lies in reaching and mobilising marginalised groups, particularly those in remote or geographically isolated areas.

Libya’s deep regional disparities present distinct obstacles to effective PPD. In the Northwest, cities such as Misrata, Zintan, and Zawiya benefit from relatively developed local structures, yet are undermined by internal tensions, smuggling networks, and human trafficking, which erode governance and security. The Northeast – home to Benghazi, Bayda, Tobruk, and Derna – has comparatively stronger institutions, shaped by early support for the 2011 uprising and the NATO intervention. However, the region remains vulnerable to instability due to ongoing factional rivalries and movements advocating for regional autonomy. In the South, governance is more heavily influenced by ethnic and tribal affiliations, with chronic challenges related to border control, oil infrastructure, and systemic marginalisation. These dynamics heighten the region’s susceptibility to conflict and hinder inclusive policy engagement (Fitzgerald, 2018[5]). To account for these differences, different PPD sessions were held in: Tripoli, Benghazi, Misrata, and Sabha.

Libya’s regional differences also reflect varying degrees of fragility. In the Northwest, cities like Misrata, Zintan, and

• Tripoli: Libya’s capital faces political fragmentation, security challenges, and economic instability due to corruption, a liquidity crisis, and power outages. PPD discussions prioritised restoring trust in banking, expanding credit access for SMEs, and enhancing anti-money laundering measures. Policymakers also explored ways to reduce ICT costs, digitalise public services, and improve infrastructure financing through public-private partnerships (PPPs) to reactivate stalled projects.

• Benghazi: Conflict has severely impacted Benghazi’s economy, with infrastructure damage and limited investment. While port and airport reopenings offer hope, youth unemployment remains high. PPD discussions focused on agriculture sector transformation, advocating for regulatory reforms, stakeholder collaboration, and technology adoption. Banking sector dialogues supported governance reforms, anti-money laundering laws, and a Credit Guarantee Fund for micro- small- and medium-sized enterprises (MSMEs). Stakeholders also explored enhancing telecommunications infrastructure through PPPs and streamlined regulations.

• Misrata: Considered more stable, Misrata’s economy benefits from its port, airport, and state enterprises. PPD discussions addressed transportation improvements, advocating for better road safety, logistics integration, and airport/port operations. A proposal for a unified transportation strategy was developed. In agriculture, policymakers emphasised education, food safety, and resource management, introducing initiatives such as awareness campaigns, a safe food initiative, and modern irrigation practices.

• Sebha: A key logistical hub in southern Libya, Sebha struggles with high unemployment, informal economies, and weak infrastructure. PPD discussions explored infrastructure financing and governance, promoting legal reforms, PPPs, and digital governance. In ICT, policymakers considered regional sub-data centres, fibre-optic expansion, and private sector incentives. The agricultural sector dialogue addressed legislative updates, public-private collaboration, and activating free trade zones for investment and job creation.

The PPD Project in Libya successfully conducted 45 targeted sessions in these four cities, assessing key challenges and opportunities in each sector. These efforts were complemented by capacity-building activities and peer-learning exchanges to strengthen knowledge-sharing and engagement with regional stakeholders. To ensure continuity, a technical steering committee was established. The analysis in the following chapters provides a comprehensive overview of discussions, with final recommendations reflecting key takeaways from the PPD sessions.

Successful Public-Private Dialogue (PPD) depends on inclusivity, a deep understanding of local power dynamics, and the involvement of well-connected local facilitators who can build trust and promote long-term sustainability. In fragile settings like Libya, mobilising marginalised groups—particularly in geographically remote or underserved areas—remains a persistent challenge. These difficulties are compounded by political instability, institutional fragmentation, and stark regional disparities that affect the capacity for effective policy dialogue.

Libya’s regional landscape is marked by distinct governance structures and varying degrees of fragility, each posing different challenges for implementing PPD. In the Northwest, cities such as Misrata, Zintan, and Zawiya benefit from relatively developed local institutions, but face persistent issues such as internal political tensions, smuggling, and human trafficking, all of which erode governance and undermine security. In the Northeast, including Benghazi, Bayda, Tobruk, and Derna, stronger local institutions emerged early on due to support for the 2011 uprising and the NATO intervention. However, this region is still affected by factional rivalries and movements advocating for regional autonomy, threatening long-term stability. In the South, governance is shaped by ethnic and tribal affiliations, with deep-rooted challenges linked to border control, oil infrastructure, and marginalisation. These factors increase the region’s vulnerability to conflict and limit its integration into national policy processes (Fitzgerald, 2018[5]).

To respond to these regional differences, the PPD project implemented a decentralised engagement strategy, organising structured dialogue sessions in Tripoli, Benghazi, Misrata, and Sebha. These sessions were tailored to the specific economic and governance challenges of each locality:

• In Tripoli, the capital’s political fragmentation, liquidity crisis, and power outages created a difficult environment for business. PPD discussions prioritised rebuilding trust in the banking sector, expanding credit access for SMEs, and strengthening anti-money laundering measures. Policymakers also explored strategies to lower ICT costs, digitalise public services, and unlock infrastructure financing through public-private partnerships (PPPs) to reactivate stalled projects.

• In Benghazi, a city heavily affected by conflict, infrastructure damage and limited investment continue to constrain growth. While recent reopenings of the port and airport are promising, youth unemployment remains high. PPD dialogues focused on modernising the agriculture sector through regulatory reform, stakeholder collaboration, and technology adoption. In parallel, the banking dialogue addressed governance reform and the establishment of a Credit Guarantee Fund for MSMEs. Telecommunications infrastructure was also highlighted, with emphasis on PPPs and streamlined regulatory frameworks.

• Misrata, often regarded as one of Libya’s more stable cities, benefits from strong commercial infrastructure including a functioning port, airport, and several state enterprises. PPD activities centred on improving transportation, with proposals to enhance road safety, logistics integration, and port/airport operations. A unified national transportation strategy was drafted. In agriculture, emphasis was placed on food safety, environmental sustainability, and educational initiatives, including awareness campaigns and support for modern irrigation techniques.

• In Sebha, a critical logistics hub in the South, the dialogue focused on overcoming widespread unemployment, weak infrastructure, and reliance on informal economies. PPD sessions addressed legal reforms and infrastructure financing, alongside opportunities for digital governance and PPPs. ICT discussions included proposals for regional sub-data centres, fibre-optic expansion, and incentives for private sector investment. In the agriculture sector, the dialogue promoted updated legislation, public-private collaboration, and activation of free trade zones to stimulate investment and job creation.

Through these targeted regional dialogues, the PPD project engaged over 200 stakeholders from across the public and private sectors, helping identify priority areas likely to have a positive impact on different local economies. Supported by a local implementing partner, the project developed sectoral networks across four regions and five strategic sectors. In total, 45 PPD sessions and workshops were delivered, complemented by peer-learning activities and international exchanges. These efforts were supported by a technical steering committee to ensure continuity and alignment. The following section provides details about the sectors and actions identified through the PPD.

Prioritised economic sectors

Building on the insights gathered through regional consultations, the EU-OECD project on Promoting Public-Private Dialogue in Libya (2020–2023) identified five strategic sectors as entry points for reform: agribusiness, banking and finance, ICT, infrastructure and construction, and transport and logistics. These sectors were selected based on national development priorities, Libya’s economic potential, and the need to foster private sector growth and reduce dependency on public employment. The selection process drew on prior OECD analysis (OECD, 2016[3]), ongoing engagement with Libyan stakeholders, and alignment with regional economic contexts (Box 2.1).

The prioritisation reflects a focus on sectors with strong employment potential, opportunities for value addition and export growth, and relevance to both short-term recovery and longer-term diversification. These findings were reinforced during the development of the Libya Short-Term Action Plan for SME Development (2020), which engaged over 200 public and private institutions across the country. Establishing a national PPD platform around these five sectors has provided a structured space for dialogue, helping to connect local insights with national reform efforts and paving the way for more coherent and inclusive policy implementation.