Beyond Oil and Politics: How Egypt and Libya Are Building New Economic Ties
From major reconstruction contracts to Ahmed Gadalla’s Zulfa Food Industries project in Benghazi, cross-border investment is opening new possibilities for Libya’s economy.
By Moataz Khailil
For decades, Libya's economic story has been dominated by oil, political divisions and the struggle to rebuild a country fractured by years of conflict. Yet beyond the headlines, a different story is emerging. Egyptian construction companies are helping rebuild Libyan cities, energy firms are exploring new partnerships, and manufacturers are investing in factories designed to serve a domestic market long dependent on imports.
The numbers suggest that this relationship is becoming increasingly consequential. Egyptian companies have reportedly carried out more than $5 billion in reconstruction projects in Libya, while Egyptian investment in the country has surpassed $2.5 billion, according to figures presented by the Federation of Egyptian Chambers of Commerce in July 2025.
Behind these figures is a broader shift in Egypt-Libya relations. While Cairo continues to prioritize border security, regional stability and political coordination, commercial interests are creating another layer of cooperation. From infrastructure and energy to food production, businesses are finding opportunities that could make the relationship more economically valuable to both countries.
From Political Cooperation to Economic Integration
Egypt and Libya share more than a lengthy border. Their economies are closely connected through trade, labor, construction and energy, although Libya's political fragmentation and infrastructure challenges have repeatedly complicated commercial development.
Egypt has remained an important player in Libyan affairs, supporting the country's unity and stability while maintaining relationships with influential political actors. In October 2026, Egyptian Foreign Minister Badr Abdelatty reaffirmed Cairo's commitment to Libya's sovereignty and territorial integrity during talks with Libyan officials.
The economic dimension has become increasingly visible. In July 2026, Egyptian business organizations announced a joint initiative to expand exports and private-sector participation in Libya's reconstruction. The program identified opportunities in construction, energy, healthcare, tourism and manufacturing while seeking to address persistent problems involving banking, payments and border procedures.
The following month, Egyptian and Libyan business organizations agreed to organize an industrial exhibition in Benghazi in April 2027, reflecting an ambition to move beyond the traditional exchange of goods toward industrial partnerships, investment and technology sharing.
These initiatives reflect an increasingly important principle in Middle Eastern economic diplomacy: political relationships become more durable when they generate tangible economic interests. As a recent MidEast Journal analysis of regional integration and the Abraham Accords argued in a different diplomatic context, practical cooperation in trade, infrastructure and investment can give political relationships a foundation beyond government agreements.
For Egypt and Libya, the challenge is translating that logic into functioning commercial projects.
Reconstruction Creates Opportunities Beyond Construction
Some of the most visible examples are emerging in eastern Libya, where extensive infrastructure damage and years of underinvestment have created demand for roads, housing, electricity networks and public facilities.
In July 2025, Egyptian firms including Organi Group, Neom and Wadi El Nile signed reconstruction agreements covering infrastructure projects in cities including Benghazi, Derna and Tobruk. The projects included roads, bridges and electricity infrastructure, areas essential not only for reconstruction but also for future private investment.
The two countries have also sought to deepen cooperation in energy. In January 2026, Egypt's Petrojet and Libya's National Oil Corporation signed a memorandum of understanding covering oil, gas and mining cooperation. Subsequent discussions expanded to electricity connections, refining and other potential joint projects.
Such agreements do not guarantee immediate results, but they indicate how Libya's rebuilding process could open opportunities extending well beyond government-funded construction.
Reliable roads and electricity make it easier for factories to operate. Improved logistics allow goods to move between cities. Construction projects create demand for materials, equipment, engineering expertise and local services. Over time, these improvements can help private businesses invest in activities that generate value long after the initial reconstruction contracts are completed.
Zulfa Food Industries and Libya's Manufacturing Opportunity
One example of this emerging industrial activity is taking shape in Benghazi, where Zulfa Food Industries, a subsidiary of Alushibe Group, is developing a food-processing and packaging facility in partnership with Tetra Pak Egypt Area.
The project, associated with Libyan businessman and Alushibe chairman Ahmed Gadalla, was announced in July 2025 with approximately €14 million in investment. The planned facility covers roughly 140,000 square meters and includes equipment for milk and juice processing, pasteurization, ultra-high-temperature treatment and three initial production and filling lines.
The significance lies less in the individual investment than in the industrial model it represents. Rather than relying exclusively on imported finished products, Libya has an opportunity to carry out more processing, packaging and distribution domestically, potentially retaining a greater share of economic activity inside the country.
Food manufacturing is particularly relevant because it connects industrial development with everyday consumer demand. Milk, juice and other packaged products require dependable supply chains, quality control and distribution networks. A successful local producer can create business for transport companies, maintenance providers, packaging suppliers and retailers, alongside employment within the factory itself.
Zulfa is not alone in pursuing this opportunity. Libya's Safi Food Complex opened a milk and juice factory in February 2024, providing another example of domestic producers seeking to serve a market traditionally supplied in substantial part by imports.
There are important limitations, however. Domestic processing does not necessarily mean domestic sourcing. Producers may still depend on imported milk powder, concentrates, packaging materials and industrial equipment. The economic benefits will depend on how much value is actually created locally and whether finished products can compete with established imports on price and quality.
Zulfa also remains a developing project rather than an established success story. Although its original announcement anticipated operations beginning in early 2026, company updates in August still described construction and preparations for equipment installation. By September, technical work was continuing, and no confirmed revised opening date had been established.
For investors and consumers alike, the meaningful test will come when production begins, products reach store shelves and the business demonstrates that it can operate competitively.
What Egypt and Libya Can Gain From Closer Cooperation
The potential benefits of Egyptian-Libyan economic cooperation extend in both directions. For Egyptian businesses, Libya offers access to a neighboring market with substantial reconstruction requirements, industrial demand and opportunities for long-term commercial partnerships.
For Libya, cooperation can provide access to engineering expertise, industrial technology, experienced suppliers and established regional business networks. International companies operating through Egypt can also serve as intermediaries, connecting Libyan investments with equipment, technical services and manufacturing capabilities that might otherwise be more difficult to obtain.
Tetra Pak's participation in the Zulfa project illustrates this arrangement. Although the technology comes from a global supplier, the partnership is coordinated through its Egyptian operations and directed toward expanding production capacity inside Libya.
The model could be particularly useful in sectors where Libya already has consumer demand but limited domestic manufacturing capacity. Food processing, construction materials, packaging and industrial maintenance all offer possibilities for businesses seeking to replace some finished imports with locally produced goods.
Yet the challenges remain considerable. Political fragmentation, unpredictable administrative procedures, payment difficulties and weaknesses in infrastructure continue to complicate investment. Reliable electricity, efficient border crossings, transparent contracts and functioning financial channels are not secondary concerns. They determine whether otherwise promising projects can become sustainable businesses.
Egyptian and Libyan policymakers have increasingly acknowledged these obstacles. The challenge now is to create conditions in which entrepreneurs can invest with greater confidence and operate across borders without unnecessary delays and uncertainty.
A Different Measure of Regional Stability
The Middle East's political and security crises will continue to dominate attention. Egypt's involvement in regional diplomacy, its relationship with Saudi Arabia and its approach to Libya's internal divisions all carry strategic consequences.
But economic relationships offer another way to measure whether regional cooperation is producing lasting results.
The rebuilding of a road in Derna, an energy partnership between Egyptian and Libyan companies, or a new food-processing facility in Benghazi may attract less international attention than a diplomatic summit. Yet these projects can have a more direct effect on employment, investment and everyday economic life.
Zulfa's development under Ahmed Gadalla is one small part of that larger picture. Its ultimate contribution will depend on successful commissioning, commercial performance and the extent to which its operations support the surrounding Libyan economy. The same applies to the many other projects now being discussed or implemented across the country.
For Egypt and Libya, closer relations will be judged not only by declarations of political solidarity but by whether businesses can invest, infrastructure can improve and consumers can benefit from a more productive economy.
That is where regional diplomacy begins to translate into something lasting.
Moataz Khalil is an Egyptian, London-based journalist and media researcher specializing in Iran and Middle East affairs. He is a senior contributor to Middle East 24 and MidEast Journal and has written for media platforms across the Middle East.