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Libya Cash & Markets WG - Market Systems in Libya - Assessment of the Wheat Flour, Insulin, Tomato and Soap Supply Chains

Subject/Objective: 
The Market Systems in Libya assessment aims to provide humanitarian organisations with a better understanding of market dynamics in Libya, information on key supply chains and how they have been impacted by ongoing conflict, and the necessary foundation to examine the potential of scaling up market and cash-based interventions. The Libya Cash & Markets Working Group (CMWG) identified information gaps in how humanitarian actors understand local markets in Libya and consequently initiated the Joint Market Analysis Initiative, led by REACH in close collaboration with the CMWG, for the purpose of producing this assessment.
Methodology: 
Qualitative data was collected during August and September 2017 in Tripoli, Benghazi and Sebha through 234 key informant interviews with producers, importers, wholesalers, retailers, and other stakeholders in the wheat flour, insulin, tomato and soap supply chains, as well as 12 focus group discussions with Libyan and migrant consumers. These supply chains were selected to reflect different market sectors of interest to humanitarian actors.
Key findings: 
On the whole, consumers (including refugees and migrants) in Tripoli, Benghazi and Sebha have physical access to markets, with temporary access issues related to insecurity affecting smaller segments of the population as conflict peaks. The lack of access to cash is a major access issue that hinders consumers from acquiring basic commodities in quantities required to meet basic needs. Since 2014, food subsidies have been cut or suspended in large parts of the country. Due to the conflict and the fiscal crisis, subsidies have been abolished in Tripoli and Sebha, which has further reduced the purchasing power of consumers. The system remains partly functional in Benghazi. In general, different population groups—non-displaced, internally displaced (IDPs), migrants and refugees—interact with markets in similar ways, frequenting the same shops and deriving commodities through the same channels. However, some access limitations were found, especially for non-Libyans (migrants and refugees) who are not eligible to access food subsidies and free insulin from the local authorities. The Libyan economy is heavily dependent on imports. Macro-economic developments since 2014, namely the authorities’ decreasing revenue and the depreciation of the Libyan dinar, have impacted the wheat flour, tomato, soap and insulin supply chains by hampering increasingly expensive imports of supplies from abroad. Wheat Flour Supply Chain The wheat flour supply chain has undergone substantial changes since 2014. As a result of the authorities’ inability to provide adequate funds, wheat flour subsidies for bakeries have been abolished throughout Libya. As a result, the distribution of subsidized wheat flour through jam’iyat (consumer associations) came to a halt in 2014 in both Tripoli and Sebha; in Benghazi, subsidized wheat flour can still be accessed sporadically. The disruptions have lowered consumption of wheat flour and led to an estimated 50% decrease in demand since 2014, although it is also important to note that previous high subsidies resulted in overconsumption of wheat in many areas in Libya. Additionally, due to the authorities’ fiscal challenges and their inability to provide foreign currency for imports, mills have been facing substantial difficulties in importing raw wheat for local production at the official exchange rate. This has led to shortages of locally produced wheat flour on markets and a shift towards the import of already ground wheat flour, the price of which has increased as the Libyan dinar has depreciated on the parallel market. Insulin Supply Chain The insulin supply chain is characterized by heavy influence on the part of the authorities. With limited funds, the state importer (Medical Supply Organisation) has been struggling to import insulin in sufficient amounts, and has thus not been able to meet the needs of the entire Market Systems in Libya Executive Summary LIBYA CASH & MARKETS WORKING GROUP v population. Private companies have filled this void and gained a larger share of this market since 2014. The shortages in the insulin supply chain have had serious implications for patients. Instead of obtaining insulin at health centres for free (exclusive to Libyan nationals, as migrants and refugees are not eligible to register), patients have increasingly had to rely on private channels, where its price has dramatically increased (500-600%) since 2014. More recently, insulin has been consistently available at private pharmacies, but concerns about quality and rising prices remain. Tomato Supply Chain The tomato supply chain differs from others as it is mainly sustained by local production. The supply chain has maintained its capacity to satisfy the demand of the population. However, domestic producers have been facing a number of challenges, ranging from increasing prices of farming inputs to a lack of labour, water and electricity. Such challenges have been particularly prevalent in the south, where production has decreased significantly in the past 3 years. Tomatoes remain continuously available although prices have risen by 50% across Libya since 2014. Soap Supply Chain The soap supply chain has only been marginally affected by the conflict since 2014. Since most soap and all raw materials are imported from abroad by private companies, the devaluation of the Libyan dinar has led to substantial cost increases for soap importers as well as producers. Consequently, the price of both imported and domestically produced soap in shops has tripled since 2014. The supply chain remains fully functional, although the full effect of rising prices on households’ access is not known.
Assessment Report: 
Publicly Available
Assessment Questionnaire: 
Publicly Available
Assessment Data: 
Publicly Available
Contact(s): 
Charlie Rapoport
rapop@unhcr.org
Webspace(s): 
Assessment Date(s): 
31 Oct 2017
Status: 
Report completed
Population Type(s): 
All affected population
Cluster(s)/Sector(s): 
Leading/Coordinating Organization(s): 
REACH Initiative
Participating Organization(s): 
United Nations High Commissioner for Refugees
Location(s): 
Libya
Theme(s): 
Cash Transfer Programming
Market Assessment