Libya: $70 bln fund set to thaw from UN asset freeze
Formerly one of the wealthiest nations in Africa under the rule of Muammar Gaddafi, Libya stands with its territory divided and its economy scarred from its 6-year-long civil war ending in 2020. However, hopes are on the horizon for the country as it is expected to regain access to the continent’s largest sovereign wealth funds in over a decade.
The Libyan Investment Authority is set by the end of the year to actively manage its $70 billion worth of assets for the first time following the expected end to a UN asset freeze on the wealth fund, reported Reuters on August 2nd.
The LIA was established in 2006 by Gaddafi to manage the country’s oil wealth sustainably. Following the Arab Spring, the United Nations froze all assets held by the wealth fund after Gaddafi was toppled.
The LIA has applied for a UN Security Council sign-off, which would all the fund to make new investments and move cash from negative interest rate accounts that have been losing money.
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Ali Mahmoud Mohamed, the CEO and chairman of LIA, said that the fund was confident the UN would give the landmark approval by November or December following its investment plan given in March.
“We believe our investment plan with be accepted … we don’t think they will refuse it,” stated Mohamed.
LIA has a four-part plan to manage the fund, initially reinvesting money built up during the freeze, such as payouts from bond holdings.
The LIA had previously tried to access its funds. However, the attempt came amidst the turmoil following the fall of Gaddafi, when the authority had competing chairs backed by the different factions in the country. A British court eventually ruled in Mohamed’s favour in 2020.
A Deloitte audit found in 2020 that the LIA had lost approximately $4.1 billion in potential equity returns due to the asset freeze.
Mohamed stated that the fund’s transparency has since improved, with the authority releasing audited financial statements for 2019 and 2021. It is aiming to publish figures for 2020 soon and hopes to provide them annually for the coming years.
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The wealth fund has also greatly improved in Global SWF rankings for sustainability and governance, jumping from 98th out of 100 sovereign funds in 2020 to 51st this year.
LIA’s $70 billion in assets consists of $29 billion in global real estate, $23 billion in deposits invested across Europe and Bahrain, and an additional $8 billion in equities spread over more than 300 companies globally. It also holds around $2 billion worth of matured bonds.
Though the UN Security Council has not immediately commented on thawing funds, it stressed the “importance of guaranteeing the frozen funds for the benefit of the Libyan people” last year after meeting with the LIA.
Libya is one of Africa’s largest oil exporters, pumping around 1.2 million barrels per day. The LIA seeks to increase oil exports with increased domestic investment, which will also target solar power.
If the investment proposals are not approved, Mohamed said, “we will keep trying…we will keep asking and requesting.”
Reuters and agencies
