Libya is not a country typically associated with a vibrant tech scene. Often linked to strife, conflict, and instability, it's not a place where many expect to find significant innovation. However, for those immersed in the space, this perception is far from accurate.
According to Ibrahim Shuwehdi, Founder and CEO of e-commerce startup Mataa, which is considered one of Libya’s most promising ventures, the country is considerably more stable than many other African nations. Shuwehdi believes the primary issue lies in inadequate storytelling and marketing.
“Since 2020, the country has been pretty much more stable than a lot of countries. The country just needs better marketing. Franchises are working well in the country, while the startup ecosystem is still working its way since it needs more than stability for the capital to come,” Shuwehdi said.
He further elaborated that Libya possesses a unique geographical and demographic advantage, being culturally closer to the "Middle East" than "Western Arab countries." Its proximity to African nations also positions startups operating there to effectively serve both regions.
The State of Libya's Internet and Mobile Penetration
Contrary to any notion of technological backwardness, Libya boasts one of the highest internet penetration rates in Africa. Approximately 88.5 per cent of its population has access to robust 4G internet. This figure significantly surpasses that of major African tech hubs like Nigeria (41 per cent), Kenya (48 per cent), and South Africa (79 per cent).
Libya even introduced 5G internet as early as 2019, positioning it among the first African countries to adopt this advanced technology. Its internet services are both affordable and fast. Additionally, smartphone penetration is healthy, with 14.6 million active mobile cellular connections recorded as of January 2025, nearly double the country's population of 7.45 million.
While the population is relatively small, it is significantly underserved. Coupled with the high purchasing power of the average Libyan, this presents a market ripe for exploration and development.
Challenges in Libya's Tech Ecosystem
The most significant impediment to the growth of Libya's tech ecosystem, as identified by Ibrahim Shuwehdi, is an outdated and business-unfriendly legal system. The country operates under a hybrid legal framework, a blend of Sharia law, civil law traditions, and political influence, all of which shape the administration of justice.
Beyond the complexity of its judiciary and legal system, which can lead to inconsistent outcomes, systemic corruption within the business and legal spheres poses a substantial obstacle to conducting business. Libya ranks poorly in global business indices, sitting at 164th out of 190 in the World Bank’s Starting a Business Index and 186th out of 190 in its Ease of Doing Business rankings. These low scores are largely attributed to the nature of its business laws.
For instance, recent legislative changes mandate that foreign-owned businesses must secure local partners with at least a 51 per cent ownership stake to register. Similarly, introducing products or services into the country necessitates engaging with a local intermediary.
Further complicating matters, the ecosystem grapples with a foreign currency liquidity crisis. Consequently, foreign companies often demand upfront payment before introducing their products and services into the country.
Libya is also subject to extensive United Nations sanctions, which result in asset freezes and travel bans for certain prominent citizens, politicians, military chiefs, and their associates. Therefore, businesses looking to launch in Libya must meticulously verify that their prospective partners are not on the UN sanction list before proceeding with engagement.
“These are laws from past decades that are not adjusted to the new way of working,” Shuwehdi stated.
Limited Access to Venture Capital Funding
Ideally, these challenging conditions should foster the emergence of homegrown tech startups addressing local problems. However, this potential is stifled by a significant lack of venture capital (VC) funding.
Ibrahim Shuwehdi explains that the same legal framework that hinders the business environment also impedes the entry of venture capital. “Global investors will not enter because the country’s laws are still old and not up to date, not because of instability,” he told Technext.
In the absence of foreign capital, startups are compelled to rely on local investors. Other common funding avenues primarily consist of grants from non-governmental organizations such as e-fundsforNGOs and SPARK, alongside an EU-funded initiative known as *Libya Start-up*.
Mr. Shuwehdi, however, contends that grants, including those from the EU, can be detrimental to the ecosystem rather than beneficial, as they fail to cultivate a proper incentive-reward cycle.
“The EU funds actually hurt the startups they are claiming to help, because the incentive-reward cycle is broken. Have you heard of a successful venture that was raised from an EU FUND? There are a lot of investing stories within the country, but still more of a private equity style than venture capital,” he remarked.
Despite these obstacles, the Libyan tech ecosystem has seen a few notable successes.
In July, Mr. Shuwehdi’s e-commerce startup, Mataa, secured Libya’s first-ever venture funding round, valued at over $100,000. The round, which Technext has confirmed to be worth more than $1 million, generated considerable excitement within the ecosystem and brought the North African country into the spotlight.
Reflecting on the significance of this funding round for the Libyan tech space, CEO Ibrahim Shuwhedi stated: “The round has a huge impact on the country for sure, it breaks a lot of ice and will have more venture funding to try the market.”
Shuwehdi recounted that Mataa's journey has been challenging from its inception. In addition to the previously mentioned difficulties, founders face a scarcity of mentors and collaborators. Consequently, most founders resort to bootstrapping their operations.
For example, Ibrahim is diligently building the foundational elements of his operational system day by day. The team manages last-mile delivery, oversees inventory, processes and stores data, and even assists vendors with cash collections.
Amidst these efforts, Mataa has emerged as the leading player in the country's e-commerce sector. Yet, the startup does not consider itself fully successful. Its strategy, however, is to leverage these very challenges to achieve success.
“These same problems are actually what inspired us to start because from such disadvantages come great opportunities,” he said. “The plan is to dominate the Libyan e-commerce market, then expand into the region using strong Libyan characteristics,” he concluded.
He remains optimistic that the Libyan startup ecosystem possesses the potential to become a dominant force in Africa in the future. He therefore advises African founders looking to expand into the MENA region to consider Libya as a strategic gateway.