Libya’s economy is being held back by a lack of funds for small and medium-sized enterprises (SMEs) according to a new study by Nottingham Trent University (pictured).
The study – led by academic Emhamad Elmansori, of the School of Architecture, Design and the Built Environment – shows that nearly three quarters of Libyan SMEs say a shortage of financial resources is a major barrier to innovation.
Other major barriers, according to the study, are a lack of innovation culture in schools, colleges and universities, and a shortage of skills in innovation management.
The study has been published in the International Journal of Innovation and Knowledge Management in Middle East & North Africa Vol. 3 No. 2, 2014.
It shows that 92 per cent of SMEs in Libya have no financial support. The vast majority only have the owners’ personal savings or money from their parents or partners as a form of equity.
“In many countries SMEs play a major part in the strategy for revitalising their economies,” said Mr Elmansori, originally from Libya.
“This is especially important for a country such as Libya, which has an economy that is dependent on oil and which badly needs to diversify.
“Yet it is widely recognised that SMEs in Libya face more difficulties than large businesses do in terms of accessing the finances which are required to innovate.
“It should not be expected for people to create the industries of tomorrow with only their personal savings as a financial grounding.
“This is a problem which cannot be ignored and it’s imperative that the right policies are put in place to ensure that all barriers to innovation are removed.”
The study - which was overseen by Leslie Arthur, an expert in innovation from the School of Architecture, Design and the Built Environment - is based on a survey of almost 100 Libyan SMEs. The survey was taken in April 2012 and Mr Elmansori says its findings are just as relevant today.
It also found that the main reasons for SMEs avoiding the loans which are available is the bureaucracy, inflexibility, terms of interest and centralisation.
Mr Elmansori found that another barrier to innovation was a lack of women running SMEs due to cultural, religious and family reasons.