The new social enterprises in Lebanon’s entrepreneurial landscape
Lebanese industries have not been able to take part in the post-COVID-19 global recovery and accelerated reopening; already severely crippled by limited access to financing and the loss of a sizeable portion of their imports, they also have to contend with the surge in prices of commodities worldwide, making it ever more difficult for them to maintain productivity, much less profitability and job creation. With this upward price trajectory showing no signs of slowing down so far, the trend is toward adopting lean manufacturing principles, exploring new investment vistas, particularly the growing number of social and impact investment funds for enterprises that implement environmental, social, and governance (ESG) principles, focusing on exports, and rethinking raw materials from a local sourcing perspective. For budding social entrepreneurs, the last point present interesting opportunities that could eventually translate into profitable business models, create jobs, and even alleviate some pains in the local market.
Thinking outside the norms
Taking a step back is necessary to start understanding the landscape in terms of local and sustainable raw materials. The list isn’t very long and consists mainly of agricultural produce and limited construction materials (think cement). The first category can easily meet environmental and social standards, being local, necessary for food safety, job-creating, and requiring limited imports and inputs – or almost none in the case of organic or fair-trade crops so attractive for export markets and able to bring in “fresh” US currency. It also aptly supplies growing domestic demand, exacerbated by the dearth of imports and their rising costs. Construction materials, on the other hand, do provide jobs and may generate income from exports, but they are a long way from meeting ESG standards; the main three companies in Lebanon hardly give anything back to the community and their production processes are hungry for imports of fuel and equipment, not to mention they are not exactly environment-friendly. While these producers await positive political and economic developments to resume their exports to Syria and Iraq, they will also have to contend with regional giants in Iran and Turkey, according to International Cement Review, one of the leading publications in the global cement industry. A more sustainable long-term strategy would be investing in research and development of cleaner alternatives and production chains.
In both sectors, Executive looked at a few promising examples of social entrepreneurs already actively working towards viable alternatives and models. On the more business side of things, local startup Plastc Lab, the brainchild of brothers Rami and Ralph Sbeih, is developing specialized construction materials from an unexpected and environment-friendly local source: plastic waste. Taking a less profit-oriented approach, locally-based US-born entrepreneur Brant Stewart is working on repurposing and revaluing the production, processing, and distribution chain of local wheat and other agricultural products by operating as a social enterprise.
In 2019, Rami Sbeih, a biochemist by education, and his brother Ralph, a civil engineer, were introduced to preciousplastic.com, an open source of courses and diagrams for alternative plastic recycling systems, encouraging more individuals to build new products from this resource and even start businesses. The most commercial applications involve pressing plastic waste into sheets, extruding it into beams and bricks, or injecting in free-form for more customization. The brothers were immediately won over by the idea and saw the environmental benefits in it, as well as its business applications. “We have the opportunity to create a product that is 100 percent locally sourced and high in quality, and we are well-positioned to do so,” says Rami. While there is no accurate data about waste in Lebanon, he estimates that plastic accounts for a large portion of that waste and that less than 10 percent of that plastic is not recycled. The brothers began experimenting in their family home, and eventually launched Plastc Lab in July 2020 after receiving $17,000 in support from Omdi, a program financed by the French Institute and French Embassy in Lebanon, in partnership with the makesense incubator. The cash was used to order a shredder, a sheet press, and an extruder from Europe in order to produce sheets, beams, and blocks that could be used in outdoor structures and interior design. While dealing with unexpected shipping delays, Plastc Lab applied for and received support from Berytech’s Cleanergy Accelerator Program, which allowed them to develop the business side of their idea but also to locally assemble their own shredder and sheet press, and rent a 1,500 m2 warehouse in Halat to start research and development. Recently, Plastc Lab won a competition organized by Seeders, a group of angel investors and part of the IM Capital investment fund, receiving financial and in-kind support that will go towards further bootstrapping their operation.
In addition to the Sbeih brothers, Plastc Lab currently employs up to 3 workers on a part-time basis. The current operating model will serve as a blueprint for future large-scale production when a larger team will be necessary. First, the company buys plastic waste from local recyclers such as Live Love Recycle and Arcenciel. Rami explains this choice: “We are not interested in collecting our own waste, although we do have a small collection point outside our warehouse where friends and neighbors drop their waste. What matters to us is integrating the existing ecosystem of recyclers. By buying from them, we are validating their work and helping maintain their operations. In addition, some recyclers sort their plastic waste by type, which facilitates our job.” Even so, the second step in the process involves hand sorting on-site by type and color of plastic. There are seven types (numbers) of plastic used in different products, and most fit the bill for Plastc Lab, except type 1 (polyethylene terephthalate or PET, used in water bottles but not ideal as a resistant material) and type 3 (polyvinyl chloride or PVC, used mostly in water pipes and considered toxic to foods). Apart from type 1, the most common plastic products are type 2 and 5 (both used in food, shampoo, and other liquid containers and caps). The process could be mechanized with sophisticated infrared-equipped sorting machines but this is not on Plastc Lab’s radar for now. “Taking time to sort by hand is an added value for our products, and it guarantees its composition and quality,” says Rami. The plastic is then shredded and pressed into sheets at 200 degrees Celsius, or processed through and extruder to produce beams. Once Plastc Lab receives delivery of its block mold, it will also be able to produce construction blocks.
In the coming months, Plastc Lab s.a.l. will be incorporated in Lebanon while the Sbeih brothers will complete enhancing the physical characteristics of their product and acquiring all the necessary quality certifications to market their product. Once everything is set up, the company will seek Series A funding from local and international sources. Both envision maintaining their operation in Lebanon despite the country’s decline. Their products will be targeted directly to contractors, architects, and interior designers, and will priced competitively according to Rami: A 1m x 1m recycled plastic sheet will cost around $15, almost the same as other materials, but with the added feature that it requires no maintenance and can be recycled over and over. They have notably developed interesting synergies with Modeo Systems, a Lebanese designer and manufacturer of modular furniture also interested in sustainable locally sourced materials. “We want to show people that plastic can be recycled well and that it is a valuable resource. Even people who sort their waste do not know what becomes of it after they drop it off. It could end up in landfills or be recycled as cheap plastic products. We want to raise awareness and show how the loop can be closed with zero waste,” Rami says. To that end, part of their warehouse space will also eventually be dedicated to holding awareness sessions.
From field to table
Near a trending corner of Gemmayzeh, Mavia Bakery is known to its customers and followers on Instagram for baking sourdough bread and other goods using locally grown wheat and other ingredients. Behind this seemingly innocuous operation is a growing network of local and international individual partners and donors concerned with revaluing local produce and also providing free food to needy Syrian and Lebanese families in Lebanon. The operation is headed by Brant Stewart, a documentarian and baker who has been seeking ways to help vulnerable demographics since he first visited the country in 2013. Initially, Stewart registered a non-profit public charity in the US under the name “Sadalsuud” (the conventional transcription of the Arabic name “luck of lucks” for a group of stars in the Aquarius constellation) and collected donations to facilitate access to education for families in Tripoli. In 2017, his operation was hosted by the Shift Social Innovation Hub in the city, and it is there that he began hobby-baking in the center’s shared kitchen and teaching local women about sourdough, eventually creating a buzz. He was also introduced to local wheat varieties such as “salamouni” and “bekaai” and was surprised to learn that these were not held in high regard by local producers, as commercial bakeries and wheat mills prefer imported hybrid varieties. This set the wheels in motion and by the summer of 2019 Stewart shifted his organization’s main focus to building a model full-circle operation around local wheat, from growing to harvesting, milling, baking, and even free distribution for the needy. “I believe in local wheat, and I think it is unhealthy for a country to depend so much on imports when it can grow a perfectly good alternative,” he comments.
Despite the unfortunate timing, by May 2020, Stewart had managed through donations to rent and equip a location in Gemmayzeh, even employing a number of women from Tripoli. “Bringing people from different backgrounds together was always at the heart of what we wanted to do, but we realized Beirut was more cosmopolitan and it was easier to bring the country to Beirut than the other way around,” he explains. In efforts to provide women from underprivileged backgrounds to generate their own income and take pride in their work, the name “Mavia” harks back to a fourth-century warrior queen who ruled over Tanukhid semi-nomadic tribes in southern Syria. By Stewart’s account, the bakery’s customer base was growing steadily, a chef was brought on board to develop a lunch menu, and a number of local farmers and landowners showed interest in planting or donating land to grow local wheat varieties. August 4, 2020 put a temporary halt to this, with the bakery taking its share of the heavy damage from the explosion. But one month later, the bakery raised $2,000 through crowdfunding and donations from different parts of the world to rebuild and was soon back in business. In the immediate aftermath of the explosion, it served as a soup kitchen providing meals for residents of the most hard-hit areas, in collaboration with the Basmeh & Zeitooneh NGO, and the Nation Station initiative.
One year on, things are back on track for Stewart, with operational growth still rooted in donations. As at July 2021, he had managed to bring in his first harvest of wheat from Lebanese varieties, grown in different plots in the Bekaa, including in collaboration with a local seed-preserving NGO named Buzuruna Juzuruna. A state-of-the-art stone mill is on its way from Austria, which will produce whole-wheat flour for the bakery, but also for sale at a subsidized price to partner bakers, bankrolled by donations at first. As it stands, the price of wheat from local flour hovers above 10,000 Lebanese pounds per kilo, compared to 1,400 Lebanese pounds per kilo for mass-market commodity flour. The mill will also service small growers and their wheat harvests, in an effort to generate better interest in local varieties. The third component in his growth plan is the establishment of a free, subscription-based bakery in the Bekaa, serving the families most in need. From a business and logistics perspective, this plan will require partnerships. “There is much unused or mismanaged land, and we want to make it clear to landowners that they can turn a profit and contribute to improving food security simply by growing wheat conscientiously and reviving local varieties. Oversight will be necessary every step of the way,” he says. Closing the loop, will be individual consumers who will drive demand. “We want to take deliberate and intentional steps to encourage people to consume better quality local products, whether through our own customer base, or through select partner bakeries buying flour from our mill at subsidized prices so their products stand out among the competition,” he says. A vast program for which Stewart is currently considering incorporation, either as an NGO, or as a business, unless opportunities arise for partnering with existing entities. He admits that sales of his baked goods, while reasonably priced, are not close to generating profits at present. Current gross income stands at around 660,000 Lebanese pounds per day, but this needs to rise to 2,300,000 per day to break even. “The sad current reality is that it’s easier to raise funds from donations in the US than from sales in Lebanon,” he says.