Bike messengers are a new sight on Beirut's streets
Business

Deghri bike messenger service gaining traction on Beirut’s streets

by Nathalie Rosa Bucher
written by Nathalie Rosa Bucher

After six months in business, Deghri Messengers s.a.r.l. – out to prove that bicycles are faster, cleaner and more reliable than cars and motorbikes – is firmly in the saddle as the first bike messenger company in the Middle East.

Deghri employs two full-time messengers, two part-time riders, and one dispatcher from their AltCity base in Hamra.

Starting with non-profit organizations as a core client base helped a lot, says Matt Saunders, one of the founders. “Particularly with Abaad, they turned out to be a very reliable client, and they introduced us to others so that we now have a fairly wide range of clients in the NGO field.”

The Swiss Agency for Development and Cooperation (SDC), based in Hamra, started to rely on Deghri in October last year, switching from a scooter-based delivery to the non-motorised Deghri modus. “Our decision was based on the fact that Deghri are bicycle-based and environment-friendly and are a young company, managed and operated by young people,” Hala Acouri, Finance and Admin officer at the SDC explains. “For us, their commitment to deliver the documents on time at low cost is key,” she adds.

Deghri’s growth has mostly been through word of mouth and social media. The company has successfully broadened its client base and diversified to include businesses and private clients. “We’ve had the odd random person sending a laptop to be fixed, dropping off invoices and picking up checks. A trucking company, education centers, universities and increasingly private individuals … translators and lawyers call us,” Saunders says.

A standard delivery request (within three hours) costs 9,000 LL ($6), while rush service (within one hour) costs an additional 3,000 LL ($2), and chilled service for same day delivery when sent before noon or overnight costs 6,000 LL ($4). Customers must pay in cash. Deghri operates between 8 am and 6 pm during the week and half-days on Saturdays.

“Our main costs are dispatcher and messenger salaries – all of these work on a part-time, freelance basis and messengers are paid a commission for each delivery. Then come phone bills – we use WhatsApp as much as possible to save costs – and spare bike parts. For the insurance we have a generous sponsorship deal from Elite Insurance Consultants,” Saunders elaborates.

“Nothing got lost so far and we’re insured against loss or damage. We insured the riders with personal insurance and we’ve recently secured the items we carry up to $2,500,” Saunders explains.

It took the riders only one month to make back their $6,600 in start-up costs. After six months in business, Deghri has doubled its monthly revenue, Saunders said.

Deghri's bullet bike can carry up to 60 kg

[/media-credit]Deghri’s bullet bike can carry up to 60 kg

And they are innovating, too, seeking to expand their services. ‘The Bullet’ (pictured above) is the latest Deghri member, donated by the Danish Embassy in January. It allows a messenger to carry heavy bulky items up to 60 kg. “We are still very flexible with it, it’s narrow, well engineered and we can get people’s packages out in time – only a tad slower. It also allows us to expand in other ways: we’re starting to reach out to businesses like restaurants and others within the gastronomy sector.” Deghri presently delivers for Achrafieh-based Roger le Boulanger, taking his artisan sour dough breads across Beirut. “We hope to be able to do more things like that,” Saunders says.

Deghri approached Souk el Tayeb and is now present at the Saturday farmers market. “Heavy things get sent home with our Bullet. The positive effect we aim for is for people to leave their car at home, walk to the market, save parking, shop and send their groceries home with Deghri.”

Plans for 2014 include overhauling the website, expanding work with the Bullet, increasing food deliveries, and attending the European Bike Messenger Championship in Stockholm. Deghri is also considering introducing accounts that would allow customers to pay at the end of the month.

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Society

In photos: The forgotten poor

by Greg Demarque
written by Greg Demarque

Around a third of Lebanon’s population lives in poverty, in a society where lavish opulence and desperate hardship are often only meters apart. Those in need are consistently neglected by the state. Whether it be working families struggling to pay the rent for their crumbling homes, the destitute living on the streets, or the elderly making it through old age with little assistance – the country’s support networks are desperately lacking.

 

A woman sits in front of her home in the Bourj Hammoud district of Beirut
This family in Bourj Hammoud have two sons, the youngest of whom (pictured) is autistic
They survive on the money the father makes from selling bananas on the street - roughly $267 a month. In a country where rent is high, the only home they can afford is full of rot
This family are slightly better off, making $600 a month. Even still the house has damp - which aggravates their youngest child's asthma
On the streets of Beirut, the number of people begging has increased in recent years
Some have been begging for years, but many are newly impoverished
The influx of over 930,000 Syrian refugees has increased the number of destitute people. This family is among thousands that have lost everything
Some, like this young boy, drop out of school to work
As poverty bites, people take desperate measures. This man was looking through bins in the Ain El Mreisseh neighborhood of Beirut
There are, however, some services for the poor. The Darouna center in Furn el Chebbak invites elderly people to shower and eat breakfast in the morning
The Asile Maronite nursing home in Ain el Remmaneh offers shelter to elderly Lebanese who could not otherwise afford it
87 year-old Marie has lived in the home in Ain el Remmaneh for 20 years. She never married, but would have liked to meet the right person.
87 year-old Mokarami has lived in the home for the past 15 years
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Leaders

Facing poverty head on

by Executive Editors
written by Executive Editors

Nearly a third of Lebanese are estimated to live below the poverty line. This phenomenon cuts across sectarian divisions: destitution knows no religion or nationality (see photo essay).

Many of these are not poor due to war, sectarianism or displacement: they are poor as they have been neglected by their society. Successive governments have failed to adequately identify and help those in need, while simultaneously forgoing adequate investment in health and education infrastructure. The past four decades have also seen a rapid increase in inequality (see article). Many poor have simply been left behind.

For the past two years, the country has been faced with an additional crisis in the form of an influx of Syrians fleeing the carnage next door. Competition for jobs has increased, while rents have risen in poor communities. The World Bank has estimated that in total 170,000 Lebanese people will be pushed into poverty by the influx, and there are few signs of a reprieve.

At the same time, expenditures have risen. The Bank estimates spending will have grown by $1.1 billion from 2012–2014, largely due to refugees using government services. At a macro level the effect was evidenced last year when Lebanon slipped into negative territory in its primary balance (that is, revenues minus expenditures other than debt repayment and servicing — the country has long had a deficit when you count debt handling).

But, as John F Kennedy once said, every crisis is also an opportunity, and Lebanon could use this chance to fix its domestic system. The newly minted government should formulate a strategy to bring social, health and education services up to par, leveraging the potential to tap international donors — an impossibility during the interminable months of a caretaker cabinet.

Ideally, the government could use the short-term relief money to invest in creaking infrastructure systems in a sustainable manner, while providing the breathing space to make necessary reforms. Services provided to refugees today should be sustainable for Lebanese tomorrow.

Without international donors, Lebanon has little chance of making the changes and investments desperately needed to fix its social safety net. But the refugee crisis has provided the best opportunity to remedy this — for Syrians, Palestinians and for the roughly one million Lebanese living in poverty. This government must not let this crisis go to waste.

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Economics & Policy

Aid agencies struggle to keep focus on Syria’s war

by Thomas Schellen
written by Thomas Schellen

Three years on since the first protests against Syrian President Bashar al-Assad and with the flow of refugees into neighbors countries in no way abating, aid organizations are struggling to draw attention to what they describe as the worst humanitarian challenge in a generation. Lebanon as host country of the largest number of refugee – close to one million – gets much less financial support from the international community than needed. Worst of all,  Syrian children bear the brunt of the war’s impact.

These were take-home points from a press conference that two UN agencies and three international aid organizations held Saturday in Beirut. Stories about the suffering of Syrian refugee children and testimonials about their resilience were the main focuses of the press conference, which culminated in a call for justice by Anthony Lake, executive director of the UN Children’s Fund (UNICEF) and a former US diplomat and national security advisor.

“Enough that diplomatic efforts to reach necessary compromises have failed; enough with denial of access by all parties to all children who need assistance; enough with destruction of schools and hospitals; enough with this catastrophe,” Blake said.

Appeals for funding by humanitarian organizations have been about 70 percent covered, however, international support for the Lebanese people and the Lebanese government struggling to cope “has been weak,” acknowledged UN High Commissioner for Refugees Antonio Guterres.

Only small amounts have been contributed to a trust fund set up by the World Bank, Guterres said, adding that the level of financial support in areas such as infrastructure and the economy is still very low. “That support has to be strongly increased, for it is an absolutely essential condition for Lebanon to be able to continue receiving and supporting the refugees.”

The situation in Lebanon is exacerbated by the fact that the burden of hosting the refugees is falling to a large degree on areas that are the country’s poorest, added Lake. Thus the issue of trying to assess the cost burden on the country in the next 12 months is not only one of “trying to extrapolate the trends a year into the future – which I think is always very dangerous because things change – but also looking at the quality of the economy. With increasing inequities within the economy you are also reinforcing patterns that in turn have political and social consequences,” he warned.

The two high-powered UN officials and representatives of aid organizations Save the Children, Mercy Corps and World Vision had been paying a visit to Beirut to ring alarm bells for the sake of Syrian children on the third anniversary of the country’s unrest that erupted on March 15, 2011 in Daraa, southwest Syria. All three organizations are engaged in projects to support refugees, especially children, and internally displaced Syrians.

While appeals for funding were not a topic of the conference, the organizations emphasized that work for Syrian children is not getting enough of the world’s attention. The funding needs are hard to quantify as the situation is constantly evolving, said World Vision regional director Cornelia Lenneberg, “but what we have certainly experienced is that there is not enough focus today on the needs of children, on their protection and education. That is probably the area that is most under-funded.” According to Lenneberg, aid organizations have put a $1 billion estimate on education needs of the “lost generation” of Syrian children, without allocation of a time frame.

According to Andrea Koppel, vice president for global engagement at Mercy Corps, her organization has found it more difficult to motivate donor support for the Syrian crisis than it would be for a natural catastrophe. “We raised as much, $2.4 million, in three weeks after the [November 2013] typhoon in the Philippines as we did in three years for Syria.”

Lake and Guterres peppered their evaluations of the crisis with urgent appeals for an end to the war in Syria and for change in international behavior in dealing with Syrian refugees by opening borders and enacting visa programs. “It is absolutely unacceptable that we see people drowning in the Mediterranean because they have no legal way to come into Europe,” Guterres said. “It is absolutely unacceptable that we are asking Lebanon, Jordan, Turkey, Iraq, [and] Egypt to receive more and more Syrians. Countries should show that Jordan, Lebanon, and other neighbors will not be left alone and that they are ready to share the burden,” he continued.

However, even the best intended appeals for ending the conflict and solving the refugee crisis cannot hide the fact that the shifting in global attention to other problems, such as the Crimea crisis, has moved Syria down the ladder in international priorities.

As the UNHCR numbers show, the attempts at peace negotiations in January and February did nothing for visibly alleviating the flight responses of the beleaguered population: the number of more than 2.5 million registered Syrian refugees, 99 percent of whom left their home country in the past two years, has continued to grow with more than 210,000 persons fleeing between January 1 and March 15 of this year. This rate is practically unchanged from the net increase in refugees recorded by UNHCR for the period from last October 15 until the end of 2013.

Any estimate on the impact of the Syrian war on the economies of Lebanon and other Levant countries in the next twelve months would still be guesswork, according to Lake. The international aid organizations acknowledge that they cannot predict the funding needs to meet the humanitarian crisis and protect refugee children from harms, which range from avoidable amputation of limbs due to lack of medical options to the risk of a heightened propensity of child war victims to use violence themselves later on.

The outlook less than two years after the escalation of the Syrian protests into a civil war is thus more and more shaping into a heritage of conflict that may take a generation to clean up. For Mercy Corps’ Koppel, the corresponding financial needs are not quantifiable. “It is really endless,” she said. ”When you have close to three million refugees, over half of them children, and you have the needs of the host community, the need is so great that we can’t get too much [funding].”

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Retail

Stripped bare by technology

by Jasmina Najjar
written by Jasmina Najjar

Have you ever dreamt of being a cyborg? Ever fancied strutting your stuff like a character out of a William Gibson cyberpunk novel? Wanted to be totally wired and experience connectivity like never before? Then never fear, wearable tech is here!

The brilliant thing about wearable tech is the usefulness and life changing potential it represents. A lot of the innovative delights popping up will make you wonder how you ever managed to survive without them! One example that comes to mind is the GER Mood Sweater. An LED light in the white  turtleneck sweater changes color according to your mood ­­­— teal when you’re feeling zen, blue if you’re relaxed, magenta when you get excited, and red if you’re smitten with love. It takes the expression ‘wearing your heart on your sleeve’ to a whole new level. Awkward social situations can be taken to a whole new level of embarrassment as well — since having a poker face and trying to exude the impression of control simply aren’t going to work if you’re sporting this.

Another groundbreaking fashion statement gone high tech is the Spider Dress by Anouk Wipprecht, fashion designer, and Daniel Schatzmayr, software developer and hacker. There’s nothing more aesthetically charming than a dress with six robot legs around the shoulders. This beautiful tribute to horror movies on acid reacts to nearby movement, protecting your personal space if someone gets too close. Wipprecht states that “technology combined with fashion creates new ways of communication between people, a new relationship between interface and the body, and a new connection of the body with technology.” This creepy-crawly creation definitely opens the path to communication. There’s nothing like robotic arms shoving people away to break the ice at parties!

Baring it all

The wearable tech fashion craze doesn’t stop here. The Intimacy dress line by Studio Roosegaarde takes a playful ‘now you see me, now you don’t’ approach to things. The white or black dresses are made with smart e-foils and when your heart starts to race from excitement the dress becomes transparent. The naked truth of your turn-ons are instantly revealed. Very practical attire to wear while walking around in public. Keen not to have men feel left out, Studio Roosegaarde is also developing a suit for men which turns transparent when they lie. This will definitely be a smash hit with politicians, businessmen and lawyers.

Japanese innovators Ravijour have joined the trend with The True Love Tester bra that, as the name suggests, only unlocks itself if true love is in the air. The company’s promotional video unveils the bra as the saviour women have been waiting for. It apparently protects us from the “animal, technician and flashy guy” who lurk around waiting to grope us at the first chance they get. While sexual harassment and rape are serious issues, how a bra, rather than lockable panties, offers protection is slightly bewildering. And why the bra is designed to seemingly burst open with great enthusiasm when it detects love, rather than discreetly, is another mystery. One can only hope it doesn’t decide to fling open at the wrong time in the wrong place. That might prove to be a bit too flashy.

Thanks to wearable tech like Durex’s Fundawear, couples in long distance relationships are no longer physically constrained by geographical boundaries. If ‘sexting’ starts to bore them, they can now opt for vibrating remote control underwear. Long distance partners will have the ability to control the how, the when and the where of the vibrations in their lover’s lingerie.

Not all wearable tech is as superfluous as the inventions mentioned. Some have more concrete uses, although they haven’t yet reached their true potential. Smartwatches, for the most part, don’t look very smart at the moment. There are none that will look spectacular with the little black dress. Nor is their functionality something to rave about. Some display notifications but do nothing else, while others suck the batteries dry with more gusto than vampires.

Looking in the future

Google Glass is no longer new news but apps being developed for it are still making the headlines. One example is the app created by Lebanese product design student Sherif Maktabi during the London Wearable Hackathon which lets a couple having sex see through each other’s eyes. If Google hadn’t taken the app down — Google is taking active measures to prevent sex apps popping up for Glass — women could have been staring in devastation at their cellulite in all its glory and men could have been up close with a certain face they probably didn’t want to see.

Beyond false eyelashes that can be used to switch lights on and off — let’s hope the wearer isn’t a compulsive blinker — and fingernails with tracking tags in them — a great way to ensure Big Brother can trace you — there lies a world full of necklaces with USB flash drives, bracelets that are actually mobile phone chargers and a vast array of other functional gadgets and gizmos.

There are also some wearable tech innovations that truly have the potential to improve lives. The ocular health monitoring smart contact lenses that Swiss scientists at ETH Zurich are working on and Google’s smart lenses that monitor glucose levels are prime examples of this.

For better or worse, our love affair with wearable tech is here to stay. While some of the creations seem like random flings, others are sowing the seeds for the long-term. This burning passion is driven by several market factors, including our affection for things that can spice up our love lives.

So get ready to wear your tech.

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Real Estate

Seeding for green communities

by Tiziana Cauli
written by Tiziana Cauli

When Gilbert Tegho launched his green building consultancy business e-EcoSolutions in Canada just over five years ago, awareness of environmental and sustainability issues in Lebanon’s real estate market was nearly nonexistent. As Tegho and his team prepare to host the fifth edition of the “Build It Green Lebanon” conference tomorrow in Beirut, Executive took the opportunity to meet with him to discuss the sector’s progress.

 

The main focus of the 2014 conference is “green communities.”  Can we see any examples of those in Lebanon?

A green community or a green city comprises more than just green buildings. This concept also involves transportation and the production of CO2, air pollution, waste and water management, parks and human life. In Lebanon we have some gated green communities being developed, one of the best examples of which is the Waterfront City project in Dbayeh. Now, by definition, a green community should be open, but this is at least a start. Some municipalities, especially in the mountains, are also trying to change towards this model even if not with a systematic approach. They are doing it with scattered solutions such as improvements in waste management.

[pullquote]Many developers are building green. Very few of them do it because they believe in it. Most do it for financial reasons, to access the green loans, which is still good[/pullquote]

Have you noticed any increase in awareness on these topics in Lebanon since you started your business here?

We have seen a great increase. Five years ago people used to think of trees when they heard about green building. Now they understand it also means water, waste and other parameters. Incentives to developers such as those promoted by the central bank have also created a lot of awareness. Banks are selling these loans and we know that banks drive the economy. Developers ask them for loans and they get told to build green.

Despite this increase in awareness, Lebanon only has five certified green buildings completed. What is preventing this sector from growing?

The reasons are both financial and related to market instability. In Dubai, when the economic crunch happened, the first thing to be dropped [in the real estate market] was green building, because it is just a feature and unless there is a law to impose it you will put it aside. When the market is unstable, real estate developers in Lebanon just finish their projects and sell. We don’t really expect the government here to do anything about it. Even if there was a law, implementation would be a different story. In the UAE, if the government says you have to build green, everybody builds green. Here it’s different.

 

Gilbert Tegho is CEO and founder of e-EcoSolutions

[/media-credit]Gilbert Tegho is CEO and founder of e-EcoSolutions

Despite that, some developers are already building green in Lebanon. What are their motivations?

Many developers are building green. Very few of them do it because they believe in it. Most do it for financial reasons, to access the green loans, which is still good. Finance moves things and profit should be considered as part of sustainability.

How difficult is it to build green in a country facing major infrastructural issues such as electricity and water shortages?

It is definitely more difficult than elsewhere, but I see things in a positive way. Because of electricity shortages people have adopted energy saving lamps. This is not because they care about the environment but because they have a 5 ampere generator and they want to keep their house illuminated. In the UAE you have to go to IKEA if you want to buy energy saving bulbs, here you find them in grocery stores. Water is a bigger issue. You don’t pay per cubic meter but per subscription and consumption is not monitored. Even now that, due to the shortages, people have to pay extra money to get more water, nobody makes an effort to save it.

It is difficult for developers in Lebanon to obtain green certifications from international rating systems LEED and BREEAM. Is the Lebanese system ARZ more effective?

ARZ can only be applied to existing commercial buildings and not to projects. We need to work on it to extend it because it’s easier for developers to build green if they observe the parameters starting from the project phase. ARZ, though, is made in Lebanon and Lebanese people tend not to trust anything that is produced here, so we have to work very hard.

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Business

Looking out for inspiration

by Livia Murray
written by Livia Murray

Lebanon lags behind much of the world when it comes to a favorable business environment, ranking 111th out of 189 economies in the International Finance Corporation’s (IFC) 2014 ‘Doing Business’ report.

Political deadlock and a worsening security situation are the most recent drags on the economy, but these only exacerbate a more pressing problem, which is the lack of a far-reaching governmental vision for its business environment.

The public sector has taken some initiatives to remedy the situation. Internet speed is slightly faster than it was several years ago, the government-led initiative Investment Development Authority of Lebanon (IDAL) is working to secure foreign investments and improve regulations, and the Ministry of Telecommunications has joined with the private sector to set up the Beirut Digital District, a business hub in Bachoura. But this is still far from an all-encompassing strategy. Lebanon has yet to come up with a larger plan to target areas where it is lagging behind. “The problem is there isn’t one cohesive strategy for SMEs [small and medium enterprises] that the government has endorsed,” says Yasmina el-Khoury Raphael, head of the Improving the Business Environment in Lebanon program at the Grand Serail.

Oman and Jordan have managed to foster some programs that have had a wide reach. Both countries, like Lebanon, have also struggled with constraints facing their business environments. Since a cabinet was just formed, Lebanon has the opportunity to put forward something that will work in one direction toward concrete goals.

Data and Planning

Lebanon lacks the data essential for the planning of a sector-specific strategy. “We don’t know exactly where our competitive advantage is,” says Raphael. “We need to study what exactly we should be investing in.” Increasing data would help the country develop a coherent policy for its business ecosystem.

IDAL has been working on some projects to examine Lebanon’s SME landscape, but it is still unclear where the competitive advantage lies within each sector.

The Beirut Commercial Registry has thus far been disorganized. A pilot project to convert paper documents into an online database of companies was recently completed for Beirut, according to Raphael. This could be a stepping stone for more information on the sector, which could ultimately lead to a cohesive strategy for the industry.

Oman has managed to create a constructive policy for improving its business environment by targeting SMEs in its information and communications technology (ICT) sector. Despite ranking 47th on the Doing Business report, SMEs make up only 16 percent of the sultanate’s economy, owing to a dependence on government jobs. In fact, Oman has the lowest number of SMEs per capita compared to other countries in the Gulf Cooperation Council.

In a move to privatize and liberalize the economy, the Information Technology Authority of Oman was assigned to oversee the development of an ICT infrastructure strategy for a digital Oman. In 2013 they prepared an ICT-related SME database. It is designed to give them insight into the sector, help diagnose its strengths and weaknesses, and facilitate awarding 10 percent of public and private contracts to SMEs. This knowledge of the sector should also allow them to get feedback from SMEs. The most recent project is Sas (meaning ‘foundation’ in Omani dialect), an ICT business development initiative launched in 2013 to promote SMEs in Oman and develop a competitive ICT sector. Sas offers workshops and seminars to entrepreneurs in every aspect of business management at the Knowledge Oasis Muscat technology park. By 2013 they were already incubating nine projects, with three more in the pre-incubation phase.

These programs are new, and it is difficult to measure their impact. “I think it’s too early to judge,” says Sharifa al-Barami, founder of Al Jazeera Technical Solutions and Training, and active player in Oman’s startup ecosystem. “I think it would be unfair to try to measure it now. In my opinion, any initiative in support of SMEs cannot be measured until three to five years have passed to see if it was successful or not.” Barami has been leading grassroots initiatives in the Omani ecosystem for the past three years. She was recently approached by the government and is now working with them to improve the ecosystem. The Sas program plans to replicate its model by opening incubators on university campuses outside of Muscat.

Overcoming the obstacles

The business environment in Lebanon faces many infrastructural and legal barriers, but it is not alone in combatting a difficult commerical terrain. Jordan has also struggled with this, actually ranking lower than Lebanon at 119th on the Doing Business report in 2014.

Although its rankings indicate that there are many obstacles to be overcome in starting a business in Jordan, this has not stopped the country from investing heavily into a startup ecosystem — and seeing results. The Jordanian government and the royal court have played a key role in promoting entrepreneurship from the outset. In 2003, through its Higher Council for Science and Technology, Jordan’s government established iPark — the country’s first ICT incubator ­— after being approached by Omar Hamarneh, who ended up founding the project. They also helped to fund two incubators, one in Jordan University and another in the Royal Scientific Society. According to Hamarneh, iPark’s success rate is 85 to 90 percent. Jordan’s entrepreneurship scene has since garnered international attention. The Jordanian company Maktoob was bought by Yahoo! in 2009. It additionally led to further investments in the entrepreneurship sector to replicate the success of Maktoob. Startup accelerator Oasis500 came out of the economic office at the royal court in 2010.

According to Hamarneh, since 2000, the business environment in Jordan has “evolved dramatically, in the sense that entrepreneurship was seen as a career path.” In 2012 alone, the ICT sector grew by 25 percent and, moreover, accounted for 14 percent of the country’s gross domestic product according to the ICT Association of Jordan.

According to the regional director at the World Bank, Lebanon would need to create 23,000 jobs per year over the next decade to absorb those entering the job market. A more focused policy targeting the business environment — specifically SMEs — would make the process of starting a business more straightforward and would increase the number of much-needed jobs. While no country in the region is quite like Lebanon, it is worth considering replicating the initiatives that governments in other countries have taken, and in whose footsteps the Lebanese government could be following.

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Nada Abi Saleh
Business

Reaching for the stars

by Yasser Akkaoui
written by Yasser Akkaoui

Last month Leo Burnett was named Network of the Year at the MENA Cristal Festival; the Beirut office won two Grand Prix, five gold, three silver and nine bronze awards and was named Agency of the Year for the third consecutive year. Executive took the opportunity to congratulate Nada Abi Saleh, Leo Burnett Beirut’s new managing director, in person and learn some of the secrets of the firm’s success.

 

From an industry perspective, what has been the trend in the last three years?

There are three buzzwords: digital, integration and innovation. These are the trends. At the same time these are the big challenges that we need to face and work against. Most articles summarize the digital revolution as either digital or data. Today the digital transformation is part of our daily life in how we do business, how we live, how we book things – it’s everywhere. So this is the big challenge and it has many consequences.

One of the biggest consequences of digital is the integration. We used to look at advertising as the binary approach: above the line and below the line. It was easy. Now we look at it in a more global way as through the line. It’s integration of any touch points that you can think of. So this makes the challenge even bigger. It’s about PR engagement, digital engagement, social media, real marketing, and e-commerce. And in the end it’s of course about brand building.

The reaction of people today is preceding the marketing strategy of the brand and a communication agency because they are on the net, on social media, to spot on any situation, any problem, any crisis. They are here and they react. If you don’t have any kind of real marketing approach to things you’re out. You’re dead.

The third layer to this is innovation. Today innovation is not only using the new media, not only being open to new trends, not only considering innovative marketing strategy, but also being at the core of product and client and brand innovations. This is where it starts. Today an agency should not wait anymore for a client to come to us and say, “I have this product, I have this service, come up with an ad.” With the digital activation, the agency can go to the clients and tell them, “For this kind of product or service this is what you have to do,” and it starts there. The biggest campaigns are product innovative-related. Today it’s not about communication, it’s really asking your consumer to act and interact with your brand – engage in the conversation. It’s not news; it’s a one-on-one conversation.

So it makes it at the same time broader. It’s very broad because you can engage with millions of people but at the same time it’s one-on-one communication.

But what you’re describing is heavy on the balance sheet and the cash flow. To keep progressing, you have to follow international best practices or trends in your industry. How is it justifiable in the Lebanese market today?

Very challenging. As far as Leo Burnett is concerned, whether it is on the network or global perspective or when we come to Lebanon, we are looking at it. We can add a fourth layer to this – profitability. This is the big challenge that we are facing, along with integration and going digital and innovation. Because at one point you have to invest in talents, upgrade your talents, and integrate new specialties that you probably didn’t have, and you have to make them work together in a profitable way because today performance is the name of the game. Specifically for Leo Burnett where we are part of a bigger holding and we are liable to our stakeholders. We are a public company. Profitability and our balance sheet come first even before winning awards, before anything.

Lebanon as a market, it’s very difficult if not impossible. The market is small. The budget is small. We have many socio-economic and political challenges, and we know that we have to look at growth opportunities, whether we have to make things differently, transform the agency, restructure, or look at growth opportunities outside Lebanon within the region. This is how we can look at it in a more positive way and keep going.

How has the performance of Leo Burnett been over the last three years? Have you bee able to grow your client base?

Yes, we have been able to grow our client base in a significant way. For instance just last year we have included Gandour in our portfolio. That is a big account. It is not a trend in Lebanon; we know the market is much smaller. I can name a few clients like Gandour and Liban Post, but this is not what can help the agency grow significantly. We know that the market is limited. We have the international accounts that we still can bank on, and these, as far as Leo Burnett Beirut, have been significantly growing, and you have the regional accounts, which we don’t handle directly. The local accounts are small by nature but give another kind of opportunity.

So basically as far as agency performance is concerned, we’ve been doing well, and we’ve been growing year-on-year.

Now we have a new government. What is your wish list for this industry to progress? And what would be your role in making sure that this progression will happen?

It’s not a wish list. It’s an objective to come back to this position because we’ve been there. It’s no secret that Lebanon used to be the le joyau de la publicite regionale (the jewel of regional advertising).

It was a source of talent, a source of innovation. Advertising was spearheaded by the Lebanese brains and Lebanese agencies, which developed regionally. This primary position has been eroded over the years because of the limitations of the market, and because of the sociopolitical and economic situation that Lebanon as a whole, beyond the advertising industry, has been suffering from.

If you were face to face with the communications minister, what three requests you would make?

Definitely a bigger reconstruction in terms of communication, telecom and digital empowerment, which we are still lacking and suffering from. Even 3G is not totally 3G.

These last two years were really great in terms of improvement, but we’re still not there. We know that the infrastructure needs a lot of money, and this is from a communications perspective when you talk about telecom or the infrastructure in terms of facilities – we’re not there yet. It’s up to each and every industry or institution to overcome the limitations of the current situation. This would be a primary objective.

What about talent retention? We’ve seen a lot of talent leaving Lebanon and eyeing Europe or the US or the Gulf…

This could be a very big objective or wish that I would eventually address to the prime minster, but I don’t know what we can do in six months. The erosion of talent, the scarcity of talent, the migration of brains – we’ve been suffering, particularly in our industry, because we were the receptacle of this from a communication perspective. And today the brain drain is across all categories, but specifically in the advertising and communication business. So my wish would be to encourage those people to stay. How? I don’t know.

From a micro perspective we’re working a lot on this, but from a macro perspective I think it’s an issue that all Lebanese and all industries are suffering from. So basically this could be a second big wish – to encourage the youth to stay. Not only to stay but to grow and develop. Because some people, some youth, stay here because they have no means to go abroad. So they will work, and we will invest in them for years, and then at one point they reach a status – whether in terms of growth or promotion and salary – when they are obliged to look elsewhere.

What have you been doing internally to curb or at least to minimize the effect of this high turnover?

At Leo Burnett we are the ‘human kind’ company. Human kind doesn’t mean that we are human in the charity sense. It means that we invest a lot in people, and we understand the motivations of our people, and consumers, and it also starts with understanding this behavior and the psyche of people. On the other hand, internally, it means we believe in training people, in growing them, in motivating them, in inspiring them, and we give them many tools, whether it is from the philosophy of human kind, or pure training opportunities or growth opportunities – even if they are not really related all the time to salary promotion. It can be, but we think about it as more horizontal growth and motivation. The good thing also about Leo Burnett is that we have a very strong reputation in the market, whether in the region or in Lebanon in particular, we are viewed by the youth as a school. And whenever you look at someone as being like a mentor, or being someone you can gain experience from, you tend to drive these talents more than other agencies or industries. So basically we have this kind of attraction that even people who question staying in Lebanon and consider leaving, they join Leo Burnett because of this aura, this reputation, this performance in the market, because of our ethics and because of our performance across the board and our international aura as well.

There is another strategy that we are investing a lot in – the internship. We provide opportunities for internship that are systemized. We have a developed strategy of internship where we have deals and associations with the major universities, and we provide this opportunity on a yearly basis, not only in summer, for people to come and train and learn. And this constitutes a big reservoir of talent because once they graduate; they tend to look at Leo Burnett as their first professional encounter. So they know how we think, how we operate, and they are inclined to come and stay. As for the existing talents that we have it has become more and more challenging. Because I mean the youth today look at their CV as a commercial commodity to put “I work at Leo Burnett” and they can use this as a step to go elsewhere. Now we face a tough situation whereby some of our best people want to leave the country. It had nothing to do with Leo Burnett. We can help them, we can convince them, we can give them some qualitative reasons to stay, but whenever they decide they want to emigrate it is something that we cannot really change.

Today the youth are much more aggressive. They say, “I can make it on my own. I don’t need to be part of a big structure.” We always argue the contrary because there is a lot of learning and learning is continuous at Leo Burnett. They appreciate that we give them opportunities to look beyond Lebanon. I mean with all the international rules and all the campaigns and brands that we have, we give our talents the opportunity to think big, and you know the world is open to them.

The Lebanese advertising industry in general, and Leo Burnett in particular, has been very successful in winning a lot of prestigious awards. Only a couple of weeks ago, at MENA Cristal awards, Leo Burnett again was among the leaders in getting these awards. How is this an integral part of your strategy? What is the value added from getting these awards?

Winning awards is not a strategy for us. It’s the result of excellent work. It comes hand in hand. Awards are not an end, but they are part of the game. Whenever you do good work you get rewarded.

Now I must acknowledge that we’ve been good at it, because it’s also part of the culture of winning and being aggressive, whether it is in the marketplace with our brands or with growth, and it’s part of what we do as well. It is true that lately Leo Burnett as a network has had a fantastic performance, and it’s not only this year.

We look at advertising or communication differently and we’re able to do it in many of our brands, whether it’s current brands or NGOs. And we’ve succeeded. We were among the first agencies, if not as a local agency, to win in Cannes. Three years ago we were the sixth creative agency in the world. Awards have been coming naturally and consistently at Leo Burnett Beirut. It’s something that comes with hard work.

How are you going to differentiate yourself through your own management style and leadership skills in order to contribute to the growth of the agency? What is your personal touch that you will be remembered for in the future?

As a manager, I tend to look at delivering ‘Best in Class – Creative’. Whenever you have this, growth will come, awards will come, and brands will come to you because they know that you are here to give them ideas. Ideas will be the name of the game. Whether it is ideas to transform the agency strategically, or to transform the agency from a managerial standpoint, the beauty of our industry is that whenever you become a managing director, you know you have the numbers, you have the balance sheet – you have this, but it’s not as thrilling. I will give my ideas as I always have. My touch has been what I have given to this agency and it will remain even more so on the creative ideation level. Perhaps because of the challenges ahead, I look at my philosophy and the Leo Burnett philosophy in a more tangible way. Our motto is “When you reach for the stars you may not get one, but you won’t come up with a handful of mud either.” I think this will be my touch. This will be my strategy.

I do not look at this position as totally new. Leo Burnett has been part of my DNA. I’ve been part of this agency and part of this family and network since 1988.  Leo Burnett is who I was, who I am, and who I will be. I’m so proud, so happy to be part of this network because it’s a totally different way of doing things. The other side is that the people we work with – I mean, we work hand in hand, it’s not you know, some people look at a managerial position – it feels lonely at the top, I think it’s totally different. I look at it as a total partnership as we’ve always had at Leo Burnett.

Whether it is on a global basis, at a regional level, or particularly in Beirut, it’s not the success of one who will make it. It’s the success of all of our talents. I look forward to working even more hand-in-hand with everyone at the agency, whether it is from the PR perspective, planning, digital, creative, or the communications people, it’s all of us that will make it.

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Finance

Arab Stock Markets – Week in Review

by Thomas Schellen
written by Thomas Schellen

Benchmark indices of Arab stock exchanges retreated in the trading week between March 9 and March 14. Both markets in the United Arab Emirates shed around 150 points between the week’s first opening and last close, translating into a 3 percent softening for the Abu Dhabi Exchange (ADX) and around 4 percent for the Dubai Financial Market (DFM). This scaled the year-to-date gains for DFM and ADX back to 19.55 and 12 percent, respectively.

Where the ADX and DFM displayed index losses in the first part of the trading week, the Gulf Cooperation Council’s northern pair, Bourse Bahrain (BB) and Kuwait Stock Exchange (KSE), gained a bit each. The BB Index kept the pace and closed the week with a fractional gain of all of a point-and-a-half, or 0.4 percent. The KSE benchmark dropped 53 points, or 0.7 percent.

[pullquote] Saudi’s 1.5 percent gain was the best in the Gulf and also took the exchange to a new five-year high [/pullquote]

Oman’s MSM index fell 0.8 percent and Qatar’s QE index 2.1 percent, leaving it up to the GCC’s largest market to make the biggest positive impression for the week. The Saudi Stock Exchange’s TASI did so by climbing 137 points (and change) between market opening on March 9 and market close on March 13. The 1.5 percent gain was the best in the Gulf for the period and took the Saudi exchange to a new five-year high when the index peaked, intraday, above 9,400 points.

From North Africa and the Levant, the trumpets were keeping silent. Jordan’s ASE Index fell 0.3 percent while Morocco’s MASI rose 0.2 percent. Both are in 5-percentish positive territory for the year to date. So is the Tunindex which showed the Tunis Stock Exchange pass through a slight weekly dip and come out of it with a 0.2 percent drop for the March 10 to 14 period.

Even in Lebanon, where the compulsively quarreling political classes managed to produce another absurdity in the inability to draft an acceptable policy statement for the cabinet, the BLOM Stock Index stayed calm – meaning minimal trading activity and an index movement of breath-freezing 2.49 points. That represents a 0.2 percent drop, perfectly in tune with the small North African markets.

Cairo, however, played differently. The EGX 30 index of the Egyptian Stock Market was not contented with frustratingly insignificant moves but rather pushed up almost 200 points, or 1.1 percent. This resulted in a rise above 8,000 points for the Egyptian bourse and a year-to-date gain of just over 20 percent.

[pullquote] Small losses of Arab indices seem like nothing when compared with the sound of panic across the developed and the most-prominent emerging markets [/pullquote]

The double digit year-to-date gains of the EGX, DFM, ADX and TASI range between 20.08 and 10.3 percent. None of these markets made a great leap when compared with a week ago – but this rate of increase looks actually quite sweet right now in international context. That is because the mellow gains and small losses of GCC indices since March 9 seem like nothing when compared with the sudden sound of limited but contagious panic across the developed and the most-prominent emerging markets.

One of the worst hit markets this week was the Moscow Stock Exchange, owing to nervousness over the Crimean crisis and to fear of European sanctions against Russia in case of an escalating confrontation. The same crisis made bullish feelings turn to jelly beans in developed markets.

To name just two, Germany’s DAX dipped below the 9,000 points line on March 13, before rallying on Friday. And the S&P 500 in almighty New York suffered retreat from a five-year high achieved on March 7.

The downward pressure also showed in Japan, elsewhere in Asia and in Latin America. Mainland China indices in Shanghai and Shenzhen were stable for the week but the country acted as worry booster. Weak Chinese economic data and lower than expected growth targets contributed to drive global market sentiments south but better than expected labor and consumer economy data from the United States apparently did not.

Last week we discussed how long the developed markets could continue to grow, after five years of growth. Indications this week suggested perhaps not that long.

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Ski lift at Mzaar
The Buzz

Lebanon’s ski slopes finally open

by Nabila Rahhal
written by Nabila Rahhal

As the belated four day storm hit the country this week, one thought was on the mind of many: will Lebanon’s ski slopes be open this weekend?

The answer, in brief, is yes — and excitement levels are palpable as business owners and consumers alike rush to take advantage of what might be the only ski weekend this winter.

The sudden storm caught ski resort operators by surprise, according to those Executive spoke to, and most are currently scrambling to prepare the slopes for eager skiers. Christian Rizk, director of Mzaar ski resort in Faraya, says they will be opening four slopes tomorrow — Jonction, Baby, Refuge and Renard — the first time they open for business this winter. He anticipates many will be hitting the slopes this weekend but asks that they act responsibly and stay off areas that are closed due to unsafe snow levels.   

Both Laklouk and Cedars ski resorts will be open as well with Laklouk operating all of its slopes and Cedars still deciding which to open, according to Ronald Sayegh of Ski Lebanon, an online resource for the country’s alpine community. Sayegh says there is an increased buzz of excitement from ski resort operators and downhill enthusiasts — and thus foresees a busy weekend.

The ski slopes are not the only beneficiaries of the fresh snowfall as restaurants and hotels situated close to the ski resorts also look forward to filling up their venues as well. Joost Komen, reservations manager at Mzaar Intercontinental Resort, says that while he is unable to share exact occupancy rates, there has already been a significant increase in the number of room reservations for this weekend and the following days. “We anticipate it is going to be a hectic weekend indeed,” he says.

According to the front desk manager at Shangri-La in Laklouk, reservations at their restaurant went up but room occupancy was still the same this Friday at noon probably because, in his opinion, the suddenness of the storm did not allow for people to make plans yet.

Some restaurants, such as the popular Rikky’z in Faraya, also did not report a major increase in their reservations yet but are expecting a lot of last minute diners and walk-ins eager to relax after a long day on the slopes.

Tomorrow’s weather forecast is sunny and the roads leading to the country’s ski resorts are sure to be jammed from the early hours of the morning with winter sports lovers and those who want to enjoy the snow. While this might keep those who dislike traffic and crowds away from the resorts, the lure of the season’s first snow could also prove too strong to resist. We will know soon enough.

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