Private business was not encouraged during the Gaddafi era, this was apparent as the legislation and policies were not welcoming for investments. Also Libya is a heavily oil dependent economy and the majority of the population are employed by the state. But these circumstances began to change slowly when Saif Al-Islam introduced new legislation between 2006 and 2009 to encourage innovation and entrepreneurship. But the infrastructure and culture were not accommodating enough and it was not until the uprising that the private sector began to show some signs of growth. But the growth slowed down and was completely halted by the 2014 violence.
When the situation calmed down, private businesses had few opportunities to operate in a hostile and very difficult economic climate.
Islamists pushed for adapting Sharia laws in 2013 and they imposed that the country should apply Islamic banking, which led to the suspension of all loans and grants that had been offered by banks for a very low interest rate. This caused lack of funding and, together with the absence of rule of law and security, this scared away investors who did not want to take the risk.
In the absence of any state organisations to regulate the market, a shadow economy controlled the flow of goods and services, prices began to hike and inflation rates were unprecedented. But this didn't stop young people from coming up with solutions to launch news businesses and bring new products to the market. Even though it’s impossible to raise venture capital there are a number of startup competitions that are funded by Western NGOs and governments. Recently with the increase of Internet speed more and more apps are now available, and online business are developing. But there is no economy of scale to match the efforts put into these new ideas and there is no legal framework to protect ideas from being copied.