Recently, I was shyly approached by two young ICT engineers, Faisal and Omar, with an innovative startup idea: a pair of motion sensor-equipped gloves and a smartphone application that translates sign language into spoken language, bridging the communication gap for deaf-mute people.

The catch is, this happened in Libya; yes, the same ISIS-penetrated, war-torn Libya you hear about on the news.

Similar to many conflict-affected countries, life in Libya continues despite the hardships.

Military clashes could very well be taking place in the next neighborhood, yet people continue to go to school, meet for coffee, and celebrate weddings. Internet connections are not great, but it’s accessible in almost every corner in the country.

As such there are pockets in Libya where startups can, against the odds, thrive. Those odds however, are huge.

Breaking down a stagnant economy

Until 2013, Libya had an advanced case of Dutch disease, thanks to an abundance of oil discovered in the 1950s.

‘Dutch disease’ describes the negative impact of a sharp rise of foreign currency inflows into an economy. It boosts the value of local coinage, makes imports cheaper than locally-produced alternatives, and leads to deindustrialization and import-dependence.

The discovery of oil in Libya lifted living conditions but also made the country dependant on oil revenues, which accounted for 80 percent of GDP and 99 percent of government revenues by 2010. The Libyan government provided most basic services to the public for free and became the number one employer in Libya, destroying the average Libyan worker efficacy and ethic.

This has had a huge crowding-out effect, which, combined with over-regulation, drove investors out of the private sector and killed any incentive for an entrepreneurial scene to emerge.

This ‘honeymoon’ has finally come to an end. Libya’s oil production began dropping sharply in 2013, and combined with the recent fall of oil prices, this was more than the Libyan economy could handle.

As difficult as it is to find a silver lining in this devastating situation, especially when taking into account the ongoing civil war that is tearing the country apart, there is actually a bright side.

Creative destruction

The war has eroded the overprotective economic and social ecosystem. Now more than ever Libyans, especially young people, have an incentive to create and innovate.

An active entrepreneurial scene is starting to develop in Benghazi and Tripoli; from online shop Rolleta that sells homemade cakes, to food delivery app Sofrajee, all the way to private ISPs such as Connect and a company, which wished to remain anonymous for security reasons, providing fraud detection to the telecom industry.

Unlike previous economic downturns in Libya, such as in the 1980s and 1990s, today's young people have access to an extremely powerful tool - the Internet - and despite, or perhaps because of, the war they are using it to look for inspiration, solutions, and to learn the skills required to implement their ideas.

Making entrepreneurship cultural

In addition to the economic context, the local culture is also undergoing some major transformations.

Libyans are gradually shifting from a rigid society that values risk aversion and job security, to a more flexible one where adding value, innovating, and delivering results are appreciated.

For example, in the past women working as caterers or bakers were perceived to be from a lower class that had to work to make a living. Women from the upper classes were only on the receiving end of the equation. This is changing as more young women redefine the sector.

Women such as Noura El-Jerbi, cofounder of In Catering in Benghazi, are introducing new homemade products, applying content marketing strategies, and using social media as a tool to build brand awareness in the local community and to get in touch with potential customers. Society is starting to admire the aspirations, innovations, and hard work of enthusiastic entrepreneurs.  

Entrepreneurship in time of war

Entrepreneurship in Libya does not come without its unique set of challenges.

The same conditions that created the incentives for startups to emerge also form the main challenges. Many face frequent operational interruptions due to military clashes that erupt in different parts of the country. Political instability has paralyzed infrastructure development projects, and the country’s poor physical infrastructure is a significant barrier for company operations and access to markets.

Libya's outdated tertiary education system is anything but market-responsive. On one hand, Libyan universities graduate thousands of doctors and engineers every year, despite the the lack of suitable employment opportunities.

On the other hand, vocational training is diminishing;  social norms do not appreciate artisans as much as university graduates, even though the country relies heavily on skilled and semi-skilled labor from neighboring countries.

Additionally, startups in Libya suffer from poor financial infrastructure, which is reflected in the dominance of cash transactions in business, and limited access to financing. A combination of religious caution towards conventional banking, lack of Islamic banking alternatives, and outdated financial regulations has restricted entrepreneurs from accessing the necessary funds required for them to grow their startups.

Startup supporters appear

To overcome these challenges, institutional efforts are advancing to support the infant entrepreneurship landscape.

Non-profit organizations such as BYTE and HEXA are actively engaged in organizing tech talks, hackathon sessions, digital marketing training, and many other events to spread the fever and equip entrepreneurs with the right mindset and tools.

On a larger scale, local R&D firm Tatweer Research is launching an ambitious three-year program to build the entrepreneurial ecosystem in Libya.

The program, which started in Benghazi and is scheduled to expand to Tripoli and Sebha, consists of many firsts including a technology business incubator, a coworking space, and a startup competition, Enjazi, which was launched on April 8 in partnership with the MIT Enterprise Forum of the Pan Arab Region.

Tatweer Research aims to create 90 tech startups over the course of the program.

These initiatives reflect the desire of Libyan youth to challenge the status quo, and build a badly needed ecosystem and community that can help startups grow, succeed, and eventually become established, job creating businesses.

And what happened to those young engineers who approached me?  Faisal and Omar have built a startup called Lesan. They have qualified, alongside another Libyan startup, to the final stage of the MIT Arab Startup Competition taking place in Bahrain at the end of April this year.

They hope to be the Neil Armstrongs of Libyan entrepreneurs.

Feature image, young Libyans learning app development in Operation Pour, a training program provided by Tatweer Research, via Anas Benguzi.