Live Wire

Oct. 24, 2018

Lebanon's IT sector is assuming a growing role as a key support branch for its higher-profile financial and tourism industries. High rates of mobile and internet penetration have led to a better understanding of how these tools can be used to build the wider economy and develop new services for domestic and external consumption. The ICT sector grew by an annual rate of 7% between 2014 and 2016, and government analysts expect this rate to increase to just under 10% by 2019, by which time the sector should be worth USD543.5 million. Continued infrastructure and educational investment should help build the skills the population needs to take full advantage of this blossoming sector.

Though Lebanon has long been one of the Middle East's most liberal economies, the telecoms sector is largely state controlled. The Ministry of Telecommunications owns the country's mobile networks and regulates the two primary operators. Penetration rates are a bit below the GCC countries but slightly above the averages in the rest of the Levant; according to government figures mobile penetration rates reached 87.07%. As of 2015, there were almost 3 million subscribers using mobile data services, and this number has continued to rise thanks to investment in expanding and upgrading 4G networks. As of March 2017, Lebanon had 4G mobile broadband coverage across 85% of the country.

Fixed broadband rates, too, have risen significantly in recent years, going from just 9.9% in 2013 to 22.76% in 2015, according to the International Telecommunication Union. Speeds are still below regional averages, but according to the Arab Center of Research & Policy Studies, as of 2016 70% of the Lebanese population used the internet, with almost 80% of these users using it on a daily basis. Such penetration has helped the IT sector grow to a total direct and indirect contribution of USD 6 billion toward GDP in 2017.

In 2015, the Lebanese Ministry of Telecommunications launched the “Digital Communications Vision– Lebanon 2020” strategy, which outlines its plans for investment and development of the sector over the upcoming five years. The primary objectives of the project are to dramatically increase the size and scale of the country's broadband network, replacing the current copper infrastructure with fiber optics, and making high-speed internet a standard in government offices, universities, and houses all over Lebanon. More than USD700 million in government funding has been allocated to the project, with the ultimate goal of bringing average internet speeds up to 100MB/s from the current 8Mb/s. Discussions about the liberalization of the sector are underway, but current plans call for the Ministry of Transportation to sell access to private providers. Regardless, the structure of a long-term infrastructure plan and the prospect of internet on par with the world's best has the private sector supportive of the plan. The private IT industry, one of the country's fastest-growing economic sectors, stands to gain perhaps most of all if the Vision 2020 plan accomplishes its goals.

As of 2015, Lebanon's ICT sector was comprised of around 800 firms, most of which were SMEs. Though still small in absolute terms, industry leaders believe that the tech industry can grow to become a regional hub. A strong educational system combined with a record of financial and services industry success has the sector in a position to grow quickly, as needed infrastructure is constructed. The government is helping by linking the country's well-established financial sector to provide funding for incubation and acceleration programs. As a result, access to credit is higher than in countries with tech sectors of comparable size. Lebanon has also worked with the World Bank to help guarantee commercial banking loans to startups, which has helped bring more than USD 400 million into the sector. Partnerships with international venture capital and tech firms have further helped the sector, and development initiatives like the Touch Innovation Program have helped young Lebanese citizens find mentorship and access to funding.