A unity government appears to have made progress toward consolidating power in Libya in recent days, raising hopes that the North African country may finally start to put five years of unrest behind it.

But even if most warring factions recognize its authority, the challenges the new administration faces are daunting, from an economy in disarray to militant Islamists professing fealty to the Islamic State group.

Little authority

Leaders of a proposed government of national accord arrived in Tripoli earlier this month where they set up operations on a naval base.

Although the prime minister of the self-declared and Islamist-dominated government in the capital, Khalifa al-Ghawi, reversed an earlier decision on Wednesday to make way for the incoming unity leaders, his authority seems to be waning with ministers no longer going to their offices.

The central bank and National Oil Corporation have both recognized the new government, which emerged from talks between representatives of the rival legislatures in Tripoli and Tobruk. France and Tunisia have said they will reopen their embassies. The Italian foreign minister, Paolo Gentiloni, made a surprise visit to Tripoli on Tuesday to offer his support.

The formerly internationally-recognized parliament in Tobruk, which was driven out of the capital by Ghawi’s faction after winning the election in 2014, has yet to accept the new leadership.

Ungoverned

Even if Ghawi and the lawmakers in Tobruk acquiesce, the new government will have its work cut out for it.

Swathes of the country have been virtually ungoverned since Muammer Gaddafi was ousted and killed in 2011. The dictator dismantled what little institutions Libya had to centralize control in his inner circle. When he was removed, the country fell apart along regional and tribal lines. Law and order collapsed. Militias that were formed to fight Gaddafi have roamed free since.

Some, based around the city of Sirte on the Mediterranean coast, claim affiliation with the self-proclaimed Islamic State in Iraq and Syria.

Economy in disarray

The economy has suffered as a result. It shrank by a quarter in 2014 and a further 6 percent last year.

Oil production, the mainstay of the economy, has fallen to less than 400,000 barrels per day, a quarter of the amount Libya pumped before the revolution.

A steep reduction in the value of the national currency has hit hard in a country that relies heavily on imports. The cost of bread has reportedly risen fivefold.

The United Nations estimates that around half a million Libyans have been displaced within their country and another million have fled abroad.