Home Economics & Policy A state of insecurity


A state of insecurity

Lebanon’s security industry under the magnifying glass

by Thomas Schellen

Even as Lebanon has recently seen positive developments in its public security frameworks such as the deployment of governmental security in the southern suburbs of Beirut, events around the world, from Peshawar and Baghdad to Nairobi, were a reminder of Lebanon’s own vulnerability. 

Longstanding questions include: What has to be done to enhance security at all sorts of public places which are soft targets for terrorists? Do private individuals have to rethink their personal security strategies?   

Executive looked into the enterprise aspect of this new security focus, on the assumption that the current climate of insecurity must be good for the country’s private sector businesses which deal in security.

Focusing on the preventive and protective aspects of security Executive surveyed three corporate areas in which security is the core business: vendors of security equipment, guard services, and producers of armored cars used for personal protection. Quite expectedly, companies in all three sectors confirmed that they have seen growth in demand for their products and services this year. But growth was not exorbitant.

Representing the equipment vendors, Riccardo Hosri, the president of the Syndicate of Safety and Security Professionals in Lebanon (SSSPL) and deputy general manager of systems provider Sacotel, told Executive that his company saw around 15 percent growth in demand but added that it was regrettable how instability contributes to business growth. “The political insecurity helps. To my greatest disappointment, I have to say that it helps. I am not happy about it.”

Profiting from instability

Hosri could not put a number on the total market size or quantify the demand growth in the Lebanese market for security systems because an SSSPL project to gather market data is still in its infancy.

However, growth in the low double digits — between 10 and 15 or between 15 and 20 percent — was what most sector companies said they were seeing this year. At Mac Corp, an equipment vendor that just last month celebrated 20 years in business, chief executive Jamil Nassar cited 10 to 15 percent growth. Sami Zod, general manager of Zod Securities, one of the longest-established systems specialist companies with market presence since 1977, said growth this year was around 10 percent. 

If this growth trajectory is below what one would suspect from the increases in security incidents and general threat perceptions in Lebanon, one main reason for the subdued development in the turnover of security systems vendors is that the companies’ sales are dependent not only on the fears but also on the economic fates of their corporate clients.
While there is increasing demand for security systems, the overall market is rather stable and there is a shift from automation and fire safety systems in favor of security equipment, Zod said. Nasser explained that his market for installations was driven up to 80 percent by new commercial and residential projects, citing a 2013-completed shopping mall with installation of about 500 CCTV cameras as an example. He added that he saw new demand over the past three years focused on CCTV systems and more recently on explosives detectors.
A campaign against continued use of unsuitable or outright fake explosives detectors has been spearheaded by Zod.

According to the systems vendors, tight purse strings at client companies create a counterweight to increasing corporate security needs. This is also felt by security agencies that provide guards and manned services. The market is “up and down”, said Mahmoud Hammoud, partner and managing director at agency Protectron. On the one hand he received many more inquiries about guard services and had clients call for more coverage, on the other hand he cited many company closures and intense competition as reasons why business wasn’t growing at higher rates than the 10 to 15 percent that the agency was seeing.

A lack of regulation

Price wars instigated by low-end providers, and concerns over keeping business growth in balance with operational risks and long-term viability were factors to be considered in accepting new client contracts, said Patrick al-Khoury, general manager and founder of Patrick Security & Services Agency (PSSA). He confirmed that the economic hardships experienced by clients had led to restraints on their security budgets and cited the example of a hotel where management had asked for a five-month discontinuance of guard dispatches up to the start of the summer season because of cash flow problems. Yet demand growth still was at 15 to 20 percent, he said. “People are getting more scared.” 

When compared with the gloomy mood and demises of companies in parts of the hospitality industry the sentiment among providers of security products is cheerful. Company leaders showed no signs of worry over their future, whether they were providing manned services, low-voltage systems, or converting luxury cars into armored vehicles.    

However, the Lebanese market for all these products and services is inherently small and the business of security in Lebanon is, as far as private sector activity goes, positioned between a craft and a trade. By its size and level of organization, information, and regulation, it cannot be regarded as an industry.

One common characteristic of operating conditions for all security businesses in Lebanon is the weakness or absence of regulation. Depending on perspective and business morals this is either a detriment or generates competitive advantages. Car armoring companies, for example, do not benefit from supervision by a domestic standard-setting body or from government support through tax breaks imaginable for the heavily export-oriented ventures.  If, on the other hand, they don’t voluntarily restrict themselves from serving dubitable customers, car armoring companies are not encumbered by procedures such as having to provide an end-user certificate to ascertain that a buyer of an armored sedan or SUV is beyond suspicion of using the vehicle in a criminal or terrorist enterprise.

Quality supervision and assurance is also not something for which the systems vendors can rely on the Lebanese state or governmental entities. While the systems and equipment vendors in their syndicate have an umbrella organization that sees quality assurance as its top mission, the organization can easily be mistaken for a protectionist one that is preoccupied with shielding the market from unwanted competitors.

However, as SSSPL’s Hosri insisted, the syndicate and its members are in full support of competition “as long as it is fair competition”. In the opinion of Hosri and his peers, the Lebanese government is not doing nearly enough to ensure that the vital sector of security installations in companies and commercial or educational institutions is guarded against substandard providers only after a quick buck.

For the security agencies, it is non-observance of labor standards by dodgy providers that creates pressures. “Many clients will seek to bargain and say that a competitor offered the service for $700 where I asked perhaps $1,100”, said PSSA’s Khoury, referring to the monthly fee for a standard dispatch of one security agent on basis of manning the post 8 hours for 7 days a week.

As he described it, numerous shady operators — 30 or more versus five or fewer professional companies — peddle basic guard services and perhaps advanced services such as personal security detachments (PSD) without having the organizational infrastructure for an effective and secure service and without fulfilling essential responsibilities toward the guards they hire. When charging clients $500 or $700 per manned position, low-end guard companies can stay afloat only if they don’t pay social contributions to their employees such as National Social Security Fund dues and transportation allowances, Khoury explained.

In the entire segment of Lebanon’s private security, companies need better regulatory frameworks to improve quality and have more development options. Even more importantly, the sector will thrive only in the context of stronger public security and a more confident state. Citing Switzerland as an example Hosri noted that security industries perform best in countries with advanced economies and, perhaps counterintuitively, stable political environments.   

Steps towards professionalism

According to Khoury, the serious agencies have a vision to develop the job profile of being protection operatives. A school or training academy for operatives could be created under government supervision but “to make this really work, the country has to be safe,” he said.
It is notable that the private sector operators uniformly welcomed initiatives such as the empowering of municipal police forces. Asked by Executive about the perceived danger that municipal police troops could have exclusionary tendencies, no private security operator saw a strong risk of that.

To the contrary, Zod, whose background is in armed services, reasoned that security works best when based on cell structures like a mobile phone network, and the best neighborhood policing is done by people with intimate knowledge of the people and areas they work in.

“That is why real security is by local police. I am for this plan by [caretaker Interior Minister Marwan] Charbel and I hope it will succeed by hiring good people and paying good salaries.”
The main addressable deficiency in the sphere of security overall seemed to be the lack of professionalism, evidenced most blatantly in the continued presence of fake explosive detectors at public and commercial sites. The friendliest assumption for this is that the managers responsible see the devices as providing some feel-safe effect. However, the imposing of security placebos comes with severe ethical and practical problems.

This is the kind of issue where the responsibility to regulate and act lies with the public guarantor of national security, the state. Private sector companies can assist in creating awareness, implementing preventive solutions and developing response scenarios, but their roles cannot go farther.

For a further positive perspective on the relatively slow market for security products and services in Lebanon, one can argue that reluctance by businesses and average consumers to convert their inquiries into actual purchases of security systems demonstrates a lower actual threat perception when compared with the talk of Lebanon’s impending slippage into disaster. The numbers suggest that the country feels safer than some say.
 

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Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years. Send mail
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