Sadiq Al-Kabir: Libya’s increasingly dominant central banker

In March, al-Kabir effectively devalued the dinar currency and asked parliament's speaker to approve a more unified government. This was interpreted as a direct challenge to Dbeibeh in Tripoli, with whom he is at odds.

Al-Kabir has taken a particular dislike to off-the-books spending by the Government of National Unity (GNU), which is recognised internationally but not by Khalifa Haftar's House of Representatives parliament in Libya's east.

Around 2.4 million Libyans (out of a total population of 7 million) are on the public payroll, so when Dbeibeh announced public sector pay rises recently, al-Kabir was quick to squash this. It is al-Kabir, ultimately who pay their wages.

Guarding the vault

Foreign exchange reserves were valued at around $82bn at the end of 2022. Libya also has one of Africa's high gold reserves, estimated at around 140 tonnes. Al-Kabir has built up the national pot, not reduced it, but corruption remains a big problem.

Last month, the heads of the customs authority and of Misrata Airport were arrested along with others for trying to smuggle 26 tonnes of gold out of the country. The bullion, which was recovered, is valued at around $2bn.

Accessing the central bank's reserves has been politicians' goal since the 2011 fall of Muammar Qaddafi, who ruled Libya for 42 years, having led a military coup to depose the country's monarchy and proclaim the state as a republic.

Al-Kabir was a member of Gaddafi's regime but turned against it early in the revolution. This gave him legitimacy after it fell.

Today, his role is that of banker, statesman, guardian of the nation's gold and currency reserves, and an ally of the United States, with internationally sound credentials. If he keeps seeing off rivals, analysts wonder whether he may be a new Gaddafi.

Read more: Libya's gold reserves hit new high amid political infighting

Public spending

The current dispute with Dbeibeh over public spending broke out last year, interrupting a period of relative calm in Libya's rambunctious post-Gaddafi politics.

Al-Kabir said there was an agreement between him and the government that the central bank would help public spending reach $87bn during Dbeibeh's three-year tenure. Later, he felt forced to criticise "parallel spending from unknown sources".

Libya's recent history suggests the governor is more likely to emerge the winner in any fight with the government, and al-Kabir has some significant global backing, including from the International Monetary Fund (IMF).

In May, the IMF signalled its support for him and his policies. It noted an expansion in public spending last year due to wage rises and bigger fuel subsidies, but said foreign reserves remained "comfortably significant".

The central bank tried to limit the use of foreign currency by tightening controls on letters of credit, reducing available limits for personal foreign currency purchases, and imposing a temporary 27% tax on the official exchange rate of foreign currencies.

In Libya, al-Kabir divides opinion. Some see him as a statesman, others see him as a thief. He is described as the last of the revolutionaries and a political kingmaker.

A senior banker who worked with him for years told Al Majalla that al-Kabir was "a competent banker", adding that "keeping him at the central bank for years might be the best for Libya".

They continued that "despite the criticisms, mistakes, and deviations, in my opinion, looking objectively, considering the available resources and the country's situation, al-Kabir has proven highly skilled in preserving Libya's reserves and wealth."

With help from friends

Al-Kabir, whose rise owes something to luck, grew up in the Belkheir neighbourhood of central Tripoli, just metres away from the central bank building.

Lacher has highlighted how al-Kabir built important relationships with central figures who helped shape his destiny, including Muhammad Al-Bukhari, a finance minister under Gaddafi, and Abdel-Razzaq Al-Awadi, a businessman and former leader of the Muslim Brotherhood.

In 1988, al-Bukhari entered al-Kabir into Libya's elite, appointing him chairman of Umma Bank (the largest state-owned bank) when al-Kabir was in his early 30s.

Nepotism gave him a golden start, but he soon had a major setback, when it became clear that al-Kabir was among the senior figures to have signed off loans and real estate deals that went sour, leading to the bank's collapse.

He was sentenced to three years in prison in the early 1990s, but served three months before going to Tunisia, where he took up a position at a bank in which Libya was a major shareholder.

Al-Kabir's adversaries brought this up when he was appointed head of Libya's central bank. His backers say that, during that period, there was simply no realistic alternative but to follow Gadaffi's orders.

Useful networking

Over time, Al-Kabir has shown himself capable of rapid repositioning, adept crisis management, pragmatism, and opportunism. A bureaucrat who knows his own limits, he has learnt to identify where power lies and align himself to it.

These skills helped him survive a totalitarian regime. He allied himself with the second most powerful man in the country, Abdessalam Jalloud, a former Libyan prime minister who went to school with Gaddafi and helped him oust the monarchy.

Jalloud fell out with Gaddafi and was placed under house arrest for several years before finally managing to leave Libya for Italy in 2011.

Abdel-Razzaq Al-Awadi was also al-Kabir's childhood friend from the Belkheir neighbourhood of central Tripoli. They both got a scholarship to study in the United States during Gaddafi's rule.

Al-Kabir's appointment as central bank governor in 2011 is attributed to Al-Awadi who, like al-Kabir, was also a member of the National Transitional Council.

Networking has continued to help al-Kabir. Last year, the Association of African Central Banks elected him Chairman of the North African Central Banks Group, which covers Egypt, Morocco, Tunisia, Algeria, Mauritania, and Sudan.

It also elected him Vice-President of the Association for 2024 and Chairman of the Board of Governors of African Central Banks for 2025.

Facing criticism

Al-Kabir is no stranger to barbs. His friendship with al-Awadi led to al-Kabir being seen as a Muslim Brotherhood sympathiser. More serious criticism came in 2016 from the (then) British Ambassador to Libya, Peter Millett.

The envoy told a UK parliamentary committee that the Central Bank of Libya was funding the country's civil war by paying the salaries of militants. The bank vehemently denied this, and even Millett soon seemed to backtrack.

Al-Kabir's critics accuse him of becoming too powerful, and of turning the central bank into a state within a state, using it to serve his own interests. As Lacher notes, his predecessor called al-Kabir's central bank "a one-man show".

Critics say that, during his tenure, Libya has lost billions, the dinar has depreciated and devalued, and Libyans have faced runaway inflation. Others make unsubstantiated claims that millions have been spent buying off militias.

Another criticism levelled at al-Kabir is that he has been more generous with help from the central bank for the spending plans of subservient governments.

A Libyan figure close to the country's UN special envoy (who recently resigned) told Al Majalla "what al-Kabir is doing isn't the best… he is a controversial figure and doesn't enjoy the trust of all, but replacing him might open the door to the unknown amid new developments in the country."

Working in insecurity

Those "new developments" include fears about the presence of heavily armed Russian fighters. This led to calls in Washington to counter Moscow's growing influence in Libya.

The respected French newspaper Le Monde reported that sums of around $127mn have been earmarked, a sign that al-Kabir may be having an influence in the US capital.

He earned his MBA at Hartford in Connecticut, then spent time working in Tunisia, and lived in Britain for a period, before returning to Libya. A former Tunisian official who knows him well paints a familiar picture of his manner.  

"He's an introverted and cold personality, skilful in communication. He doesn't chameleonise but can deal calmly with all situations and fluctuations, managing risks and crises. He is purely a banker."

When directly confronted, al-Kabir responds calmly and with logic, talking through the legal and procedural situation, explains Lacher in his article. Libya's central bank faces challenges that other central banks do not, the country's many well-armed militias being one.

Amidst the very real threat of violence, he exhibits composure and courage. More than 50 bank officials have been kidnapped in recent years and al-Kabir has had a $25mn price tag put on his head.

Le Monde reported that the danger had grown sufficient enough for him to flee to Turkey in October 2023 fearing his safety, after a violent clash with the prime minister's adviser and nephew, Ibrahim Dbeibeh.

Gone, the revolutionary

For all his quiet manner, al-Kabir is no stranger to violence. When the Gaddafi regime was on the wane, he was no backseat passenger.

Having resigned, he began reporting on events first-hand, as if he were a war correspondent, tracking the number of rebels among soldiers and officials, as well as the areas falling under their control. He was even referred to as a 'military analyst'.

This helped show that he was part of the action, which in turn helped him work with the National Transitional Council. Still, his nomination to run the central bank was a surprise. Once in the job, he was quick to leave the revolutionary behind.

Instead, he rose above the day-to-day political clashes, embraced the neutrality required of bureaucracy and a central bank, and burnished its credentials as one of Libya's most important sovereign institution.

But is he really objective? "Al-Kabir says he's neutral and has no political ties, but he's probably the only politician in Libya," one diplomatic source told Al Majalla.

Politically adept to the point of being Machiavellian, for al-Kabir, the end always justifies the means. The trouble is, most dictators throughout history have thought the same.

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(Editor's note: This article was updated on 25 July 2024 to attribute several quotes and sections to Dr. Wolfram Lacher, Senior Associate at the German Institute for International and Security Affairs in Berlin)