Banking Sector in Libya: 15% Growth in 2013-2014

Ahmed Rajab, General Manager of Jumhouria Bank, shares his prediction for 2013-2014 banking sector. Jumhouria Bank, the largest bank in Libya, is expected to grow by 15% in 2013-2014.

Despite the increased fees associated with higher contribution to the salaries, which grew by 14% to match the level of salaries in the private sector, higher deposit insurance contributions and additional expenses associated with training of the human resources, 2013-2014 should still be profitable years for the banking sector in general.

The biggest challenge in the banking sector is the transformation from conventional banking to Islamic banking by 2015. Libya is the 3rd country in the world after Iran and Sudan to put a nationwide ban on non-sharia compliant banking practices. This law will certainly create a short-term shortcoming as the banks in Libya will try offer alternative services to offset losses. Also, this law might impact the willingness of banks to lend through traditional interest based loans.

“We are also facing a problem with the latest law issued by the general congress to cancel the interest for social loans for individuals. So we have to think about alternate services to compensate for this profit loss,” concludes Rajab.