Offloading state firms will broaden the base of ownership
PRIVATIZATION LIBYANS GET THE CHANCE TO RUN THEIR OWN BUSINESSES AS PUBLIC FIRMS MOVE TO THE PRIVATE SECTOR

The newly privatized Wool and Textile Company plans to expand from the domestic market to exports.

PRIVATIZATION is a sensitive and much debated issue in Libya, where concerns about social justice and economic effectiveness are matched with fears that jobs could disappear along with state subsidies when privatized firms confront the problem of over-employment.

The 360 state enterprises the government has scheduled for transfer to the private sector range from steel mills, cement plants, and engineering firms to food factories, truck and bus assembly lines, and state farms.

The government says the effect of its program will be to widen the base of ownership. The plan is to convert large numbers of Libyan workers into owners, and give a fair chance for everybody to participate in the economy.
With privatization, up to 30% of the shares of medium-sized state companies will go to the people who work in them. In the case of smaller firms, the workers could take over the whole company.

However, with a stake in the company will come responsibility. “It will be under their ownership, and no-one is going to subsidize them,” says Abdulgader Elkhair, Secretary of the General People’s Committee for Economy and Trade.

MAHAMUD AHMED AL-FTISE Secretary of the General People’s Committee at GBOT

EL MEHDI ALI EL MEHDI General Manager of the Wool Textile Company

Mahamud Ahmed Al-Ftise, Secretary of the General People’s Committee at the General Board of Ownership Transfer of Companies and Public Economical Units (GBOT), acknowledges the need to win people over to the change. “It is a big step and some are afraid of it,” he says. “We are making every effort to get the message across to the Libyan people that this is their chance to invest and make a change in the country. We are restructuring the economy and giving the private sector a chance to grow.”

He is confident the people will rise to the challenge of running businesses for themselves. Libyans, he adds, are natural entrepreneurs. “Before we had oil, historically, this country was built on trade.”

Taher Jehaimi, Secretary of the General People’s Committee for Planning, acknowledges that over-employment is an important issue for former state-owned companies. “The total figures are not particularly frightening, but every redundant worker must find or be offered a job. Job opportunities are available but they are not always in line with people’s wishes or expectations.”

The government is launching a lending program to strengthen the private sector, with credit and loans being made available on easy terms for small and medium businesses. “The goal is to make people self-employed and self-reliant,” says Dr. Jehaimi.

Among the companies that have already been privatized is the Wool Textile Company, a carpet manufacturing enterprise that was formerly part of the national Spinning and Weaving Company.

General Manager El Mehdi Ali El Mehdi welcomes the privatization, which follows the government’s model and leaves 30% of the shares in the hands of the workers. The remaining 70% of shares are held by wool producers and wool merchants.

“The privatization process is good for companies because it gets rid of the bureaucracy, which was a big problem,” declares Mr. El Mehdi, adding that the company can now fly freely, without being held back by red tape. “It is better that we can take our own decisions and operate without the regulations that were tying our hands. We can have minimum labor—not like before—and can use it the way we like.”

The Aman Strok Company for Tires seeks latest technology.

The Wool Textile Company has approximately 500 staff and produces around one million square meters of tufted carpet, 300,000 square meters of woven carpet, and three million square meters of needle felt carpet per year. “We intend to double these figures,” says Mr. El Mehdi.

The high quality and resilience of Libyan wool makes it particularly suitable for carpet manufacture. At present, the new company focuses primarily on the local market, although it does export processed wool to carpet producing countries such as Pakistan and Iran.

Carpet exports from Libya stopped some years ago, but the company has plans to increase production and look for sales abroad. “We intend to resume the export program and increase our production by high-speed machines,” says Mr. El Mehdi.

Ideally, the company would like to find an American investor who could provide technical know-how and strategic marketing facilities. “We are seeking a partnership that will make us competitive internationally,” he says.

“We are looking to market our products in the States and all over the world. We know that the American market is a good one because Egypt exports to it.”

Another of the first state-run enterprises scheduled for privatization was the Aman Tires and Batteries Company. The firm was divided into two separate entities, with the tires part of the operation becoming the Aman Strok Company for Tires Industry.

The company produces approximately 400,000 to 500,000 tires annually in a variety of sizes for cars, light and heavy transport vehicles, and tractors. Production is to high quality specifications, based on standards set by the European Tire and Rim Technical Organization.

SULEMAN M. ABU-SA’A General Manager of the Aman Strok Company for Tires

There are currently around 800 employees—partly the result of the government’s drive for full employment. General Manager Suleman M. Abu-sa’a believes that is too many and says it needs to shed 150 jobs.
He says the firm has to operate in a more competitive, cost-effective mode. “We have to work as a private company. We have to consider the cost of production, and have to reduce electricity costs and the number of employees.”

The company hopes to achieve a technology upgrade through a partnership with a foreign investor. “Investment and financing is not as difficult to obtain as know-how,” observes Mr. Abu-sa’a. “We want to create a joint venture with a foreign company in order to improve the factory.

“We invite American companies to participate and join us. We are considering building a new factory, and we need to incorporate the latest technology.”

Aman has developed a partnership with Pirelli to produce tires under their brand name. “We have the same quality control as foreign companies, but Libyans like brand names,” says Mr. Abu-sa’a.

The company would like to be able to export more of its products. “We don’t export much of our production at the moment, but we are starting to export some products to Tunisia,” concludes the general manager.