ENGINEERING THE FUTURE
TBY talks to Marianne Hoayek, Director of the Executive Office of Banque du Liban, on the roots of the Circular 331 concept, bridging funding gaps throughout the startup lifecycle, and the country's growing knowledge economy.
BIOGRAPHY
Marianne Hoayek has headed the Executive Office at Banque du Liban since its establishment in July 2007. She is also a member of the official Lebanese delegation to the IMF and World Bank annual meetings and sits on several BDL high-level committees. She has been particularly involved in the implementation of Circular 331 and is behind the BDL Accelerate Conference, the successful international conference that has established Lebanon as an international startup hub. Hoayek has a degree in business economics from the Lebanese American University and one in law from the Lebanese University and obtained her master’s degree in laws of banks and capital markets from Saint Joseph University.How did the idea of Circular 331 come about and when did you decide to build momentum on the knowledge economy?
The concept started in 2013 when we noticed that something was going on in the Lebanese startup ecosystem; however, the industry was still somehow in the shadows. We began talks with major players in the industry to measure the potential this could have in the years ahead, and by August 2013, Dr. Riad T. Salameh himself drafted a circular about the knowledge economy. When Circular 331 saw the light, the concept was new to the banking sector and to most people in Lebanon, so it took some time to grasp and take off as a valid project. Circular 331 allowed commercial and investment banks in Lebanon to invest up to 3% of their capital in knowledge economy startups with a 75% guarantee on its investments coming from Banque du Liban. This created an initial platform of USD400 million available for the ecosystem, which is a great number for a country the size of Lebanon, and has been pushed even further to reach an amount of USD500 million today. This circular has created major momentum for startups in Lebanon; everyone is talking about the ecosystem; the private sector is becoming increasingly interested in them; and, more importantly, we have created a culture of entrepreneurship in the country. Through the disbursement of funds for the ecosystem, Circular 331 has released the potential of the knowledge economy in Lebanon to turn it into a pillar for the country's economy. It has also served as a platform for Lebanese talents to go abroad and shed the attention from international investors to this industry.
Some players in the ecosystem talk about a gap in funding between seed-stage and advanced startups. As the regulator of funds, how is Banque du Liban working to cover this gap?
When the disbursement of resources started there were only two funds catering only for mid-stage startups with more potential for successful exits. Up to a certain extent, this was the result of the hesitation raised by banks when funding early-stage startups for the doubts surrounding their development. Once we came across the need to further incentivize seed fund, we pushed for the creation of more funds at this stage, and we currently have two specific seed-stage funds operating in the ecosystem. There are many professional people out there who have landed innovative ideas and need funds to kick off their startups, so we tried to diversify the scope of venture capitals and funds at every step of the way to create a comprehensive scheme for funding. We solved the gap problem by creating two funds at the seed stage, two at the intermediate stage, and two at the growth stage.
Banque du Liban has identified the knowledge economy as one of the three flagship sectors for Lebanon's development in the near future. How will this sector impact the Lebanese economy?
We think that if the whole scheme is deployed as planed, it will constitute 1% of the GDP within three to five years. Our target is to create 20,000 jobs in the ICT sector by 2025, especially in the key sectors that the UK Tech Hub has identified for the upcoming years, namely retail, fintech, and healthcare. We have maintained a conservative approach about the potential of the sector, but if things improve in Lebanon in the short-term, the number could jump even further. During these complicated times in the country, Banque du Liban has come out with subsidies, stimuli, and initiatives that have all proven successful and have maintained this ship on float. The initiatives spurred in the knowledge economy will be no different and this sector will indeed become a beacon of progress for Lebanon in the years come.
ENGINEERING THE FUTURE
TABLE OF CONTENTS
Focus: Lebanese-French Relations
Let’s be Franc
Lebanon shares a close relationship with its former colonizer, both in terms of economic relations and cultural identity among Lebanese. In spite of hardships like the presidential power vacuum and Syrian war next door, the bond is only getting stronger.
read articleFocus: Tripoli Economic Free Zone
The Tripoli Transformation
The Tripoli Special Economic Zone (TSEZ) is one of most ambitious projects in Lebanon at the moment. With an initial cost of USD27 million, it is meant to provide an alternative to the heavily centralized economic activity in Beirut, a new gateway for investments and trade to settle in northern Lebanon, and will transform the image of a long-neglected region.
read articleInterview
Dr. Freddie Baz, Vice Chairman & Group Strategy Director, Bank Audi
TBY talks to Dr. Freddie Baz, Vice Chairman & Group Strategy Director of Bank Audi, on the bank's increase in profits, dealing with currency devaluation, and working to turn the economy into an export-driven one.
read articleReview: Insurance
Life is a Rollercoaster
Unlike many emerging markets, Lebanon enjoys a relatively high insurance penetration rate and strong life segment, buoyed by compulsory lines and bancassurance. Competition remains fierce, however, and reform aimed at encouraging consolidation looks far off.
read articleInterview
Max R. Zaccar, Chairman of Commercial Insurance & President of the Association, Insurance Companies
TBY talks to Max R. Zaccar, Chairman of Commercial Insurance & President of the Association of Insurance Companies, on the resilience of the sector, increasing the already-high penetration rates in the country, and remaining one of the strongest insurance companies in the region.
read articleInterview
HE Arthur Nazarian, Minister, Energy and Water Resources
TBY talks to HE Arthur Nazarian, Minister of Energy and Water Resources, on the potential offshoots from oil and gas explorations, the country's National Energy Efficiency Action Plan, and attempts to increase renewable energy consumption.
read articleInterview
Wissam Zahabi, Chairman, Board of the Lebanese Petroleum Administration (LPA),
TBY talks to Wissam Zahabi, Chairman of the Board of the Lebanese Petroleum Administration (LPA), on making the investment climate attractive for foreign companies and becoming self-sufficient in energy.
read articleFocus: Sovereign Wealth Funds
Gas Pipe Dreams
Despite excitement over exploration of Lebanon's hydrocarbons, the creation of a sovereign wealth fund, which was included in legislation, has yet to take place. The country faces several obstacles in its path to creating and properly managing a fund.
read articleInterview
Pierre El Khoury, General Director, Lebanese Center for Energy Conservation (LCEC)
TBY talks to Pierre El Khoury, General Director of the Lebanese Center for Energy Conservation (LCEC), on the development of energy efficiency in Lebanon, awareness of energy conservation, and the country's 2020 renewable energy goals.
read articleInterview
Dr. Fady Gemayel, President, Association of Lebanese Industrialists (ALI)
TBY talks to Dr. Fady Gemayel, President of the Association of Lebanese Industrialists (ALI), on the group's work to promote industrialists, new developments in terms of industrial cities, and the future of industry in the country.
read articleFocus: Industrial Cities
Industrial Solution
Domestic and regional events have stifled Lebanon in building a strong national industry to protect and sustain its economy. Four proposed industrial zones throughout the country may provide it with the economic backbone it so desperately needs.
read articleInterview
Marianne Hoayek, Director of the Executive Office, Banque du Liban
TBY talks to Marianne Hoayek, Director of the Executive Office of Banque du Liban, on the roots of the Circular 331 concept, bridging funding gaps throughout the startup lifecycle, and the country's growing knowledge economy.
read articleRoundtable
Thinking It Through
On June 12, TBY and the American-Lebanese Chamber of Commerce (AmCham) organized a roundtable titled “Startup ecosystem sustainability: fostering cooperation to drive entrepreneurship." The participants discussed the impact of Circular 331, an initiative by Bank du Liban, the Lebanese central bank, to inject a potential of USD400 million into the local enterprise market and guarantee 75% of banks' investments in startups and startup support.
read articleFocus: Infrastructure for the startup ecosystem
The New Star
Startups are ubiquitous in Lebanon despite the difficulty of starting a business and the lack of services available to new businesses. However, a number of actors, both public and private, are innovating the environment and allowing startups to fulfill a greater role in the country's economy.
read articleFocus: Maritime Exports Bridge
Bridging The Gap
The conflict in Syria has wrought serious damage on the Lebanese economy, effectively closing off the country's trade routes through Syria. However, a new program geared at balancing the price disparities between land and sea transit is poised to help Lebanese industries.
read articleFocus: Real Estate
A Stimulus For The Rest Of Us
The real estate market in Lebanon is nothing like it used to be. The sector has slowed considerably, and demand has shifted from the traditional center, Beirut. However, stimulus packages from the central bank over the years have proven beneficial for all parties involved.
read articleInterview
Armand Pahrés, President, Lebanese Pharmaceutical Importers Association (LPIA)
TBY talks to Armand Pahrés, President of the Lebanese Pharmaceutical Importers Association (LPIA), on the development of legislation in the sector, boosting further innovation, and opportunities for Lebanon to become more self-sufficient in pharmaceuticals.
read articleFocus: Incentives for pharmaceuticals in Lebanon
Pharma Land
Lebanon has always been the region's leader in all things health related. Its pharmaceutical industry is no exception, and the country's incentives for international pharma companies to operate, manufacture, and distribute in Lebanon are only getting stronger.
read articleInterview
HE Elias Bou Saab, Minister, Education and Higher Education
TBY talks to HE Elias Bou Saab, Minister of Education and Higher Education, on the ministry's initiatives to improve the education system, ensuring access to education for Syrian refugee children, and reversing the brain drain in the country.
read articleInterview
Mohamed Harajli, Provost, American University of Beirut (AUB)
TBY talks to Mohamed Harajli, Provost of the American University of Beirut (AUB), on his upcoming plans for the university, the key role played by the AUB alumni, and fostering an entrepreneurial spirit among students.
read articleFocus: Programs to school Syrian refugee children
High Marks
Proportional to its population, Lebanon has taken in significantly more Syrian refugees than any other country. With the country now facing the problem of placing the tens of thousands of Syrian children in school, international donors and local and foreign organizations are making educational support a priority.
read articleInterview
Joseph G. Jabbra, President, Lebanese American University (LAU)
TBY talks to Joseph G. Jabbra, President of the Lebanese American University (LAU), on embracing technology at the university, the challenges of Lebanon's brain drain, and the importance of having international links with other institutions.
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