Open for business

The lifting of US trade sanctions last year has suddenly made the Libyan market a viable proposition for IT companies previously forbidden from developing channels in this part of North Africa. But those who are now beginning to take the Libyan IT sector seriously are advised to tread carefully if they wish to build the routes to market required to justify their investment.

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By  Andrew Seymour Published  December 23, 2007

News of the US' decision to restore full diplomatic relations with Libya 18 months ago was greeted not so much with a sigh of relief, but a stifled cheer from the array of technology vendors frustrated by an embargo that had prevented them from growing their coverage of the MENA landscape. Several major brands - from Avaya to Western Digital - told Channel Middle East last year that with the restrictions eased, their intention was to start the process of establishing channels in the country.

For many foreign companies, however, the initial enthusiasm that accompanied the opening of the market has been replaced by the stark realisation that cultivating strong and reliable channels in the country presents a gargantuan challenge. Few vendors have publicised their partnership agreements or project wins, preferring instead to take a low-key approach to finding their way around a market that has clearly suffered from the restrictions imposed upon it.

There is some knowledge on the PC side, but when it comes to the Unix high-end datacentre type of business it is very difficult to find engineers who have been exposed to this type of business.

One of the most striking features of the Libyan market is that local resellers, computer shops and traders - and to an even greater extent end-users - have simply not been exposed to the sort of consistent channel landscape common in other markets. "Libya is lacking a distribution hierarchy as a result of the closed market due to the long years of embargo," admitted Vipin Sharma, VP EEMEA sales at UPS vendor Tripp Lite. "During that period, the resellers used to buy their goods directly from a Dubai Free Zone area and ship it to Libya to be resold in their outlets.

This method of conducting business has meant that the values and principles associated with a healthy channel aren't held in the same esteem as they are elsewhere, leaving fresh-to-the-market vendors facing a serious brand-building challenge. "The channel structure in Libya is not thriving as much as other markets in the region," remarked Jamal Maraqa, managing director at storage integrator Pro Technology. "We are working closely with several small firms and trying to establish a long-term relationship that is based on mutual profitability. Because these local companies didn't have a chance to work with distribution - only on direct import - we have to make sure that they realise the benefits of working through the channel structure.

At the moment, Libya is completely dominated by Chinese vendors which haven't been subjected to the same restrictions as American and European firms, according to Ahmed Youssef, who oversees the Saudi, Egyptian and Libyan operations of networking distributor FVC. "It has been an open market for Far East companies to go and establish their business so Huawei and ZTE have huge set-ups there," he said. "They are dominant when it comes to the infrastructure of the telcos. Since the embargo was lifted, Cisco and 3Com have begun paying attention and Cisco participated in the last main IT exhibition in Libya. They are working actively to compensate for the fact that the competition is already ahead of them.

For many of the US brands, the immediate aim is to enhance local awareness of their business and portfolio because they aren't blessed with the brand equity and customer links they would normally take for granted. This point is especially pertinent in the high-end space where the lack of experience around certain technologies is going to command a strong degree of channel education to rectify.

"There is some knowledge on the PC side, but when it comes to the Unix high-end datacentre type of business it is very difficult to find engineers who have been exposed to this type of business because of the sanctions," admitted Bruno Haubertin, partner and alliances sales organisation manager at server vendor Sun Microsystems. "Where we need to put in a massive effort now is in terms of training and engaging the partners into selling things that are different from a bunch of PCs. That also requires lots of investment from their side as well.

Several sources insist that many Libyan ex-pats who have worked or studied abroad are now returning to their homeland to take on roles in the public and private sector. That is also having a positive impact on the technology market although it will take some time before the deficit in skilled engineers and IT professionals is eradicated. "The Libyan IT market is unique in its status and level of maturity due to the limited access it has had to vendors and suppliers during previous years," said Pro Technology's Maraqa. "Our role is to educate and make sure that we deliver by implementing what we promised.

Pro Technology is one of the few companies to have invested in opening a fully-fledged office and showroom in Libya's capital, Tripoli. The company has taken on a 4,500 square feet facility as part of its expansion plans and strengthened its presence by recruiting several engineers to serve the market.

Networking distributor FVC, which carries brands such as TippingPoint and Polycom in its portfolio, has capitalised on the opening of the market by expanding some of its Egyptian partners into Libya, including the IT and telecoms units of business group Alkan. That gives FVC the assurance that it is working with resellers it knows are technically capable. "These partners have already proved themselves, been successful in the Egyptian market, and seen the potential growth area to expand into Libya because the two countries have some excellent ties in terms of partnerships and relationships," explained KS Parag, managing director at FVC. "They've actually set up affiliate or associated companies in Libya and then transferred their core competencies from Egypt to Libya.

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