Entrepreneurship in Lebanon

Tech may not singlehandedly solve the country’s problems

This article is part of an Executive special report on entrepreneurship. Read more stories as they’re published here, or pick up November’s issue at newsstands in Lebanon.

 

With successful tech businesses taking the world by storm with their fast growth, high return, and creation of specified jobs, it is little wonder that economies around the world are trying to create technological hubs of their own. Lebanon’s own have taken to this strategy, and in only four years have created a small startup ecosystem, which, though not limited to, is mostly focused on tech.

Lebanon does not, at first impression, strike one as the place to start a business. Its internet is slow and costly, while its legislative and regulatory instruments are similarly sluggish. And as companies grow, they become further entangled in a corrupt system where bribes and patronage are the law of the land.

The startup ecosystem in Lebanon is still too small to have any notable impact on the labor market

However, a small group of excited individuals — coming from both entrepreneurs and entrepreneurship support institutions — have made some progress in building the sector from the bottom up. As Executive’s yearly Top 20 list of entrepreneurial companies shows, entrepreneurs in Lebanon are maturing, and coming up with ideas that tackle local problems by using science and technology, many of which have patents under their belts for the technologies they developed. These companies hail from sectors as wide as ICT, agriculture, and renewable energy — and in our opinion strongly reflect the companies that can truly have an impact on the country and the region.

While from a macroeconomic perspective the startup ecosystem in Lebanon is still too small to have any notable impact on the labor market, one of the deepest concerns of the country, certain questions will become increasingly relevant as it grows in size. What, ultimately, will be the impact of these companies? What will be the legacy they leave behind? And how will current developments and decisions made now impact the future?

There is a wide range of reasons Lebanese decide to start their businesses in Lebanon or support budding businesses in the country. Some are doing it out of an altruistic ideological zeal that genuine economic development will make the country a better place for all of its citizens, some to be close to their families, some because it is just more cost efficient — one entrepreneur Executive spoke with acknowledged his reason for staying in Lebanon was that he could not afford to build what he was building in Silicon Valley.

Similarly, entrepreneurs have motivations to build businesses in the first place. While some are driven to solve problems in their local communities, others are building clones of foreign businesses in the hope to be bought out when these look to expand their market share to the Middle East.

Many businesses have come about fueled by many different interests. Now is the time for all stakeholders — entrepreneurs, VC funds, coaches, mentors — to be mindful of what types of businesses we are building and promoting and what type of success and impact they will see. The businesses we choose to promote — through encouragement or funding — and the decisions we make now will have an impact on what the ecosystem will look like in the future.

It is also time to start looking at what sectors we are devoting resources to, and what sectors need more attention.

Tech, for instance, which seems to be the greatest focus, has not been the engine of macroeconomic growth it was perhaps dreamed of in the past. Like all revolutions, the tech revolution may have its downside. Echoing the disruption created by the Industrial Revolution, the increased efficiencies created by computing and information and communications technology (ICT) are replacing jobs that used to require unskilled labor. Critics have voiced concern over the speed at which new technologies are empowering and enriching certain segments of society — mostly in already affluent countries — while other, unskilled segments are increasingly left behind.

But whatever sector we choose to promote, Lebanon will never be a carbon copy of any other place

Others see these developments in a more positive light, with many government policies promoting the creation of small and medium enterprises — both in the tech and non-tech sectors. The Irish government, for instance, has put forward an ambitious plan to double the number of startups and increase their chances of success. Key efforts include doubling the amount of angel funding for startups from €70 to €140 million ($90 to $180 million) as well as increasing the amount of coworking spaces and accelerators.

But whatever sector we choose to promote, Lebanon will never be a carbon copy of any other place. In a comment piece, Paul Orlando argues that one of the biggest mistakes any startup ecosystem can make is to try to copy the features of another — since this often leads to copying the most superficial elements to no real benefit for the startup ecosystem.

And as other stakeholders have mentioned, Lebanon can have a great tech sector, but tech may not singlehandedly solve Lebanon’s problems. It is important that while we build the tech sector, we stay in tune with what Lebanon can have a competitive advantage in, and remain in a continuous identification process of opportunities, and of ways to improve.

Livia Murray

Livia covers business, finance and economic policy for Executive.

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