There have been rumours in recent weeks that Lebanon is once again ripe for investment. A new man in the presidential palace and a new government has sent ripples of optimism across a country readying itself for the holiday period. For if this is the time of year for giving, then the Lebanese from all confessions are more than ready to receive.
The local press has been coy in naming names when it reports that certain “companies” have been looking at Lebanon “with interest”. So who are they? My guess is property developers reviewing the Lebanon file and waiting for a bit of stability to invest in a market that got burnt by pandering to Gulf money but which has more long-term potential in smaller units for local home buyers who have no need for 400-600 square metre duplexes.
That doesn’t mean that relations with the GCC won’t thaw. Envoys are already seeking to mend things (especially with Saudi Arabia, which, effectively, pulled out of Lebanon earlier this year) in a bid to woo back free-spending Arab tourists. Who knows, they may even snap up some of the empty mega-apartments. It is a buyers’ market after all. But in terms of sustainable job creation nothing has changed and is unlikely to change even now with a new government formed.
The Lebanese, and bless them, they have been through a lot, will talk about “renewed stability” but deep down they must realise that a cabinet that demands representation of all Lebanon’s major political parties is unlikely to pull in the same direction for the sake of the common good. Elections are supposed be held next year and so this will be a “holding” government and unlikely, even if the will was there, to seriously address the economic priorities.
Which is annoying because the Global Entrepreneurship Development Institute, or Gedi, a Washington DC-based research body, has recently ranked Lebanon 11th out of the 17 Mena countries in its Global Entrepreneurship Index, which measures the “quality and dynamics of entrepreneurship ecosystem at the macro and micro levels”.
Israel was given the top spot, followed by the UAE, Qatar, Saudi Arabia, Bahrain, Turkey, Oman, Kuwait, Tunisia and Jordan. The only countries that Lebanon ranked higher than were Morocco, Algeria, Egypt, Iran, Libya and Mauritania. Syria was not mentioned for obvious reasons.
Given our tradition of wheeling and dealing, a millennia-long connection with the rest of the world, an almost pathological obsession with education and a street-smart instinct for all things tech-related, we Lebanese should really be punching above our weight. But we’re not, and our best and brightest are either heading to the Gulf to wait tables or are driving taxis in Brighton
What makes Lebanon’s ranking even more depressing for Lebanese is that in August 2014, in a bid to halt the brain drain and boost local employment opportunities, the Lebanese Central Bank announced “Circular 331”, which outlined an initiative that it hoped would inject as much as US$400 million into Lebanese entrepreneurship, guaranteeing 75 per cent of local bank financing of the “knowledge economy through direct start-up equity investment or indirect start-up support entities”.
What was in it for the local banks? In return for investing in knowledge-based start-ups economy, the Central Bank offered them seven-years’ interest-free credit, which could be ploughed into treasury bonds giving 7 per cent interest.
It was a laudable but nonetheless crude idea. “Here’s the money,” it said. “Now go and start a successful company.” But it didn’t take into consideration that Lebanon’s business environment is probably closer to Rwanda than Silicon Valley. Infrastructure is a problem; regulation and red tape is a problem.
The talent to hack into a nuclear mainframe while sitting in a shisha cafe is there, but without a genuine nurturing environment all this is unlikely to translate into meaningful macro economic activity.
As far as I can tell, and maybe someone will tell me otherwise, the only winners have been the banks. Plus ça change.
Michael Karam is a freelance writer who lives between Beirut and Brighton.
business@thenational.ae
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