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Finding scarcity

The search for entrepreneurial opportunity among Lebanon’s perfect storms

by Nabil Makari

Executive visited with Naji Boutros, a Lebanese economic mind whose expertise and passion spans from investment banking and identification of opportunities in venture capital (VC) and private equity, to nurturing entrepreneurship in Lebanese agro-industry, viticulture, and hospitality. 

You have been involved in a wide spectrum of local entrepreneurship in non tech-dependent ventures, which as you tell me range from cultivation of high-end cuisine and restaurants, to the facilitation of micro-entrepreneurs who use local recipes and ingredients in baking very tasty Lebanese cookies. A few months ago, you tackled entrepreneurship in tech as the chair of Nucleus Ventures, the early-stage seed program and entrepreneurship support enterprise that evolved out of the UK Lebanon Tech Hub. In light of seeking an economically sustainable future, how do you describe the situation after Nucleus Ventures has been in operation for a few months?

One thing that these guys [at Nucleus Ventures] are focusing on now is education, making technological education accessible to all, because the best way to get somebody out of poverty is to teach them in the most efficient way the skills [they need]. We are involved with Steve Wozniak (co-founder of Apple), in education in Lebanon and that is what Nucleus will roll out now, [an education program]. Another subject that they are working on and that we see a lot more of is e-commerce, assisting Lebanese companies sell overseas. In today’s environment, this makes so much sense.

How much do you trust the infrastructure for doing such things out of Lebanon, especially when looking at uncertainty of electricity supply or internet stability, etcetera?

I don’t think that it is anymore a big problem [with regard to electricity and the internet]. The Lebanese have adapted and are making do with the infrastructure that they have, [such as] payment gateways, internet speed, etcetera, They know when to turn the generator off, what window has a better reception, [and] who to talk to regarding global payment gateways. The percentage of [entrepreneurial] energy that they have used to adapt to this environment could have been better used elsewhere, but they have adapted to [infrastructure shortcomings by] mainly relying on networks and family connections and community support. 

Without talking politics, how do you evaluate 2020 economically from the experience of a Lebanese investor and an individual passionate about this country?

It is the year of perfect storms. I am involved in many sectors in Lebanon, in logistics, in food production, in technology, in wine-making and hospitality. Lebanon got hit with so much and I don’t need to enumerate it, because you lived through the [blast], through the revolution, [and through] the banking crisis which cost tremendous liquidity. I believe that the winners [will be] those who have a marathon attitude, those who are able to go through this period of uncertainty and adapt to it. Almost every company that I am involved with has opened bank accounts outside, lines outside. [Many a company] has [been successful in] obtaining financing of accounts receivables from non-Lebanese entities, so this is in a way really good for them because their business model has become much more resilient. So when you look at the Lebanese sector overall, [companies] have gone outside of Lebanon, so their business models have become more resilient. That is very good because it will help them weather the next storm. 

Can Lebanon still become a hub for startup listings and be a conduit for financing of knowledge economy ventures? 

I think that the financial industry has been dealt a very hard blow and will not recover from it for a very long time. As you know, the foundation of business, especially when it comes to custodianship of money, is trust. Trust has been shattered. So if I were running a Lebanese bank and would have benefited from years and years of profitability and high interest rates, I would have brought the money – or at least a big chunk of the money – back to Lebanon and reinjected it in the Lebanese banks. This is a long-winded way of saying that the main support base of Lebanese financial institutions and trust has been shattered. I do not believe that anything reliant on them will succeed any more. It will be a long time before you see that. On the other hand, reestablishing a parallel platform with new players, preferably with some kind of European sponsorship, could go a long way to reestablish this capital markets platform. 

When it comes to the startup scene, you have two parts. You have the human element, [such as entrepreneurialism], creativity etcetera. This [human element] until now has been reliant on Lebanese institutions – academic institutions – and I think the Lebanese will continue succeeding in this. Because of their DNA. But one thing was taken away from them, and this is the finance at the seed level and VC level. This will need to be reinvented. What we need to think of very seriously is some kind of a tokenization of the remittances and funds inflows from Lebanese expatriates [and] take it “over the counter” to a level where every Lebanese expat [can be involved]. Lebanon has always survived because of the [expats], through their remittances.We need to rethink or re-engineer their remittances to make them reconnect with the products in Lebanon, whether these products are something they eat, something they consume intellectually, or startup financing. 

Would you mean doing something like a diaspora cryptocurrency? Or perhaps a digital currency that is not organized and managed by the central bank? 

I don’t know if I would use the term cryptocurrency. The term needs to be a bit romantic, because [what] appeals first and foremost to the Lebanese about their home country is romance. It is nostalgia. But I absolutely feel that [there should be such an electronic tokenization system] – and definitely not run by the central bank. I fault the central bank – and I don’t want to get into the politics – in a major way. Two major problems of Lebanon today are that we are occupied – let’s face it – and [that] our allegiances are not for the benefit of Lebanon. 

Tokenization might not be the most sexy term for such a project but is what you are talking about basically a digital layer of financial communication? 

I think we need to have a trusted global marketplace, one that brings everybody together, all the Lebanese expats with the Lebanese users that share the need [for a tokenized marketplace]. 

Would that be run by the World Bank or a multilateral agency of that global sort or an entity like an NGO, or a Lebanese bank? 

Perhaps it will be several NGOs but certainly not Lebanese financial institutions or the central bank. 

With the future of Lebanese entrepreneurship in mind, what is your view on the utilization of national assets through a public asset management company, as envisioned in the government’s proposal, a fund such as the Government Debt Defeasance Fund concept of ABL (Association of Banks in Lebanon), or comparable designs proposed by several economists? 

I am tempted to say the best asset of Lebanon is the diversity of the Lebanese and their intelligence. I think that is certainly something that Lebanon can bank on, because at a time of shifting global allegiances Lebanon can be friends with everybody. That is certainly something [of great value] but that is unfortunately also a movable asset, because you can take the Lebanese out of Lebanon – and then Lebanon will be left without them. So when we think of Lebanon we must not think of a place but we must think of a nation. It is almost a state of mind. But the one immovable asset that Lebanon has – and that I firmly believe and have invested a lot of money in – is the Lebanese nature. It is [the diverse natural environment] with 24 climatic zones. 

This means we can be almost self-sufficient when it comes to the most important staple foods and exotic foods. You can have the bananas on the coast, the apples on the mountains. This is also very important because this is the foundation of eco-tourism. We need to pay attention to this. But when you think of the Lebanese food industry, whether it is the wine that we are making at Chateau Bellevue or the chickpeas and hummus that we are making… or the jams – everything can come from Lebanon. The benefit of [producing locally] is to take [food] out of the commodity scene. So when we talk about digitization, we need to get what is called in this industry traceability of the product, identifying a product that comes from Bikfaya as a unique peach or a karaze from Hammana as a unique cherry. That is what people pay a premium for. Lebanese expats will pay a premium for a Lebanese product.  

Would something like the Mckinsey plan – Lebanon Economic Vision (LEV) – have been adequate to address these opportunities if implementation of this plan had ever been achieved?

I remember, [from discussions related to the LEV], thinking: “What is this?” People talked about the benefits of medical Cannabis – [although] I am all for this. Then [they were talking] about gas and oil – I am not really for that because I think the perception of the wealth created by gas and oil is bad for the work ethics of our people. For me gas and oil will have almost no economic benefit going forward; the only real economic benefit of it being our own usage of gas and oil so that we reduce our import bill. For me the groovy thing is around the next corner, meaning the plot of land where you can plant olives or grapes or bananas or chickpeas or whatever for your local production. 

It sounds like your approach to the use of productive land would imply a lot of entrepreneurship. Am I correct to assume that, if done right, such an entrepreneurial use would not be only farming? 

It is value-added farming.  

This reminds me of an interview where you spoke about the principle of scarcity, at that time referring to real estate on the island of Sardinia. The concept of scarcity referring to anything of high value and limited in number, be it real estate or nature. Do you think the concept of scarcity has been internalized and capitalized on in Lebanon?

Not yet. Exactly, Lebanon has not internalized this yet. The most expensive hams come from Parma, or [Spain, as] jamon de Serrano. People still talk about Iranian caviar although the quotas are so limited now. Or Balik salmon, which is made at a specific [location] in Switzerland and based on an old Russian recipe that [was used in the smokehouses of] Czar Nikolas [II]. Lebanon can do the same. We need a big marketing vision for the country, and I think this [vision] has to be based on the scarcity [principle]. There needs to be a major study about scarcity. [We have to study] what is unique about Lebanon and market the heck out of it. But polish it. None of the guys that have run [consulting studies on] Lebanon have thought about this. All they have been wanting to do is import a model made outside of Lebanon, into Lebanon. That is wrong. It is not adapted to our country. [We need to be] digging deep and polish the diamond that is called Lebanon. That is what the Italians did with Sardinia. 

So sitting here in Bhamdoun on a very sunny afternoon in late 2020, are you depressed about the Lebanese short-term outlook? 

No. I am depressed that there is a [harsh] short-term outlook because people have lost so much – especially when I see old men at the banks. It breaks my heart to see this. But I am extremely hopeful for Lebanon because the puss has been brought out of the wound – the shit has hit the fan as they say in colloquial English. The Lebanese now understand that it is not all groovy and dandy as they have been told before, and that this [collapse] is here – and kudos to economist Toufic Gaspard who I, 20 years ago, heard talking about this collapsing Ponzi scheme. We must go back to the original Lebanese hard-work ethics, respect for each other, care, and faith. Because if you don’t believe that you are going to get out of it, that is very depressing. 

Talking in the short term, and especially with regard to entrepreneurial finance, it seems that a few companies in the knowledge economy have been able to mobilize international investments, but compared to what Lebanon would need, this does not seem to be enough for mobilizing new economic growth. What are the chances that any entrepreneurship project or startup would gain investor support and access to finance in the intermediate term, let’s say between now and mid-2021?

The foundation [of investments in the knowledge economy] has to be the judicial system. At this current moment, nobody trusts the judicial system. I do not expect money coming to Lebanon to finance projects, whether from donor agencies and governments or individual Lebanese [in the diaspora]. That is not going to happen until you get rid of the mafia ruling over Lebanon. Nevertheless, there is a lot of money trapped in banks in Lebanon, and that money is looking for a home outside of banks. To the extent that you can get a project financed with lollars, or local lebanese dollars, or Lebanese pounds, I think you can find a lot of money. 

If I name a few sectors of entrepreneurial activity, would you give me very brief yay or nay evaluations if investing in these sectors would be interesting? 


Let’s start with Fintech. Would this sector have potential in Lebanon? 

Yes. By the way, on Fintech, one of our iSME (the entrepreneurship fund associated with the Lebanese Kafalat loan guarantee corporation) entities was just sold to a Hong-Kong based player. Fintech is definitely interesting. 

Even Fintech made in Lebanon? 

Yes, because the Lebanese are working globally in financial institutions. It is not the archaic Lebanese system that taught them this way. 

How about networking or social media startups, like TikTok? Would you invest?


Home office operations, remote work organization etcetera. Do you think Lebanon has an edge in developing any solutions? 

Yes. I do, [when considering] hardware plus software. We are doing well in this and [cloud computing infrastructure company]. Multilane is one example. 

Gaming industry?


Online media and content of high journalistic quality? 

I am tempted to say yes but you would know more about this than I do. But along perhaps the same line I definitely think that online education and adaptability of foreign curriculums to the Arab world is huge and keeps growing [as opportunity].

Any specialty in e-commerce? Online shopping malls, direct from producer to consumer, intermediary platforms and marketplaces? 

I think we definitely can be leaders in e-commerce. For example if you think of luxury fashion, that is something that we are good at. Taking that regionally and perhaps even globally, you need a mart, some kind of a mall. Lebanese food, taking Lebanese cuisine globally. It could have the same impact as pizza had in America after World War II, when GIs came back after tasting Italian pizza. Lebanese food will become a big hit in the US, and in Europe too, I believe. 

Corona awareness apps? 

No, we don’t take it that seriously. 

Any other sector where you would feel that Lebanese startups will have a natural edge or would be attracting you immediately? 

I think we covered most of it. 

“The foundation of business, especially when it comes to custodianship of money, is trust. Trust has been shattered.” 
“[We have to study] what is unique abut Lebanon and market the heck out of it…. [We need to be] digging deep and polish the diamond that is called Lebanon.”

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Nabil Makari

Sections Editor

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