Libya awaits UN approval to reactivate its sovereign wealth fund

The chief executive of Libya's National Wealth Fund, Ali Mahmoud Mohamed, has expressed his expectation that the United Nations (UN) will approve before the end of the year the active management of its wealth for the first time in more than a decade.

According to Reuters, Mohamed said on Saturday (3 August) that the institution is confident that the UN Security Council will approve its investment plan presented in March before the end of the year, marking a historic approval.

As Al Arab reports, the Libyan Investment Authority (LIA), established by the Libyan government in 2006 to manage $70bn from the country's oil wealth, has been subject to a UN-imposed asset freeze since the 2011 uprising that toppled Muammar Gaddafi. 

This freeze means that the fund, Africa's largest sovereign wealth fund, first needs UN Security Council approval to make new investments or transfer cash from accounts where it is incurring losses. Mohamed explained that the first part of the institution's four-step plan is straightforward: reinvest money accumulated during the years of the asset freeze, such as bond payments. 

Previously, the institution had tried to actively manage its resources, but the years of instability after Gaddafi's overthrow led to disputes over the fund's leadership, with different factions supporting different leaders.

In 2023, the Libyan sovereign wealth fund launched an international arbitration campaign against Belgium, seeking to lift the freeze on Libyan funds. The case was brought by Prince Laurent, brother of King Philippe, against the Tripoli authorities, claiming €67 million in compensation for the breach of a 2008 contract signed with Libya's Ministry of Agriculture to reforest thousands of hectares of desert, a project that was not completed due to the 2011 armed conflict that overthrew the Gaddafi regime. 

The LIA alleges that Belgium is committing "an abuse of power and procedure in violation of international law, including the Belgium-Libya Bilateral Investment Treaty". The arbitration request cites delays in court hearings and the Belgian authorities' refusal to provide access to investigative documents.

In recent years, the LIA has sought relief from its asset freeze. In 2020, a British court ruled that the current chief executive was fit and proper. That same year, the LIA reported that a Deloitte review showed that the asset freeze had cost it around 4.1 billion dollars in potential investment returns. Mohamed said "transparency has improved since then", with the institution publishing audited financial statements in 2021 covering 2019. The institution plans to publish 2020 data in the coming months and provide these reports annually from next year. 

In addition, last year, following a meeting with the Libyan Investment Authority, committee members noted "significant progress in the implementation of the LIA's transformation strategy" and stressed "the importance of ensuring that frozen assets are allocated for the benefit of the Libyan people".

Mohamed also indicated that the institution intends to seek approval for two additional investment plans this year, one related to the equity portfolio and the other to the local investment plan. 

The corporation is targeting local investments in solar energy and to help increase oil exports. Libya is one of Africa's largest oil exporters, with production of about 1.2 million barrels per day.

Mohamed said the foundation will continue its efforts even if the UN does not approve its investment proposals. 

Regarding the institution's assessment and assets, in the 2020 ranking by Global SWF, a provider of sovereign wealth fund data, the Libyan Investment Authority ranked 98 out of 100 in sustainability and governance, and this year it moved up to 51st. 

The institution has assets estimated at approximately 70 billion dollars, including 29 billion in real estate around the world, 23 billion in investment deposits in Europe and Bahrain, and 8 billion in equities spread across more than 300 global companies. It also holds around 2 billion in outstanding bonds. 

In short, the Libyan Investment Authority is at a key crossroads, awaiting UN approval to manage its assets after years of freezing. With a clear strategy and ambitious goals, the LIA seeks to transform and revitalise the Libyan economy, hoping that the international community will support its path towards a more prosperous and stable future for the country.