Executive Magazine

Waiting on the line

by Executive Editors May 24, 2013

written by Executive Editors

The Lebanese might be excused for laughing at the suggestion that their country is set to become a regional telecommunications hub. But while farcical Internet speeds, unreliable service and inflated prices justify such cynicism, the man at the helm of the sector, Minister of Telecommunications Nicolas Sehnaoui, insists that this is indeed the path on which Lebanon is set.

In an effort to improve the country’s languishing state of connectivity, the Ministry of Telecommunications (MoT) and the Cyprus Telecommunications Authority (Cyta) entered into an agreement in early March to share capacity on Cyta’s Alexandros submarine cable. Lebanon will enjoy 24 percent. Designs are also under way to construct a new submarine cable, dubbed “Europa,” that will link Cyprus to Lebanon.

Lebanon today relies primarily on two international cables for its Internet connection: IMEWE (India-Middle East-Western Europe) and Cadmos. Beginning construction on the new Europa cable is critical, as it is meant to replace the Cadmos line, which is scheduled to ‘die’ in five years. According to a June 2012 MoT market report, Lebanon’s contribution to the construction of the cable will be less than $10 million, excluding the cost of the equipment.

“I am very proud to say that this step is a historical step for Lebanon [and] Cyprus,” said Sehnaoui in a press conference in Sassine Square to announce the deal. “It gives us the redundancy we badly need because no regional hub can claim it is a regional hub if it doesn’t have redundancy.”

The need for redundancy was stressed last summer when Lebanon’s connection to IMEWE was damaged. A country-wide Internet blackout lasted for several days, and the MoT estimated $11 million per day in economic losses.

The Alexandros cable can potentially provide up to 700 gigabytes per second (gbps) of additional Internet throughput to Lebanon. This may rise with future technological advancements. This augments the 200 gbps of capacity currently available on IMEWE and 79 gbps on Cadmos. Lebanon’s actual in-service capacity, however, is closer to around 30 gbps today – a significant increase from 3 gbps in mid-2011. This figure represents the rented capacity on the submarine cables as well as the local fiber-optic transmission capacity in place to handle the bandwidth to-and-from the international Internet gateways.

“Eventually, we want to be able to sell capacity. We have now a cable that connects Lebanon to Syria,” said Ministry Adviser Firas Abi-Nassif. “We can sell on any cable such as IMEWE or Beritar [an Internet cable connecting to Syria].”

Abi-Nassif remained vague on how much bandwidth will be distributed domestically versus sold regionally, but he maintained that the first priority is to distribute the additional throughput to Lebanese consumers. He noted that the current political situation in Syria might dampen plans to distribute excess capacity.

Unused bandwidth is necessary for future upgrades and unforeseen connection problems, making it integral for development in the sector. However, while more international bandwidth should translate into faster speeds and lower costs, the ministry still needs to overcome several obstacles if they are to capitalize on all of the additional capacity that they have purchased.

Beset by in-fighting

“Delays have hit the utilization of increased international broadband bandwidth, with the finger of blame pointed both at the government and Ogero,” said Tom Shepherd, research analyst at TeleGeography. “Political squabbles continue to beset the [telecommunications] sector.”

Ogero is the cornerstone of Lebanon’s telecoms sector, responsible for connecting the telecoms network internationally as well as internally. Although in theory Ogero is government-owned and operates under the supervision of the MoT, it has often acted against MoT policies, leading to confusion in the industry and delayed Internet access for users.

When the IMEWE cable was first opened in December 2010, Ogero and the MoT clashed publicly, with more than eight months passing before the international bandwidth was distributed to consumers in July 2011. The conflicting political affiliations and agendas of the MoT and Ogero are likely to remain a deadweight on the industry’s advancement in the foreseeable future.

Ogero has also been accused of not distributing bandwidth packages to Internet service providers (ISPs), akin to choking competition in the supply of Internet. These packages, known as E1s, are what allow ISPs to deliver Internet to consumers. By restricting their supply, Ogero is inhibiting private ISPs from competing with the state.

Ministry Adviser Abi-Nassif confirmed that ISPs claim to have not received their mandated E1 allocations from Ogero and maintained that “there should be absolutely no reason why, for other than technical reasons, there should be problems giving [out] bandwidth.”

Falling at the final hurdle

Another hurdle facing the MoT is modernizing the ‘last mile’ connection of the delivery network, where speeds bottleneck in Lebanon. If infrastructure between ISPs and consumers remains outdated, end-users will not enjoy higher Internet speeds despite the additional bandwidth from abroad. ISPs are not legally allowed to install these ‘last mile’ connections; they must rely on Ogero and the MoT, instead.

“Before IMEWE, there was no reason to do a proper network so there was almost no fiber optic network,” said Denys Fedoryshchenko, information technology consultant at Virtual ISP, a local service provider.

The ministry’s plans include rolling out a fiber-to-home project in select areas as well as upgrading current connections that use older technology such as DSL. The ministry aims to have 100 percent ‘last mile’ coverage from these two initiatives. Ogero, however, recently announced that they had not received funding from the MoT for their projects over the past two years. Abi-Nassif acknowledged this and said that whatever funding Ogero needed for the ‘last mile’ connection, “the ministry is happy to provide it.” He declined to comment on where funding for the fiber-to-home project would come from. Minister Sehnaoui also announced in December his plan for “delayering” or restructuring the industry, aiming to decrease the government’s presence and allow privatization in certain areas. Most of the press on the new plan has focused on what this means for mobile, but the MoT confirmed to Executive that the delayering plan applies to the whole industry. The plan has come under considerable scrutiny as it does little to encourage meaningful private sector involvement and is likely to only superficially increase competition or incentivize infrastructure investment.

In a global ranking of Internet download speeds, Lebanon ranks number 153 out of 184 according to NetIndex.com, fairing worse than Afghanistan and Zimbabwe.

Although the ministry has made some commendable headway, such as through the Alexandros cable deal, major political and technical obstacles remain. There is still a long way to go before we are even close to the minister’s stated goal of Lebanon becoming a regional telecommunications hub.

May 24, 2013 0 comments

The Buzz

Morning briefing: 24 May 2013

by Executive Staff May 24, 2013

written by Executive Staff

Economics and Policy

A controversial pipeline between Iraqi Kurdistan and Turkey, which would allow the Kurdish Regional Government to export hydrocarbons without the backing of Baghdad, is almost complete.

‘Lebanon’s statistics are unreliable’

by Benjamin Redd May 24, 2013

written by Benjamin Redd

Despite serving 25 years with the International Monetary Fund (IMF), Mounir Rached bucks the stereotype of the cosseted economist for whom statistics are sacrosanct. Although his new office in the Ministry of Finance is littered with economic studies and proposals, he gives the impression of distrusting most of them.

Searching through stacks of papers, he says many of Lebanon’s statistics are unreliable. “We have statistics issued in an IMF document showing that…from 2000 to 2005 we having cumulative inflation of only 1.5 percent. How can that be possible?” Skepticism, he says, is key to understanding Lebanese economic figures. “In Lebanon some people collect statistics when they are sitting at home,” he half-jokes.

That same critical eye must be applied to Lebanon’s main inflation measure – the consumer price index (CPI). Last week Executive revealed that, because of a dispute between the government and the Central Administration of Statistics (CAS), no data had been collected since December. This means the country has no inflation statistics, making policy-making incredibly difficult.

Rached suggests that the problem is bigger than just the short-term, alleging that the system is flawed and government officials are unimpressed with the CAS’ methodology. “The CPI has been misunderstood – especially more recently,” he declares flatly. If you break the index down into its components, he explains, you find that housing stayed the same from July 2009 until July 2012, before abruptly jumping 44 percent – “a rather unbelievable one-off rise.”

Since that jump the CPI has hovered at around 10 percent year-on-year – at least until the index was suspended in January. “What’s behind these numbers? If you look at the other numbers in the CPI, the rate of increase for the whole year is 3.8 percent, which is not really much different from previous years.”

Of course, which number you use for inflation might depend on your political objectives. Since the CAS falls directly under the Prime Minister’s Office, political interference is a potential problem. In the past, Rached claims, “some [prime ministers] who came to office had an interest to exaggerate the numbers in terms of their improvement. They would have high growth and low inflation. [Others] don’t have that instinct.”

Currently, among Lebanon’s biggest issues are protests over pay scales for teachers and public servants, whose salaries are not linked to inflation and have not been adjusted for years. The rate of inflation has become a key tool for union leaders in their arguments for higher pay.

“The higher the CPI, the better for [teachers and civil servants], so they were quoting a CPI of 10 percent” during strikes and negotiations with the government earlier this year, says Rached. He adds that this “was putting pressure on the government without anybody…from the government elaborating on why the CPI has increased and why [housing] was included now and not any other time.”

To pay for the public sector wage increase, the government has proposed a list of some 20 new and adjusted taxes, ranging from increased value added taxes on certain items to higher stamp duties – a list that hints at several dysfunctions within the government.

Most obviously, says Rached, “there are too many [proposed tax measures]… to try to remember these taxes is a headache by itself. To implement them would take about a year, so you are losing time.”

The large number of tax measures also speaks to the government’s backwards approach to debt and deficit management. “If you want to address the fiscal situation, you address the total deficit, not [only] this deficit. I’m not applying new taxes because I have a new deficit coming from increasing the wages of teachers of civil servants; I have to look at the tax at the fiscal [level] as a whole…. [The current proposal] is a piecemeal approach.” If this is a procedural problem, though, a deeper issue lies in the tax measures’ substance. Rached claims they’re “not organized and not studied carefully.”

Although Rached is an advisor to the Ministry of Finance in addition to being vice-president of the Lebanese Economic Association, he doesn’t pull his punches. “[The] Lebanese government is notorious for not having enough economists. There are [only a few economists] in the Ministry of Finance; there’s one or two advisors and myself, and one or two junior people who have studied pure economics – very few professional economists at the senior level. The same applies to even the central bank…it doesn’t have enough.”

At the root of the problem is education, he posits, with few Lebanese being truly economically literate. The result of this is a sorry trail of missteps: poor understanding and explanation of CPI, politicization of economic statistics, ad-hoc approaches to budgeting, and economic planning done by those with no training in economics. And aggregated, he says, it leads to “a cumbersome and complex system that makes the government less efficient and the private sector less efficient.”

May 24, 2013 0 comments

Economics & Policy Healthcare in Lebanon

Connecting care

by Thomas Schellen May 23, 2013

written by Thomas Schellen

The venture was conceived to solve a problem of medical claims management for several Lebanese insurers in 1991, right after the country’s civil war ended. Today, GlobeMed Group has 800 employees, is active in 12 markets and is hungry for more.

The Beirut-based third-party administrator (TPA), known until last year as MedNet Liban in its home market, claims to be the region’s leading company in its field by a size margin of at least 30 or 40 percent over its nearest competitor.

“The GlobeMed Group manages around 2.2 million lives and we have grown 10 times in six years. Lebanon, Syria and Saudi Arabia are the three biggest markets of the group,” says Walid Hallassou, general manager of GlobeMed Lebanon.

Related articles: Lebanon’s disappearing health service

Meet Lebanon’s top surgeon

The TPA business model is a cross between healthcare and insurance. When Hallassou talks about “managing lives”, he refers to the insured who access medical services via a membership card. While it is not an insurance company, GlobeMed facilitates medical payments and patient benefits for these cardholders on behalf of its clients, which include private sector insurers, public sector entities and mutual associations or similar organizations that provide healthcare coverage.

An essential challenge for TPAs is to maximize cost efficiency of healthcare services for the insurers and the insured in a holistic way; that is, by doing more than just being an outsourcing and cost containment center for insurance companies that already employ bargaining power to control prices of medical services.

What’s in a name?

According to numbers that GlobeMed disclosed to Executive, the group provides its services to more than 80 client organizations and generated a turnover of $70-plus million in 2012. It manages more than $500 million in health insurance premiums across its operations, which include 10 countries in the Middle East and North Africa, plus Nigeria and the Ivory Coast.

GlobeMed rebranded itself on two levels in 2012. On the group level, it adopted a new logo and corporate motto to express the “spirit of the organization”, which Hallassou describes as oriented toward transparency, innovation, determination, openness and leadership in healthcare management services across the MENA region.

In parallel, the Lebanese brand was aligned to the group identity by changing the local name to GlobeMed Lebanon from MedNet Liban.

Underlying the rebranding was a corporate ambition to be understood as more than just paper pushers, Hallassou says. “We want to be perceived as an organization that is not only managing claims on behalf of insurance companies, but we want to make sure that the whole healthcare industry in the region becomes better in terms of standards and the balance between the cost of healthcare and the quality of healthcare.”

While the idea to go regional was born with the establishment of GlobeMed Ltd in 2001, Lebanon remained the group’s largest market for several more years and accounted for at least three quarters of the firm’s 200,000 cardholders in 2006.

Then, however, the invigoration of the Saudi market under a new insurance law in the middle of the past decade meant that some 30 new insurance providers were legally incorporated in the country. Many of the new insurers look to outsource their healthcare management to a TPA, and GlobeMed found a fertile field to the point that Saudi Arabia today is its largest market.

Home is where the hospital is

Another motor of the company’s business was the propensity of the Lebanese diaspora to seek medical treatment at home. GlobeMed saw the demand for cross-border services early on, Hallassou says, and equipped its products with the functionality of allowing cardholders to come back to Lebanon and have medical procedures done here within their regular medical insurance coverage, or at least benefit from not having to pay extra costs out-of-pocket.

According to Hallassou, GlobeMed’s cross-border capability also made the TPA attractive to regional insurance companies due to demand from Gulf-based employers to have region-wide medical coverage for their employees. “We therefore wanted to create this ‘borderless’ TPA to ensure that all countries from Morocco to Oman are covered by a service that is recognized everywhere,” he says. Hallassou cites Kuwait-based Gulf Insurance Co and Lebanon-headquartered Arabia and MetLife Alico, a unit of New York-based MetLife, as examples for multi-country insurance providers in MENA that use GlobeMed. On the other hand, insurers with large medical portfolios, such as Tawuniya, Bupa and MedGulf in Saudi Arabia, are not on the GlobeMed client roster.

Valuable relations

The third important component of GlobeMed’s success is its ability and preparedness to contract with state-owned provider organizations and insurance companies. This business model also sprang from the company’s dealings in Lebanon, where it has had to work with the mess that is the national healthcare system.

Having to manage under overlapping competencies, competing and inconsistent admission requirements, and fill holes in the service capabilities of private insurers and public providers alike, meant that this TPA service had to evolve into a versatile and flexible tool. It equipped the company so that it can assume responsibilities for a wide range of insurance-typical aspects of medical coverage, or step back from things like underwriting and relinquish these aspects of provision to the private or public entity that contracts GlobeMed.

In utilizing its versatility in service of public sector entities, the company has recently signed an agreement with the Dubai Health Authority in the United Arab Emirates by which it assists public hospitals in billing insurance companies; it also is a bidder for a state-aligned TPA contract in Qatar under the Supreme Council of Health.

But the most outstanding example of a successful implementation of a public sector partnership is found in Syria. GlobeMed has scored contracts with government entities that continue to perform to date even as the country is mired in crisis.

“We are still getting new clients and our claims are still coming in and we are paying the providers. Things are still working on a minimum basic level of normalcy,” Hallassou says of the Syrian operations. He explains this continuity as a result of the Damascus regime’s keenness to provide healthcare to its public sector employees in order to retain their loyalty.

Part of the group’s versatility is that GlobeMed offers its clients the settlement of claims in conjunction with specialized auxiliary services that range from cross-border settlement to calculating the premiums by its insurance mathematicians, or actuaries.

Optimistic about growth

In managing its expansion, the company used to move in what appeared to be mix of adapting to the needs of its shareholders and the strategy to cover the MENA region. In the initial thrust into the Saudi market and also in the out-of-area migration into Ivory Coast, GlobeMed followed its stakeholder Pharaon Group, the Lebanese conglomerate headed by Michel Pharaon that owns Libano-Suisse Insurance, along with stakes in Saudi and Ivorian insurers.

According to Hallassou, the current expansion priority is for weaving the still missing strands into the MENA blanket, where Iraq and Oman are the last two important markets in the Middle East and Morocco, Algeria, Tunisia and Libya are on the markets list for North Africa.

A second perspective for consideration is opportunistic expansion, into markets where senior management sees an opportunity and may pursue it on the basis of a feasibility study and an expected minimum addressable number of insured that GlobeMed could aim to manage in a country. These windows and areas of opportunity are far flung, with the company casting its eyes on central Europe and southeast Asia, but as yet are not developed into a specific expansion plan.

“We are also contemplating going to Turkey. All of these are not finalized. We have interlocutors with whom we are trying to understand the markets and determine if we will go there,” Hallassou says.

While the locations of GlobeMed’s future launches may not be certain yet, the ambitions for the number of managed lives are certain, Hallassou confides. “We should be able to double another time in the next couple of years. We should be around 4 to 4.5 million in the next two years.”

Previous expansion moves were implemented almost entirely by starting a new unit from scratch and acquiring the necessary licenses, but the company is also ready to move into markets by merger or acquisition. Wherever the company takes its expansion, it will reflect positively on its Lebanon operations. Here, GlobeMed has its most sophisticated operation, a strong human capital source, training resources and a market for implementing new products.

Headhunting headache

Lebanese talents with a knack for insurance and knowledge of healthcare, then, should have no worries about finding employment. Depending on the locations where GlobeMed will go, it will increase its headcount from the current 800 to 1,000 or 1,200 in the next few years, Hallassou estimates. Staffing this expansion will be the biggest mission for the company; in Hallassou’s perception, potential employees find working in insurance more enticing than third-party administration.

This is a bit of a menace, then, given that most insurance managers say they cannot find enough talent as graduates are chasing jobs of greater allure, such as banking and finance careers. GlobeMed, which has already some experience with providing qualification through a training program in medical coding, has plans for an “academy” to offer exploratory experiences with the company and qualification options toward a future career in TPA for the graduates it seeks. Finding human capital is the company’s paramount challenge and a supreme headache, Hallassou admits. “IT [information technology] is not, financial is not; the only challenge is human resources.”

May 23, 2013 0 comments

Comment

Jordan’s economy could benefit from Palestine confederation

by Riad Al-Khouri May 23, 2013

written by Riad Al-Khouri

With US Secretary of State John Kerry back in the Middle East this week, new ideas are being touted to revive the Arab-Israeli peace process – with a confederation between Jordan and an independent Palestine among those getting traffic. While it is deeply controversial and unpopular with much of the political classes in both Jordan and Palestine, the economic benefits of such an agreement for Jordanians could be significant.

The idea itself isn’t new at all: under various guises, confederal schemes have been under discussion for decades. The new proposal, however, is slightly different. Each state would remain politically independent – having its own administration, including government, parliament, police, and judicial structure, as well as a separate educational system etc. Only in specific issues regarding the outside world would the operate as one: areas as currency, tariffs, customs, and of course as defense and foreign policy.

It must be said that no institutional link between Jordan and Palestine is possible before the latter becomes independent. But that state could become part of a confederation with Jordan while still maintaining its independence. This is not transferring Palestinians from Israeli rule back to the Jordanian domination of 49-67 – which was not a confederation, but simply domination by Amman – but the creation of a free Palestine within an economic agreement.

What’s in it for Jordan?

From an economic point of view, confederation could be a way out for an increasingly non-viable Jordan. Reduced to scrounging handouts from benefactors in the West or the Gulf in order to pay the salaries of bureaucrats and security personnel, Jordan’s economy is chronically weak, corruption is rife, and poverty and unemployment stubbornly high.

A common market within a confederal system could facilitate sustainable economic growth for Jordan. To begin with, an independent Palestine will attract a massive influx of capital from the Palestinian diaspora and others, part of which would flow into Jordan. Along with this money, Palestinian capitalists could help pull Jordan out of its statist morass, with the stultifying Jordanian system eroded by a free market.

Of course, the Jordanians have no monopoly on statism and corruption: quite a few of the Palestinians in power in the West Bank and Gaza are flamboyantly crooked. Nevertheless, in a free Palestine with market forces prevailing, a tide of investment could dilute the strength of corrupt elites and eventually change the culture of the whole system. Palestine has little to teach Jordan about good governance, but perhaps more about cultural and market freedoms.

Another advantage for Jordan would be access to the Mediterranean at Gaza via the territory of a geographically unified Palestine (This in turn would be made possible after appropriate land swaps, with bridges and tunnels linking respective Palestinian and Israeli territory.)

Economies of scale would also kick in to the benefit of both sides; confederation could make it easier and cheaper to set up and run large joint enterprises, in both public and private sectors. In particular, infrastructure could be shared in areas such as transport, energy, water etc.

Thus would “little” Palestine save a bigger Jordan from itself, ending an absurd situation in which so many Jordanians work for or otherwise kowtow to the Amman government. Of course, any country needs cops, administrators, and soldiers, but to base a whole system on them is a joke that is no longer funny.

This won’t happen overnight: as mentioned, Palestinian independence has to come first, and that is still a tall order – though far easier to contemplate now than it was back in the late 20^th century. The other major hurdle will be isolationists on both banks of the River Jordan those who think tribally and view confederation with suspicion – misinterpreting it as an attempt at domination by the other side.

Secretary Kerry please note: the growth of Jordan and Palestine into sustainable economies is the only way to assure both of them their security and that is better done in tandem than separately. So bringing the Palestinians and Jordanians together in an equitable relationship may in fact be as important as drawing the Arabs closer to Israel, yet another challenge for US diplomacy.

Riad al Khouri, a Jordanian economist who lives and works in the region, is principal of DEA Inc, Washington DC

May 23, 2013 0 comments

Business

Leading the Arabic video revolution

by Joe Dyke May 23, 2013

written by Joe Dyke

In the coming months, Executive is seeking to highlight exciting entrepreneurs from Lebanon and across the Arab world. Starting today, every Thursday we will meet one of the new generation of exciting talents to learn how they are seeking to change the Middle East.

Company: EKeif

Country: Jordan

Industry: Online media

Founder: Sima Najjar

Age: 29

Established in: December 2011

Number of employees: 3

Revenues last year: $11,000, with growth rate doubling

Capital raised: Currently finalizing a deal to raise $200,000

Sima Najjar is fluent in English, but always preferred to learn in her native Arabic. But a couple of years ago, she was searching for good self-help guides online and came up empty, sparking her curiousity.

Related article: The Top 20 Lebanese Entrepreneurs

“I always liked the EHow videos and answers but I didn’t find them in Arabic. So I found a gap in the market and thought about turning it into a business,” she says. With the help of the Amman-based accelerator Oasis 500, the result is EKeif (literally EHow in Arabic).

Launched in December 2011, the company provides simple Arabic language videos aimed mostly at women. Among the most popular are tips on styling hair, recipes and how to make a homemade facemask.

At just 29, Najjar is one of Jordan's most exciting entrepreneurs

EKeif has seen rapid growth and its videos now get over 1 million views a month. The company is in the process of confirming a major capitalization deal, worth around $200,000, which will completely transform the site. Currently they produce around 40 new videos a month, but they hope to raise that number to 1,000, potentially putting them among the leading companies making Arabic-language content online.

Najjar says she will seek to learn from the lessons of the original EHow. After being bought out the company produced a lot of content rapidly and faced criticism that quality suffered, eventually leading to it pushed down Google’s search engine. Najjar says she is aware of the danger and will maintain stringent quality control measures, but with such rapid growth planned the dangers are clear.

In terms of revenues, the site makes money not from ad sales, as the original EHow did, but through selling space in the videos to specific companies. “We are going to make money through product placements and branded entertainment. We also have sponsored videos, a Youtube partnership and an exclusive contract with Mobili in Saudi for six months to have our videos downloaded through their platform.”

Najjar admits that revenues so far have been miniscule – just $11,000 last year – but says they have focused on the product in the short-term in order to attract major investors. Incomings, she says, are likely to double this year and grow exponentially in the coming ones.

Video killed the article?

While the idea for EKeif may not be original, the company benefits from being in an underdeveloped market. Just one percent of content online is estimated to be in Arabic, while Arab-speaking people make up closer to five percent of the global population.

More importantly, Najjar says, Arabic content online seems to be largely skipping text articles and going straight to video. YouTube have predicted that in the next decade as much as 90 percent of online content could be video and Najjar says this trend is particularly prevalent in Arabic content, explaining her decision to focus heavily on the medium.

There are also challenges, Najjar says, in gaining loyalty as Arabs tend to get their news via social media rather than going to specific sites. “The Arabs are very social [online], they go to Facebook or Youtube – they don’t go to the Internet to surf the net generally. This is the customer behavior of the Arabs and this is what we used to target them through our videos.”

While they may be based in Jordan, the company has identified Egypt and Saudi Arabia as the real growth markets for Arabic content, with around 70 percent of their hits coming from the latter.

It is clear that the market is opening up and Arabic-language content is underserved. With the right decisions at this critical time, the company could become a market leader, a target Najjar has set herself. “We want to be the Arabic EHow and the ultimate source of how to videos online. If you have any questions you will go to EKeif and find it there.”

May 23, 2013 0 comments

The Buzz

Morning briefing: 23 May 2013

by Executive Staff May 23, 2013

written by Executive Staff

Economics and Policy

The Egyptian government is to supply more gas and diesel to power stations to deal with electricity shortages that have worsened in recent months after the cash-strapped country failed to import enough fuel.

More from Reuters

Lebanon's Union Coordination Committee has accused the Finance Ministry of intentionally submitting salary scale bills with errors in them in a bid to delay the ratification of a wage hike in Parliament.

More from The Daily Star

Egypt’s central bank sold an unspecified amount of dollars after offering a record $800 million to local lenders at a currency auction to finance imports as Standard & Poor’s warned of accelerating inflation.

More from Reuters

Majid Al Futtaim Holding has bought Carrefour's 25 per cent stake in its hypermarket business for €530 million.

More from The National

The sovereign wealth funds of Qatar, Norway and Azerbaijan and China Construction Bank have bought about 55 per cent of the new shares on offer from VTB, Russia’s second-largest bank.

More from Reuters

Nissan Middle East expects more than 11 per cent growth in sales for 2013 and said new models will help increase its market share and volume, according to managing director Samir Cherfan.

More from Khaleej Times

May 23, 2013 0 comments

Economics & Policy Healthcare in Lebanon

Dr. Roger Sfeir

by Zak Brophy May 22, 2013

written by Zak Brophy

Dr. Roger Sfeir is one of Lebanon’s leading cardiovascular surgeons and has been a key advisor on national healthcare reforms. International bodies such as the World Bank and United Nations Development Program have sought his expertise for a number of studies. Executive sat with him to discuss recent developments in the sector and the problems that continue to beset healthcare in the country.

Is there an over-reliance on private sector financing for healthcare in Lebanon?

Provision of healthcare is nearly 90 percent private and the expenditures mainly go to these centers, so yes, it is skewed to the private sector.

What are the implications of that?

Well, we need to look at the financing, from where the money comes. Before 1998, the public hospitals were incredibly inefficient so in that year a law was passed called the Law of Autonomy of Public Hospitals, where they changed the legal structure of these hospitals.

So instead of being directly managed by the Ministry of Public Health (MoPH), each hospital had a board and a general manager under the supervision of the ministry, but it was supposed to operate like a private hospital, with its own budget. Its income would come from billing the government for the patients it serves.

Has the law been successful?

Not really.

Why not?

When this law was written, we were aware that as long as the manager and the board were appointed by the politicians then the same problems would occur again. As the law is written, the boards and managers are appointed by the MoPH, so they are not free of political interference. I believe now around 15 to 20 percent of the overall healthcare budget goes to public hospitals whereas it was around 10 percent back then.

Within healthcare in Lebanon, are there sufficient quality control measures?

Before the major effort to restructure the healthcare sector back in 1998, there wasn’t anything called quality control by the government in the hospitals. We wanted something like the joint commission in the United States, but we ended up doing what is called the accreditation of hospitals, whereby a committee from the MoPH comes and checks the hospital including everything from the infrastructure to the nursing to the management.

How rigorous is the process?

It is working, but not very well. This is because of how it is being implemented. The problem is that the hospitals are audited by one of four companies selected by the ministry. [It is a situation] where the companies may give wrong results.

How?

[Laughs.] Well, if you know or have relations with the people who own the [ratings] company, then they can give better grades. With these contacts, they can help the hospital get an accreditation when maybe they shouldn’t. The way the system is built is not foolproof to prevent abuse.

How would you assess the balance of primary to secondary and tertiary healthcare spending?

There is too little [spending] on primary healthcare and preventative medicine. There has been an effort by the MoPH and [its] director general to improve the primary healthcare centers and put more effort into improving preventative medicine, because the dollar you put there can save you 10 further down the line. Private institutions can’t do this because it is not profitable.

How coherent and comprehensive is the data available for the sector?

There was lot of money put into a 1998 study for restructuring the sector. Part of this was to collect data in what is called the national health account, and it gave some alarming findings. For example, it found that total healthcare expenditure was 12.3 percent of gross domestic product, which was second only to the US. [Between] 2004 and 2005, it found it went down to around 9 percent. But we really have to take these figures with a large pinch of salt. There is [a possibility] for errors or even gross errors in the collection of this data.

How efficient is the pooling of resources and data within the sector?

Healthcare information is very important for the steward of the system, and this should be the MoPH. Now the ministry is a lot of things. It is the steward, it drafts the laws, implements the laws, treats patients and pays for the patients. All these should be split and divided. There should be checks and balances.

These proposals have been put forward many times but have not been implemented. Why not?

The ministry should be the steward for the system, put down the regulations and have a center for the collection of data. The one that owns the hospitals should be another entity, and the one that collects and pays the money should be the national healthcare fund. The government has not been able to implement these policies even though they were approved by the Council of Ministers [Lebanon’s Cabinet] way back in 1999.

Why not?

There is no political will. If you want to take from the National Social Security Fund (NSSF) the power of paying for the hospitals, then they will not be happy, and the same for the MoPH. If you want to create a national health fund, this will take from the MoPH and the NSSF. Neither of them will allow it.

How would you assess the efficacy and equity of the mix of payments from the public health ministry, insurers, NSSF and professional associations?

It is both inefficient and inequitable. The most inefficient way to pay for healthcare is out of pocket, and yet it amounts to around 60 percent of all healthcare spend here. This also leads to inequality. If you are poor and don’t have insurance, you can’t afford to pay out of pocket so you go without. We need more prepaid systems.

The NSSF is in a bad state of affairs. What could be done to make it more sustainable?

The sickness fund portion of the NSSF used to have more money in the bank, but year after year you see the money available going down because the losses are more and more. It has passed zero and it is now losing billions of lira every year. Another set fund was created a few years ago for those people that are not insured. Who chose to join? The elderly who have no social security — and they are very sick, so within a couple of years the fund ran out of money. The government pays into the regular fund, but they have not been paying their share because they say there is a lot of theft and abuse of the system. The NSSF is going to remain in deficit unless there is a major change made, which I don’t see happening in the coming years.

What is the state of care for the elderly and palliative care in Lebanon?

I think one of the worst aspects of our healthcare system is that there is no proper adequate care for our elderly, either in terms of healthcare or nursing homes. Nothing. There are hospitals that have long-term contracts with the government for the elderly, but they are really paid minimal amounts per day. Not enough to pay the electricity. This is [a failure] of the system. Once you stop working at 65, your insurance stops and your health coverage stops and you get paid your social security, which [runs out] in one year. After that you have no medical coverage, so many of the elderly are left uncovered.

May 22, 2013 0 comments

Economics & Policy

Towards breaking point

by Peter Speetjens May 22, 2013

written by Peter Speetjens

“Late March a Syrian mother of eight stood at my door, asking for help, but I had nothing left to give,” said Elian Nasrallah, a priest in charge of coordinating aid efforts in Qaa – a Christian village in Lebanon’s northern Bekaa Valley. Qaa has become host to some 10,000 mainly Sunni refugees from Syria, many of whom cross the border with nothing but their clothes on. Yet, in order to get aid they must register with the United Nations High Commissioner for Refugees (UNHCR), with the nearest offices located 90 kilometers away in Zahle. Without this, Nasrallah and others are struggling to support their guests.

“I asked her to come back after a few days, as I went looking for a sponsor,” he said. “She returned after a week with seven children. It was still very cold in that time – as they had to sleep out in the open, her two-year-old son had died.”

Related article: Mapping the Syrian refugee exodus

Most days at the UNHCR headquarters in south Beirut, at five o’clock there still are some 200 Syrian refugees waiting outside. A sea of plastic chairs under blue parasols aims to ease the wait, while a handful of street vendors sell water and ka’ak. Each time the man in uniform calls out a number, a family or couple shuffles towards the building’s heavily guarded entrance.

To receive emergency aid, a refugee must be registered – a procedure that takes an average of 31 days. “That is long,” admitted UNHCR Representative Ninette Kelley. “But the numbers we face are just overwhelming. In April alone we registered 90,000 refugees. When I first started in Beirut some three and a half years ago, we did a few hundred cases a month.”

Since the Syrian conflict began, the UN has dropped many of the restrictions on Syrians registering, but the process is still laborious as it takes time to register each refugee and determine his or her specific needs.

Currently, there are an estimated 4 million internally displaced people within Syria and some 1.6 million refugees in neighboring countries. Some 460,000 are registered, or await registration, at the UNHCR in Lebanon. The influx has accelerated in recent months – in April last year there were only 13,000 registered refugees in Lebanon. “Some 60 to 70 percent of the refugees arrived in the last four months,” said Kelly. “If this continues at this rate, Lebanon will have a million of refugees by the end of the year.”

According to the International Crisis Group, however, there may already be a million Syrians in Lebanon as many do not register, either because they are working or are staying with friends or family.

Paying up

While the number of refugees is on the increase, the international community has so far hardly paid its dues. In January, the UNHCR called for a regional budget of $1.6 billion in 2013 to assist Syrian refugees. “Some $267m was meant for Lebanon,” said Kelley. “However, that figure was based on a total of 300,000 refugees. Today, we’ve already 50 percent more refugees, while we received but a third of the budget.”

By April 11, the organization had received only $163 million. Major donations stemmed from the United States ($56m), the European Union ($45m), Japan ($22m), and a core of mainly European countries. With the exception of Kuwait, which has already committed $2m and recently pledged another $300m, most Arab countries have so far kept their wallets tightly sealed.

Naturally, this has major consequences for the quality of services provided. “We have no choice but to prioritize,” said Kelley. “For example, we now focus on primary health care. For complex medical interventions we simply do not have the money. Also, the Lebanese government recently pleaded for $5 million to support schools, which are overcrowded due to the presence of so many Syrian children. But, again, we do not have the budget to do so.”

Kelly is full of praise for the some 1,200 Lebanese communities, like Qaa, that – with little or no help from the government – give shelter and more to Syria’s refugees. “I can’t think of a country that, proportionally, has done so much – ever,” she said. “A mayor in the south of Lebanon, where some 60,000 refugees have found a safe haven, told me ‘you speak of refugees, we speak of neighbors, and we are ashamed we cannot do more.’”

Nevertheless, the tension is rising. Lebanese shopkeepers complain about Syrians opening up shops and selling cheaper produce. In Beirut, the streets are filled with Syrian beggars and shoe shiners. Far more dangerous is the fact that the influx of refugees is sharpening Lebanon’s religious and political divide.

“Lebanon is absolutely in crisis,” Kelley concluded. “If there is not more aid soon, I fear the local communities will no longer be able to support the refugees, which entails a huge danger for the mosaic that is Lebanon. Stability in Lebanon will depend to a large extent on foreign political and financial support.”

May 22, 2013 0 comments

The Buzz

Morning briefing: 22 May 2013

by Executive Staff May 22, 2013

written by Executive Staff

Economy and Policy

Saudi economic growth will slow to 4.4 percent in 2013 from 6.8 percent last year due to an expected fall in oil production, the International Monetary Fund has said.

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Dubai contractor Arabtec has announced it has resolved a labour dispute that resulted in a four-day work stoppage without clarifying whether the workers’ demand for higher wages were met.

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Bahrain Telecommunications Co (Batelco), which has suffered a sustained profit slump, said Sheikh Mohamed bin Isa al-Khalifa had quit as chief executive and his predecessor would temporarily re-take the helm.

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Global power giant Siemens has been awarded two contracts valued at about SR1bn ($266m) by state-run utility Saudi Electricity Company (SEC).

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May 22, 2013 0 comments