Libya's former regime did not support Islamic finance in the country, but new leadership passed an Islamic banking law in May, and public demand for Shariah-compliant services is high. Local groups asked World Council to explain such products and services available through credit unions and how they might be implemented in Libya.
"The first priority for the government of Libya is writing a new constitution and establishing security," Branch said. "Moving from a centrally controlled economy requires business security and contract protection. Local business councils in Tripoli and Misrata are looking for solutions to finance large-scale business."
Access to financial services remains very limited in Libya. When civil war erupted in the country in 2011, Libya stopped producing and exporting oil, which accounted for about 70% of the country's GDP. The economy contracted 41.8%. Foreign investment and aid has since declined. Events soon after in Benghazi increased both international and local business concerns for security.
Branch said state officials and business councils are exploring ways to release central bank guarantees and financing for business.
"Most small and family businesses are self- or family-financed, and that will be the next wave," Branch said. "Consumer finance is still a new concept. Financial cooperation is still not well understood, but many are looking for an Islamic finance model. The credit union model fits."
World Council has implemented credit union development programs in 71 countries, including 18 African nations and a recently completed Islamic finance program in Afghanistan that established 34 Shariah-compliant financial cooperatives and points of service across the country. World Council has not yet had a credit union development program in Libya.
(Source: World Council of Credit Unions)