This chapter aims to analyse the private sector, Small and Medium Enterprises (SMEs) and entrepreneurship in Libya based on available data, but the current situation is likely to have significantly worsened due to the unrest since 2014. The chapter presents information on the size, structure and role of the SME sector in the economy and the level of entrepreneurial activity. It highlights the major challenges inhibiting development of the SME sector based on recent small-scale surveys. The evidence reveals a very low contribution of SMEs to the economy, a relatively weak level of entrepreneurship and poor performance of the SME sector in terms of employment generation, productivity, and competitiveness. Private sector enterprises and SMEs face many constraints that hamper their development and growth potential, which have become even more severe in recent years due to the political instability and worsening security situation. This includes access to resources and markets. Much of SME-related activity takes place in the informal economy, largely due to complex and costly business registration procedures, the absence of functioning registration and licensing systems in Libya’s regions, and weaknesses in the legal, regulatory and administrative systems.