Barriers to growth of Small and Medium Enterprises (SMEs) in Libya

The purpose of this study is to evaluate the Small and Medium Sized Enterprises and the entrepreneurship in the Libyan environment bearing in mind the challenges confronting the growth and development of SMEs in term of external and internal factors and a host of financing, institutional, social, technological, legal, and property right barriers. The research is based on a well-structured questionnaire. Out of four hundred (400) questionnaires administered, two hundred and nine (209) were returned, and these were analysed using both descriptive analysis (percentage and table) and analytical analysis (ordered logit model). Findings from this study based on the ordered model of growth regression show that age of firm and size of the company both have significant negative impact on the growth of firms while management qualifications, growth aspiration of entrepreneur and lifestyle of entrepreneur all have significant positive impact on the growth of firms. In respect of ordered regression model on the barriers to firms’ growth, the growth and development of SMEs in Libya have been hindered by external factors (legal and regulatory framework, political instability); internal factors (lack of managerial skills and management capacities); financing barriers (lack funds and funding, high cost of financing); institutional barriers (too much bureaucracy); technological barriers (lack of technological capacities); social barriers (lack of trust among entrepreneurs in the sector); and property rights barriers (weak or no patent right systems, weak or no copyright laws in the system) among others. This study suggests the following recommendations among others; creation of a peaceful political atmosphere that can engender a conducive business environment and ensure sustainable growth and development of SMEs in Libya, putting in place appropriate meaningful and comprehensive economic policies that can improve business climate through legislations.