LIBYA'S NASCENT BUSINESS INCUBATOR PROGRAMS A POTENTIAL

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000937

SIPDIS

STATE FOR EEB (EGAN); ENERGY FOR GINA ERICKSON; COMMERCE FOR
NATE MASON; CAIRO FOR TREASURY LIAISON (SEVERENS)

E.O. 12958: DECL: 12/10/2018
TAGS: ECON ECIN ELAB EPET EMIN KIPR PGOV BBSR LY
SUBJECT: LIBYA'S NASCENT BUSINESS INCUBATOR PROGRAMS A POTENTIAL
AREA FOR BILATERAL ENGAGEMENT

REF: TRIPOLI 917

CLASSIFIED BY: John T. Godfrey, A/DCM, Embassy Tripoli, U.S.
Dept of State.
REASON: 1.4 (b),(d)

1. (C) Summary: In a recent roundtable discussion, experts at
Libya's Economic Development Board (EDB) described their nascent
Business Incubator Program to a visiting U.S. Commercial Law
Development Program (CLDP) specialist. The Libyan program seeks
to support existing businesses and to create new small
businesses in Libya, especially in non-hydrocarbon sectors, and
includes a component for re-direction of former WMD scientists.
The group discussed their efforts to reach out to other business
incubators overseas, particularly in the U.S., and welcomed the
CLDP's help in facilitating such contact. A representative of
the EDB noted that the Government of Libya (GOL) could fund
visits to the U.S. by Libyan experts and asked for detailed
proposals (CLDP is preparing the proposals and can help
facilitate the visits). End Summary.

TECHNOLOGY INCUBATORS BEGET BROADER BUSINESS INCUBATOR PROGRAM


2. (C) In a meeting on November 18, Dr. Omar Annakou, head of
Libya's Incubator for Technology and Innnovation (ELITE),
explained the program to visiting U.S. Department of Commerce
CLDP specialist Marc Tetjel and Econoff. Annakou explained that
the program began a year ago and focused on developing Libya's
research capacity; it will expand with the opening of business
incubators in the major cities of Tripoli, Benghazi and Sabha.
Part of ELITE's original mandate was to help re-direct the
efforts of scientists formerly involved in Libya's WMD
development program. In addition to laboratory facilities,
there are several precision-tooling facilities that have largely
been moribund since the GOL decided in 2003 to abandon its WMD
programs. (Note: ELITE was the original program; the related
business incubators are related to ELITE, but are broader in
scope. End note.)


3. (SBU) The incubators will provide information and
communication technology (ICT) services, office space, shared
workshops, financial management training, assistance in
developing links to financiers, business information, training
in business management and help entering particular markets.
Program managers are in negotiations with a Jordanian
consultant, who will assist in establishing the incubators. It
is expected that the contract will be finalized in a month or
two. The EDB will also open "innovation centers" in
universities, starting with al-Fateh University in Tripoli, and
is working to create "maritime clusters" of companies along
Libya's coast to develop fishing, boat-building and maritime
environmental programs. The maritime project is being developed
in cooperation with a French program to link Libyan and French
small businesses.

GOING FROM PUBLIC TO PRIVATE ENTERPRISES


4. (SBU) Another expert at the roundtable stressed the
importance of understanding how the incubators project fit into
the broader history of Libya's economic refom effort. He noted
that Libya had experienced three decades of a state run economy,
but was now undergoing a "drastic" shift towards privatization.
(Note: As detailed in reftel and previous, senior GOL officials
are currently debating whether and how to implement a dramatic
program of government re-structuring and privatization
articulated by Muammar al-Qadhafi in his March 2008 address to
the General People's Congress. End note.) In his view, Libya
had relied on oil and gas to an extent that was unhealthy and
should focus on diversifying economic activity in tourism,
transit, ICT technology, solar energy, and petrochemicals. He
flagged silicon production as a potential area for investment,
noting that there is quartz in Libyan sand, and said no U.S.
companies were presently working in that sector. The GOL's
ultimate goal is that non-oil and gas activity will eventually
account for 50 per cent of Libya's GDP. (Note: This will be a
stretch. The GOL's official figures claim hydrocarbons
currently account for about 70 percent of Libya's economy;
however, external sources put the figure at 90 percent or more.
End note.)

LIBYA NEEDS HELP DEVELOPING SMALL BUSINESSES AND IN IPR
ENFORCEMENT


5. (SBU) The director of planning for the program, Dr. Ramadan,
praised the U.S. as "pioneers" in the idea of business

TRIPOLI 00000937 002 OF 002


incubators. The GOL is currently trying to transform the
collective mindset of Libyans and is looking at models from
other countries, including the U.S. Junior Achievement program
targeting young people. Rather than importing foreign programs
wholesale, the GOL is looking at how Jordan has tailored
programs to its specific culture and needs. Noting the
U.S.-Libya Science and Technology Agreement signed in January
2008, Ramadan suggested that some U.S. support for Libya's small
business incubator could fall under this agreement. The
long-term goal is to help Libya's sizeable informal sector
integrate into the formal sector. (Note: The gray and black
markets in Libya are robust and account for a large portion of
economic activity outside the oil and gas sector. End note.)
The CLDP's Tejtel pointed out that the World Bank (via the IFC)
also offers excellent training for small- and medium-sized
businesses. Responding to Tetjel's question as to whether
safeguarding intellectual property rights (IPR) was an issue,
our interlocutors described it as "a huge need" and welcomed
exchanges with U.S. counterparts. CLDP could arrange for U.S.
consultants to visit Libya to discuss various IPR protection
instruments, including patents, trademarks, and protection of
trade secrets. (Note: Libya lacks appropriate laws for IPR
protection and there is virtually no current enforcement of IPR
strictures. End note.)

GOL WILLING TO SELF-FUND VISIT BY LIBYAN EXPERTS TO U.S.
BUSINESS INCUBATOR CENTERS


6. (SBU) Tetjel suggested that a group from the EDB Business
Incubator Program could visit the U.S. to meet with counterparts
at incubators in Washington DC, Baltimore and North Carolina.
EDB representative Khaled Bezaylia said the GOL could fund such
trip(s) and requested a detailed proposal. (Note: The CLDP is
preparing proposals and can help facilitate the visits; Tetjel
will follow-up with GOL counterparts during his planned visit
December 13-16. End note.) The Libyan experts noted that
better linkages between academia and private companies in Libya
needed to be forged. Because Libya did not have a strong
history of private sector development and the number of true
private enterprises remained small, the roles of academia and
the private sector in research and development were still
vaguely defined and not well understood.


7. (C) Comment: This was Post's initial meeting with the
stewards of the EDB's Business Incubator Program. The tone was
positive and suggested that there is good potential for future
cooperation and engagement in terms of programs the U.S. could
offer through the CLDP and programs the GOL says it could
self-fund. Developing Libya's non-hydrocarbon sector is
important in the context of Libya's overall economic health and
offers comparatively greater opportunity for U.S.-Libya economic
cooperation than the more mature - and more tightly controlled -
oil and gas sector. Support for the EDB's Business Incubator
Program, with its focus on re-directing the efforts of
scientists formerly involved in Libya's WMD program, also
dovetails with a key Mission goal. As with other areas of
putative economic reform, the EDB's Business Incubator Program
is long on rhetoric and management-speak and (so far) short on
tangible results. The EDB is headed by Dr. Mahmoud Jibril, a
key adviser to Saif al-Islam al-Qadhafi (son of Muammar
al-Qadhafi and a key reform proponent),and therefore enjoys
some sway within the GOL; however, the extent to which the
Business Incubator Program has been coordinated with and enjoys
the support of other key GOL actors such as the General People's
Committee for Manpower, Employment and Training (Ministry of
Labor-equivalent) is unclear and could be a limiting factor.
End comment.
STEVENS