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It’s time to do away with 10 years of bad governance at IDAL

by Executive Editors

When the Investment Development Authority of Lebanon was first created in 1994, hope for the economy to flourish was not such a wild concept. Lebanon was being rebuilt after the war. Times were changing. There was enthusiasm for a reconstructed Lebanon with shining new infrastructure. IDAL was to be one of the institutions spearheading the project of rebuilding the economy by marketing Lebanon abroad and attracting foreign investment.

Twenty years later, it has become obvious that the hope couldn’t have been more misplaced. As our investigation reveals, IDAL has abjectly failed to deliver (see “Shattered dreams“). Foreign direct investment has been middling at best; at some $2.8 billion in 2013, inflows were roughly the same as a decade earlier, and that’s without adjusting for inflation.

This failure can be attributed to a number of reasons. Economic decisions, decreasingly a priority for the cabinet, were ultimately relegated to the back burner. Institutionally, IDAL began to deteriorate. With a wage freeze that made it impossible to make new hires, the number of staff waned over the years, cutting IDAL’s manpower which resulted in the UNDP stepping in and appointing staff to give the authority technical assistance. The situation also hindered IDAL’s ability to update its laws and get new decisions passed through the cabinet. The same factors resulted in a board of directors that expired in 2009. Moreover, Lebanon’s government failed to come up with a global vision of the economy.

[pullquote]Much more can be done at IDAL, and its leadership needs to stop using the political situation as an excuse to fail[/pullquote]

But it is only too easy to blame the deteriorating situation for the lack of foreign direct investment. Yes, the entire Lebanese political establishment needs to change. But this is a utopian hope — are we really going to wait around for a notoriously indecisive government before we start building our country? Much more can be done at IDAL, and its leadership needs to stop using the political situation as an excuse to fail.

Currently, IDAL’s board has no strategy that would enable the authority to fulfill its legal mandate, nor is there any sign they are drafting one. This is dereliction of their responsibilities. And since the people that were put on the board have shown that they are not up to the challenge, there is no reason to keep them there.

Looking at their accomplishments, even those achieved in good times, it is clear that they have not lived up to their mandate — what is required of them by law. The role of an investment development authority is to promote investment into a country by marketing it abroad. Mandated in IDAL’s case by investment law 360, this includes conducting economic research to provide investors with information, diagnosing and promoting competitive sectors, and understanding Lebanon’s competitive advantages when marketing the country abroad. Just as they didn’t have a strategy in good times, IDAL did not brace for bad times, and the Lebanese economy suffered the consequences. It is dangerous to leave our economy at the mercy of such incompetence.

The incompetence begins with the fact that the board is expired and should have been replaced. Appointed in 2005, while Lebanon was still under Syrian hegemony, the current board has overstayed its term since 2009. Since then, the cabinet has failed to pass a decision to either change it or renew its mandate.

Moreover, the board was also appointed before there was a proper mechanism to make high level appointments in the Lebanese public sector. Before this mechanism existed, appointments were made by the cabinet, a system that failed to provide checks to make sure that qualified people — rather than friends and vassals of ministers — were appointed to important positions.

[pullquote]IDAL could have achieved much more if it had been guided by competent, visionary people with a real strategy and plan[/pullquote]

It’s time for new blood at the board level. IDAL could have achieved much more if it had been guided by competent, visionary people with a real strategy and plan. If they are not delivering, they need to go — and there should be no excuses for promptly dumping them. All it takes is a decision from the cabinet. This is the smallest change that could make the greatest impact.

There is too much at stake for our economy to be put on the backburner, and the relatively simple task of turning IDAL into a functioning institution should be a no brainer. Lebanon is in dire need of jobs and economic stimulus. The capital a competent investment development authority should attract is not only in the form of cold hard cash, but should be focused on greenfield projects that create jobs and bring in foreign expertise. This is badly needed, and a properly functioning investment development authority guided by a serious strategy could make it happen, having an important impact on the economy and the livelihoods of the Lebanese.

The cabinet must stop neglecting the economy. The very simplest way to start is to replace IDAL’s board, and ensure that this is done through the proper committee-led process that will give us qualified leaders.

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Executive Editors

Executive Editors represents the voice of the magazine.

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