By TBY | Lebanon | Nov 09, 2017
The World Institute for Entrepreneurship and Development ranked Lebanon 63rd out of 137 countries in its Global Entrepreneurship Report 2017. And data show that improving the entrepreneurial environment by 10% […]
The World Institute for Entrepreneurship and Development ranked Lebanon 63rd out of 137 countries in its Global Entrepreneurship Report 2017. And data show that improving the entrepreneurial environment by 10% in Lebanon, it would bring an additional USD13 billion to the national economy.
On the regional level, Lebanon was ranked 10th among 15 countries in the Middle East and North Africa region listed in the report. Areas that reflect Lebanon’s strong performance are the skills of emerging companies, internationalization, and communication; the country’s weaknesses are the turmoil in the region and the risks surrounding the absorption of technology and growth. Globally, the US is ranked first, followed by Switzerland and Canada. Of the Arab countries, the UAE is ranked 19th in the world and first in the MENA region.
A wave of entrepreneurship was brought on by the Banque du Liban’s issuance of Circular No. 331, which allocated USD400 million to boost the startup ecosystem and attract young people who want to establish their own businesses. For years, many Lebanese people have been trying to reap the benefits of the global entrepreneurial push. This promise of the idea development and micro-projects was fueled by Circular’s No. 331, which allows commercial banks to contribute to the capitalization of startups, incubators, and business accelerators. It is a generous package that enables banks to acquire the largest share of their capital and control their management.
Young people in Lebanon have hailed entrepreneurship as a savior amidst the unemployment crisis. Funding and workshops are strongly directed toward young university students to push them to establish their own companies. Quickly, smart cities emerged, such as Berytech and Beirut Digital District (BDD), which attracted a large number of startups.
BDD aims to be the hub for digital and creative industries in Lebanon. Each year BDD accelerates 60 startups and incubates 23. In addition to hosting startups and their incubators and accelerators, BDD, in collaboration with its various partners, host several initiatives and events to promote Lebanon as a regional entrepreneurship hub. BDD and partner Wamda hosted the “Mix N’ Mentor Beirut” in September 2017 to engage stakeholders—investors, entrepreneurs, mentors, and corporates—in addressing challenges and opportunities in the entrepreneurial sphere.
Despite entrepreneurship’s positive effects—including creating jobs, encouraging hope, and stimulating the country’s economy—the truth is that, globally, 90% of startups fail. In Lebanon, the picture seems even more negative, as ideas often emigrate with their owners because of the lack of local opportunities and the lack of effective support.
Some of the challenges that entrepreneurs have to face in Lebanon are, first, political instability, which plays a very negative role in influencing the business sector. Second, the deterioration of Lebanese infrastructure ends in high operation costs, expensive electricity bills, and absurd internet prices with slow speed. internet connectivity in Lebanon is ranked one of the worst due to high prices and poor connection speeds. Government monopoly as an Internet infrastructure provider has led to stalled development in the sector, leaving Lebanon behind as technologies advance in other parts of the world. And third, the inability of the Lebanese judicial system to resolve disputes arising between companies as quickly as required.
The average investment volume in Lebanon ranges between USD100,000-150,000, while the average amount of financing in the UAE is more than half a million dollars. The proportion of investment in entrepreneurship is growing rapidly in the Arab region, with the largest concentration of financiers focusing on e-commerce and the internet, followed by software and services development, communications, and games. As with most financiers, Saudi Arabia and the UAE are the two countries where companies want to expand. To remain competitive in the region, capital investment in Lebanese startups needs to expand and further support entrepreneurs, taking innovative ideas from hopes to economic stimuli.