The visit of Peter Millett, the British ambassador to Tripoli, was eventful. From early Friday morning, parts of the capital had echoed to exchanges of gunfire between two of the armed factions fighting for control of the city. At around 10am, Millett took to Twitter to report hearing “explosions and artillery fire”.

The ambassador’s inadvertent venture into frontline reporting underlined the gulf between today’s reality and the hopes for Libya in 2011 when Colonel Muammar Gaddafi – who had ruled since 1969 – was ousted by rebels with the support of Nato airpower.

Libya is now central to the investigation into Salman Abedi, the 22-year-old who bombed Manchester Arena earlier this week. Abedi’s parents left Libya a year before his birth in the UK in 1992, and are thought to have returned to Tripoli around five years ago. Abedi himself is thought to have spent time in Libya in recent years, and was in Tripoli a week before his attack. His father, Ramadan, and brother Hashem were detained in Tripoli by a local militia shortly after the attack, responsibility for which was claimed by Islamic State.

The link has prompted headlines describing Libya as a “hotbed” of jihadi activism. Experts, however, say the situation is more complicated and warn against exaggerating the strength of Islamic militant groups there.

Isis has been forced out of the two cities on the Mediterranean coast it once controlled and, though it still has a presence in Tripoli and elsewhere, has scattered into shifting desert camps. Its propaganda now rarely mentions Libya, which United Nations experts once mooted as a possible alternative base for the group if it was expelled from its strongholds in Syria and Iraq.

Al-Qaida uses the remote south of Libya as a rear base for planning and logistics but has no territorial control and does not seem to be seeking to expand. Local groups, such as Ansar al-Sharia, are fragmented and weak.

Aaron Zelin, a senior fellow at the Washington Institute for Near East Policy, said “Libya is relevant but not at the forefront” of Islamic extremist activity across the region.

The suggestion that Abedi was radicalised or trained in the country and was dispatched to the UK by a Libyan network, possibly linked to Isis, remains plausible.

The country has a long history of exporting extremists. Libyans fought in Afghanistan against Soviet forces in the 1980s, with several veterans taking up key roles in al-Qaida in the 1990s. Others returned home to form the Libyan Islamic Fighting Group, which led a campaign of violence against Gaddafi’s regime. Documents compiled by Gaddafi’s intelligence services have apparently backed up the charge that Abedi’s father was linked to the group, although former members in Libya deny the connection.

Hundreds more travelled to Iraq to fight alongside insurgents in the aftermath of the US-led invasion of 2003. More recently, up to 2,000 made their way to Syria to join Isis and other extremist groups, while the gunmen who killed 38 tourists in Sousse, Tunisia, reportedly trained at an Isis base in the west of Libya.

There is also evidence that groups in Libya have sought to attack Europe. German investigators believe Anis Amri, who drove a truck into a crowded Christmas market in Berlin last year, had contacts there. And US officials said airstrikes in January that killed 80-100 people in Isis camps in the west of the country were carried out to eliminate a threat to Europe.

But if Islamic militant groups in Libya are fragmented and scattered, they are still able to exploit the deepening economic, social and political crisis in the country, blamed by some on the 2011 intervention by western forces.

Last year, the UK’s foreign affairs select committee delivered a scathing report accusing David Cameron of launching the 2011 intervention without thorough intelligence analysis and of shirking a moral responsibility to help reconstruct the country.

The result of French, British and US intervention, the report found, “was political and economic collapse ... humanitarian and migrant crises, widespread human rights violations and the spread of Gaddafi regime weapons across the region”.

Successive efforts to negotiate a political deal among rival factions have failed. Since 2014, Libya has been divided, with the authority of the 17-month-old internationally-backed Government of National Accord barely extending beyond Tripoli.

“It all comes back to a functional and sustainable political settlement … but we don’t see the international interest and investment necessary,” said Tim Eaton, a Middle East specialist at London’s Chatham House.

The youth unemployment rate is close to 40%, while inflation tops 30%. There are rolling electricity outages and a severe lack of hard currency. Low oil prices and instability have hampered crucial oil production. Italy is currently the only western nation with a full-time diplomatic presence in Tripoli.

With an ongoing low-level civil war and a deep rivalry between key political players splitting the leadership of key institutions, the chances of economic improvement in the near future are slim. One recent report spoke of the creation of a series of “city states” across much of the country. Elsewhere, tribes – the basic political unit in Libya – are increasingly powerful, with relations evolving in an ever-changing matrix of alliances and feuds. Senior British diplomats have raised the prospect of Libya becoming “Somalia on the Mediterranean”.

This risks greater problems in the future, experts say.

“Isis in Libya is a symptom, not a cause, of what is happening in the country,” said Mary Fitzgerald, a researcher specialising in the country. “The danger is that the continuing security and political vacuum recreates the environment that Isis saw as an opportunity and then exploited to go from a toehold to a foothold and then some. New groups might be able to do the same in the future.”