The public sector’s support for entrepreneurship in Lebanon has largely been timid. One public institution that is trying to be active and encourage the country’s enterprising youth is Banque du Liban (BDL), Lebanon’s central bank. BDL has been organizing conferences and launched an online platform in 2011 dedicated to entrepreneurs, but it has failed to gain momentum so far. Saad Andary, vice-governor of Lebanon’s central bank, says BDL has not given up, however, as fostering young talent is essential for the local economy. Executive sat with Andary to discuss BDL’s support for Lebanese talent.
How will supporting entrepreneurs in Lebanon help spur the local economy?
Lebanon is a mercantile economy and it cannot continue forever like this because we are shedding a lot of talent year in, year out, as we can’t find them jobs. I am trying to reinvent the economy. What we can do here is build on the potential strengths of the economy, that we are a service-based society with human resources, a number of first-class universities and first-class academics. There is a mismatching in human resources so we have to build an economy that matches the talent, since it already exists. The economy should provide jobs for these talents, in medicine, educational services and financial services; in other words, in knowledge-based sectors.
What is the aim of the online entrepreneurs’ platform launched by the central bank?
We started working on the platform in 2009 and it was launched in 2011. Our aim is to get people to talk to each other. We are working on it. It is not gaining enough momentum though. We are currently speaking to entrepreneurs to help us revamp and redirect the website. We are doing things that are not the norm, not the way the government would expect you to behave.
Why is the central bank taking the initiative to support entrepreneurs in Lebanon?
As the central bank, it is not our mandate to do this. There is no evidence on the entrepreneurs’ platform that the central bank is behind it. We are the invisible hand that is motivating people to work because it will alienate people in high offices and in the ministries that the central bank is doing things they should be doing and have not bothered to do all these years. I used to go to them [to request their support] but they said they did not have the budget for it.
What is the central bank doing to help entrepreneurs secure funding?
Young people are always confronted with difficulty in finding funds. Banks won’t fund startups. They fund you if you have already started up, are already established and have guarantees and collateral. So we have to work on creating a capital market capable of providing equity financing, not just debt financing. We have a new financial market authority that has been instituted recently, presided over by the governor of the central bank [Riad Salameh] but it is still early days. Meanwhile, we are working on a project with the World Bank for equity funding. If you go to people who have equity in times of insecurity, they will hold back from deploying their capital. We have to start somewhere so we negotiated with the World Bank for a $30 million loan, which we will transform into equity.
Where do you stand on the launch of this fund?
We are finalizing it now. It needs approval by Parliament and maybe should be ready in a couple of months. The fund will invest in Lebanese talent in a knowledge-based sector with up to $500,000 per project. Kafalat [the government institution supporting small and medium enterprises in Lebanon by providing loan guarantees] will run it through a holding company. We think it is original and exciting and if we succeed, we can replicate it in the region.
What do you want from the government?
Before 2009, there was no entrepreneurship ecosystem. Many Lebanese came back from Silicon Valley, from London, from all over and found that the ecosystem is beginning to fall in place. What encouraged them to come back? I don’t know. Maybe our website? Your articles? I am hopeful. You can feel the buzz around you, the energy. We are trying to direct the energy, hopefully with the support of the government, but we don’t want direct intervention from the government nor do we want money or budgetary funds. We just want support to provide such or such a service.
Do you expect the long overdue electronic signature draft law to pass soon?
This law is ready. It is in Parliament now in its final stages. It is being discussed in committees… and should be implemented soon.
How about other laws such as the competition law, also essential to be passed to support entrepreneurs in Lebanon?
I think what is more essential than the passing of laws is the Investment Development Authority of Lebanon (IDAL) playing a more pivotal role. Ideally we should not be seen doing any of the [aforementioned] things that we have done. It should be the role of IDAL, but they have not done what their equivalent in Turkey has done. IDAL should have a vision and should be the focal point for all investors that are in Lebanon or coming into Lebanon. The prime minister and his office should support it directly; similar to what is done in Turkey. When encountering problems to bring in investments, IDAL could circumvent the red tape confronted when working with a number of ministers, because who is the head of the ministries? The prime minister, and he is best placed to solve any problems that might pop up.
How about universities — what can they do to support the entrepreneurship ecosystem?
At the conferences we organized for entrepreneurs, we used to invite universities and we were happy to see that universities built on ideas that we discussed. The École Supérieure des Affaires started offering a masters [degree] in entrepreneurship. The dean of business at the Beirut Arab University implemented an institute for entrepreneurs. The American University of Beirut launched a center.
What is needed for a startup to succeed in Lebanon?
You need two things to succeed in Lebanon: one is to have an idea that could work and survive in Lebanon, and the other is for the company to operate in international markets. Lebanon is too small to survive on its own; that’s why its youth are struggling.
What advice would you give to entrepreneurs in Lebanon?
My advice is that we have to get started, not to waste time thinking about impediments. Get started, plunge in, feel the pain. If you fail, try again. Go for it.