BusinessEconomyEntrepreneurshipSpecial Report

The pathways of new Lebanese makers

by Thomas Schellen
written by Thomas Schellen

Once upon a time of apparent – but as has been shown with overwhelming force, fake – stability in the Lebanese macroeconomic and entrepreneurship framework, the promulgated and immensely hyped dream declared the rising power of the local knowledge enterprise and tech entrepreneurship ecosystem. A large part of that dream has dissolved. It evaporated along with the illusion of a currency that could be the guarantor of startups, both makers and services providers, who would first prove themselves in the Lebanese test market, create jobs and achieve profits, and then venture into region and beyond. 

Basma and Hexafresh are maker startups. They impersonate the Lebanese entrepreneurial dream in its latest incarnation. Today this means they are Lebanese tech ventures with manufacturing focus that have export potentials but no significant prospects to find clients in the country. 

Hexafresh is a climate-wise compatible, zero-emission and low power consumption engineering solution for cooling needs in small spaces, like a home office. Basma combines the digital era technology of 3-D printing with the provision of a comparatively painless correction of a deeply rooted human problem: crooked teeth and imperfect smiles. 

Both solutions saw the light in the past few years. Basma, which was created in 2018 with investments from founders, family, and friends, saw a first non-family funding round between the fourth quarter of 2019 and first quarter of 2020. Hexafresh, which is still in the prototyping phase of manufacture, was established in July 2020 with support from Berytech Fund’s Cleanenergy program. 

Both startups thus were immediately confronted with the financial barriers and market access hurdles that have sprung up in Lebanon after the stumble and fall of the lira some two years back. The worst thing about them, from a local market perspective, is that they have given up on the idea of local sales for the foreseeable future.  The best thing, form a local labor and talent perspective, is that their vision remains alive for job creation in Lebanon. 

Name: Basma
Date founded: 2018
Founders: Dr. Cherif Massoud
Industry: Healthcare device manufacturing (dental aligners)
Business Model: B2B2C, B2C
Incorporation status: Incorporated in UK, Applying for incorporation in UAE
Number of employees: 40
Latest funding received: A series investment round of $3 million was completed in June 2021

Basma is an example for adaptiveness and quick thinking in inspired innovativeness, meaning that founder Dr. Cherif Massoud did not shy away from jumping onto a winning idea that had been making inroads in developed markets but had no champion yet in the Middle East and North Africa (MENA) region. As he tells Executive, Dr. Massoud had practiced as an orthodontist in Lebanon for several years but saw his profession move into new and rising technologies of dental aligners that could for certain patient profiles substitute older corrective devices, such as orthodontic braces and retainers. “Change was happening and I had two options. I could either lead the change in our region or [see my business] die slowly,” he says. 

Lebanon-born, overseas-based

As aligner technology was seeing growth in developed markets, Dr. Massoud saw an opportunity in bringing the new dental devices to markets in the MENA region, even as he and a business partner with engineering background dismissed, from the get-go, the idea of registering their enterprise in Lebanon. 

Moreover, when preparing to conduct a first funding round in late 2019, Basma deliberately did not seek any funding that was guaranteed under the Lebanese central bank Circular 331. In the seed round, which was completed in January 2020, the investing funds nonetheless were local, including angels and noted Lebanese venture capital players B&Y and Cedar Mundi, along with the Kafalat-affiliated iSME. Following this $1.2 million round, a $3 million series A round was completed in June 2021. It was led by Middle East Venture Partners (MEVP) and involved iSME, Cedar Mundi, IM Capital, a fund called SOSF, and one by name of IFA capital.

Based on the venture’s dismissal of Lebanon as legal base, Dr. Massoud moved to the UK. He explains that the entrepreneurship environment there is very accommodating, making it easier to get started, in addition to having a “potent market” for Basma’s products. The prospective loss of the Lebanese market, however, would not deter him because it did figure in operations but not market terms. “From day one, we were physically operating in Lebanon but mentally operating in the region, and we see ourselves in the coming five years as having 50 percent of our revenue from the [MENA] region and the other 50 percent from Europe,” he says. 

The team of Basma has grown to 40 persons who are located in Beirut, the startup’s headquarters in the UK, Riyadh, and Dubai, where the company recently set up an office. With an aim to grow its teams in all four locations, the largest cohort of Basma’s employees by job description is the customer relationship management and customer support team. It is followed in size by the engineering team, developers, and three marketing teams. According to Dr. Massoud, 20 percent of employees are healthcare professionals and technicians. Most importantly for Lebanese stakeholders, he says that all employee specializations are present in the startup’s Lebanon team which accounts for 75 percent of Basma’s workforce and is envisioned to expand from 30 to about 100 persons by end of 2021 or early 2022. 

The company’s business model is informed on one hand by its manufacture of healthcare devices, which make partnerships with clinics and medical practitioners in its main target markets – currently Saudi Arabia and United Arab Emirates – a prime market access conduit. From this perspective, Basma’s recently obtained funding will be dedicated largely to the development of its partnerships with dental clinics in the Gulf, where its infrastructure is designed to involve medical practitioners. “We are a healthtech startup but this is still a medical device and you need the follow up of a doctor. We thus need to increase touch points with healthcare industry on the ground and online,” explains Dr. Massoud. 

On the other hand, however, Basma was not deterred from operations during the 2020 lockdowns in target countries, because the business to consumer (B2C) channel of its online reach was impervious to the lockdown restrictions that many dental clinics were faced with (numerous surveys last summer mentioned dentistry related professions as the most exposed to coronavirus risk). To the contrary of being hurt by the pandemic, the startup’s portal Basma.com was launched as digital native brand in March 2020, as first and only company to offer orthodontic digital end-to-end service in the region. “We are able to deliver our treatments fully online, this is our edge,” Dr. Massoud enthuses. According to him, Basma followed the direct to consumer success of its portal by developing the additional support offering of connecting patients’ to medical practitioners who are not far from their physical location. 

Leading in the region

Partner clinics will not need to be equipped with an own 3-D printer but rather with a digital scanner for dental impressions. For development of its partner network with local clinics in the immediate main target markets such as the UAE, the company is engaged with aligning clinics digitally by either integrating an existing digital scanner or providing a scanners to clinics who do not have this equipment. Additionally, given that the method of dental aligners is new and may not be known to all partner practitioners, the startup created a “Basma academy” for delivering training – by video tutorials or in-person sessions – to doctors over a short term. 

The overall aim is a good customer experience. “We try to make it an easy and nice experience for our users by minimizing the number of clinic visits and doing most of the work ahead of time, thus decreasing the chair time with the doctor and just making the necessary things happen in the clinic, with all the rest digital,” Dr. Massoud emphasizes, adding that by not outsourcing any part of its aligner production, the startup was able to create a strong customer support infrastructure and feedback loop with customers.  

Among what he says is a $4 billion dollar addressable market in region, Basma’s prime target group are younger adults above 18 who either had had prior braces – 40 percent of customers – or had not previously had the chance to align their teeth because of financial or other reasons. The main selling points for Basma’s dental aligners according to Dr. Massoud thus are convenience, moderate costs and digital payment options, and the customer’s retained confidence because the product is discreet – the aligners are not as visible as braces. 

Despite the impassive rise of this Lebanese-born dental startup, however, persons in Lebanon who would like to rely on Basma to improve their smiles, should not expect that the company’s growing MENA network will reach here any time soon. “We don’t view Lebanon as market at all. We view Lebanon as place for us to work, to operate, to produce and to export. We don’t look at Lebanon as a market because in the financial collapse, it cannot be a market. It is a driver and place where we can operate and attract talent, provide jobs and serve the region because we can speak the language,” Dr. Massoud explains. 

The company – whose plans already envision a Series B funding round in 18 to 24 months – wants to remain independent in the short to medium term but possible exits beyond consolidating its aimed-for MENA and European market positions, could well include an acquisition by a strategic partner. 

In the same breath by which he concurs that the best way to put shining smiles on the faces of residents who remain in Lebanon today would not be a dental correction but reforms and economic policy, the expatriate founder of Basma confirms, “Lebanon is in our hearts and the best way how we can focus on helping the economy is by focusing on a very smart end product that we can produce in Lebanon and export to anywhere in the region.” 

Name: Hexafresh
Date founded: July 2020
Founders: Mohamad Chaaban, Mohamed Ibrahim, Riwa Matar, Rodolphe Salem
Industry: Manufacturing (HVAC)
Business Model: B2C
Incorporation status: Applying for incorporation in France
Number of employees: 5
Funding received: Seed funding (USD 17,000) through the Berytech Cleanergy Program

[Editor’s note: The Hexafresh profile was researched and written by Alexis Baghdadi, Executive’s managing editor].

By this time next year, Lebanese startup Hexafresh aims to start rolling out the first prototypes of its flagship environment-friendly cooling solution “made in Lebanon” to the French market. With the proviso that most materials for its units will consist of imports, Mohamed Ibrahim, Hexafresh co-founder and chief technological officer, assures us that the company’s product and future ones will be assembled in Lebanon and presented as Lebanese in both concept and design, following the strategy adopted by an increasing number of European and international companies. The promise is clear: a zonal air conditioning unit that really cools and really produces zero emissions.

How ironic is it that electrical appliances designed to cool temperatures actually contribute to rising global temperatures? With a growing world population, air conditioning units are becoming increasingly essential to ensure indoor comfort in hot and humid regions, not least so in our part of the world. But such cooling devices are also becoming necessary in regions previously considered temperate but now experiencing the effects of global warming on fauna, flora, and human life. It seems the higher temperature rise, the more air conditioning units will be in demand, producing more emissions that contribute to heating the planet and locking this vicious circle in motion. With a growing demand and need, even so-called energy-efficient air conditioning units and their reduced emissions cannot offset the seemingly inexorable temperature rise. Simply put, emissions are still produced by the compressor components of air conditioners, and “energy-efficiency” only denotes savings in electrical input as a ratio of a unit’s cooling capacity. 

Seeking the best high-efficiency and environment-friendliness alternative to conventional air conditioners, Hexafresh opted for thermoelectric coolers. These devices cool air and diffuse it through a fan, making them more attractive than regular fans that only displace air. They also lack a compressor unit and therefore produce no emissions. Thermoelectric coolers function according to the Peltier principle whereby an electrical current passing between two dissimilar metals can produce a cooling effect going one way, and a reverse heating effect going the other way. The only input is electricity, the only output is cooled or heated air, with zero emissions. While studying at Rafic Hariri University, Ibrahim was first exposed to this technology and he put together a handmade prototype with a team of friends who would eventually become co-founders of Hexafresh. Later while pursuing advanced studies at HEC Paris university, this technology materialized into an application and business concept.

The trigger for Ibrahim were the heat waves France experiences every year. Recently, France has been recording an increasing number of deaths from heat waves year-on-year, marking a high of 1,924 casualties in 2020 according to French public health services (up from 1,500 in 2019). Factors affecting this increase include an ageing population and, as of last year, additional complications related to the COVID-19 pandemic, but the real killer remains global warming. Even as temperatures continue to rise, cooling solutions are not evident in the country: the installation of many conventional air conditioning units is banned in many residential areas in France because of their emissions, the noise they produce, or simply because they are seen as an aesthetic blight on certain neighborhoods’ architecture. 

And so in July 2020, Ibrahim and his co-founders applied for the Berytech Cleanergy Program and one of their concepts was selected and became Hexafresh. With USD 17,000 in seed funding from the Netherlands, the team was able to produce a minimum viable product (MVP), the eponymous Hexafresh unit, assembled in Lebanon from electrical parts, fiberglass, and aluminum. In the future, the unit’s body will be 3D-printed, rendering it more lightweight and affordable. Part of the seed funding also went into running an Ansys simulation on the prototype to maximize its efficiency. “Depending on conditions, we can safely say today that Hexafresh can produce a temperature of eight to 10 degrees lower or higher than the room temperature,” Ibrahim affirms. As a way of saving costs for consumers, Hexafresh designed their unit as portable and zonal. According to Ibrahim, the Hexafresh unit consumes only about 300 watts to heat or cool the air by eight to 10 degrees inside a volume of 1.3 m3, consecrating it for personal use. Being this energy-efficient, effective, portable, and sold for a fraction of the price of other alternatives, makes it an attractive value proposition for individuals at home; almost as if it was intended for the elderly in France. As added benefits, the Hexafresh unit acts as an air freshener and dehumidifier.

Midway between France and the GCC

For the near future, Hexafresh will seek to secure $50,000 in angel investments. After incorporation in France, this fund will be used to obtain the CE certification for their product and manufacture 300 air conditioning units that will be rolled out for user-testing in France in the summer of 2022. “We sought to incorporate in France because it makes things so much easier for us financially right now. Our main market is France and our brand identity is based on the French market and we are looking for funding opportunities and partners in France,” Ibrahim says, explaining that “Hexa” is a direct reference to the roughly hexagonal outline of mainland France that earned the country its nickname “L’Hexagone,” and can be seen in the shape of the Hexafresh unit. “While the economic situation in Lebanon poses many problems, it has benefited us in terms of reduced labor costs. Hopefully we can maintain our design and assembly operations in Lebanon and once the situation improves, we can contribute to better job creation.” Feedback gathered from testers will serve to prepare the final consumer product that should be set for mass production in 2023. 

Of course, France isn’t the only target market for Hexafresh but it is an ideal testing ground. “The need for a viable air conditioning solution is a real pain in France, and it could save lives among the elderly” Ibrahim comments, adding that other countries at high risk of casualties caused by heat waves include Belgium, the Netherlands, Germany, the United Kingdom, among others. Hexafresh units could also be purchased as casual personal air conditioners in less life-threatening settings. Asked about the Lebanese market, Ibrahim admits that hyperinflation, coupled with erratic fuel and electricity provision may not put their product within easy reach of many Lebanese residents, unfortunately. Hexafresh have their sights set on penetrating GCC markets with versions of their product intended for outdoor use. “Lifestyles have started to change in the GCC,” explains Ibrahim, “with the COVID-19 pandemic and confinement, people have started seeking to spend time on their balcony or in their garden, and this is the growing niche we are targeting.” Currently, the only cooling solutions for limited outdoor activities in GCC markets consist of large fans with misters, which are bulky and require maintenance. Ibrahim sees virtually no competition for Hexafresh once they introduce an adapted version of their personal air conditioners equipped with batteries. According to Hexafresh’s financial model, the company will be valued at $1.2 million within five years.

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Brand VoiceTechnology

Bayer introduces digital ophthalmology in Lebanon through its Alleye home-monitoring sponsorship program

by Bayer
written by Bayer

As more and more of the way we receive healthcare shifts towards online, Bayer Middle East looks to utilize digital health to provide better eye care for local patients and support doctors through the launch of the Alleye Home Monitoring Sponsorship Program.

Dr. Samer Al Faqih, managing director and commercial area head at Bayer Levant, shares how Bayer are innovating virtual care.

Courtesy of Zaven’s program “Bala tool Sira”

What is Alleye and how will it improve the patient experience?

“Alleye” is a mobile medical software application that helps detect and characterize visual distortion in patients with retinal diseases like Age-related Macular Degeneration, a moderate or severe distance vision impairment or blindness. What makes it such a revelation in terms of eye care is that patients can now check their condition by themselves at home and it is also very user friendly and simple to navigate. Patients will be able to send their vision scan results to their ophthalmologist who will, in turn, analyze their results to determine if the patient’s condition is stable or has improved or progressed in a way that requires intervention.

In sum, Alleye means that patients can manage their condition from the safety of their home and therefore giving them the peace of mind they need.

What is the current landscape in terms of retinal diseases and eye care in Lebanon and the region?

As we all know, the COVID-19 pandemic caused massive disruptions in the healthcare industry, requiring professionals to re-examine the traditional face-to-face patient-physician care model. It also highlighted the need to incorporate new models of digital healthcare solutions in ophthalmology, such as home-monitoring, to meet this challenge.

Diabetic Retinopathy, a complication of diabetes, is the leading cause of preventable blindness in adults. A recent study also showed that 24.6 percent of Type 2 diabetes patients in Lebanon suffered from Diabetic Retinopathy, and diabetics with a more severe Diabetic Retinopathy condition presented late to ophthalmology clinics.

In addition, diabetes as a disease is estimated to become even more prevalent than it is in the region during the next two decades, with data from the International Diabetes Federation Diabetes Atlas revealing that diabetes cases in the Middle East are set to rise by 110 percent by 2045.

In terms of eye care, there really isn’t anything like Alleye in Lebanon or the region, so this will be a revolutionary tool to help address the needs of patients and doctors when it comes to disease management.

How will the program help in this regard?

The sponsorship program enables ophthalmologists of partnering hospitals across Lebanon to keep a regular track on the vision of their retinal disease patients, with the aim of limiting deterioration linked to diabetes and aging as well as optimizing in-person ophthalmology visits. Additionally, ophthalmologists will also be able use Alleye to observe their patients’ conditions, monitor disease progress, and allocate needs more closely than ever before.

Another huge benefit of Alleye, and this program in particular, is that it will also help us to detect signs of early disease before the patient is truly aware of it, giving us a chance to prevent long term and irreversible damage. A recent study showed that Alleye can detect the progression in macular disease with an accuracy of 93.8 percent and a false alarm rate of only 6.1 percent, which means that false alarm rates for the detection of progression in macular disease via home monitoring is low.

About Bayer

Bayer is a global enterprise with core competencies in the life science fields of health care and nutrition. Its products and services are designed to help people and planet thrive by supporting efforts to master the major challenges presented by a growing and aging global population. Bayer is committed to drive sustainable development and generate a positive impact with its businesses. At the same time, the Group aims to increase its earning power and create value through innovation and growth. The Bayer brand stands for trust, reliability and quality throughout the world. In fiscal 2020, the Group employed around 100,000 people and had sales of 41.4 billion euros. R&D expenses before special items amounted to 4.9 billion euros. For more information, go to www.bayer.com.

CF Approval Code (MA-M_AFL-LB-0010-1)

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BusinessProfilesSpecial Report

Content and satisfaction

by Alexis Baghdadi
written by Alexis Baghdadi

Beirut-born podcast app aims to increase its MENA expansion and leadership

Name: Podeo
Date founded: 2019
Founders: Stefano Fallaha
Industry: Technology and Media (Podcasts)
Incorporation status: Incorporated as a US holding (owner of Podeo FZ-LLC, Podeo Inc., and Podeo SAL)
Number of employees: 22
Funding received: Seed funding through Razor Capital with co-investments from Globivest VC and other investors
Awards and accolades: Grant from the Supreme Committee for Delivery & Legacy

Podcast hosting platforms have been around for a while, with global leaders like Buzzsprout, Podbean, and Libsyn (the pioneer in the field since 2004) serving as both content aggregators and creators, but until 2019, the Arab World market was still underserved in terms of localization. Founded by Stefano Fallaha, Podeo deserves recognition for being among the first podcast platforms from and for this region, as well as for successfully managing its rapid growth. Until it raised its first seed investment round in March 2021, Podeo had been entirely bootstrapped, generating basic revenue from its content, as well as a grant from the Supreme Committee for Delivery & Legacy in preparation for the upcoming World Cup. Today, the platform hosts the largest catalog in the region with over three million podcasts In Arabic and English, including hundreds of exclusive podcasts. 

A community-based approach

So what sets Podeo apart? “We want to push the audio culture in our part of the world,” says Fallaha. A number of factors played into that equation, based on Podeo’s learnings from audio user behaviors. First among those is the app’s extensive library. In addition to curated and tailored aggregated content, available for free on the Podeo app, the company not only began creating its own high-quality exclusive content, but also opened the door for podcasters from the region to to start their podcast with Podeo, thereby launching a rapid multiplier effect that contributed to the rapid growth of its catalog. The cost of producing exclusive content depends on the type of content itself (documentary, interview, solo, cast production) and the amount of research and production that goes into it. This content is not limited in type or scope, the same as other aggregated or user-generated content, and covers anything from entertainment to politics and sociology.

Second, the platform analyzes and responds to each user’s activity (searching, downloading, listening) to highlight and suggest content suited to their preferences, while of course showcasing new content, be it Podeo exclusives or brand-sponsored content.

In that same vein, a third factor crucial to Podeo’s rapid growth was the platform’s AI tools that allows it to analyze listener engagement and behavior. For example, whereas most platforms provide only download numbers by region, Podeo delves deeper to examine listenership behavior, providing a holistic understanding of their audience preferences and better tailor their content to meet demand.

When asked about content appropriateness and censorship, Fallaha concedes that this issue was always in the back of the platform creators’ minds, but major concerns have been successfully avoided thanks to self-policing by the content team. “Content is a huge world, and being independent comes with a huge set of challenges. We are not biased against any content, as long as it does not violate community guidelines. Instead, we take a community management approach to such issues,” he states. For Podeo’s own exclusive podcasts, an editorial team ensures the content meets these standards and also performs the necessary research and fact-checking. However, when it comes to aggregated content, it is impossible to review millions of hours of podcasts to ensure all their content is appropriate. “Our listeners act as the community watchdogs and alert us to potentially offensive or abusive content so we can investigate and take appropriate action.”

Fifth, Podeo is experimenting with a revenue-sharing model from advertising income and brand sponsorship, the details of which are not yet shared publicly. The idea would is to provide a strong incentive for content creators to produce and distribute more quality podcasts through the platform, driven by the promise of financial reward and based on the performance of their content through an algorithm.

Expansion and localization

Podeo is incorporated as a US holding company, one of its offices operating out of Beirut, Podeo SAL, located in Lebanon. Despite the severe economic downturn in recent months, and even after their offices were damaged in the August 4, 2020 Beirut Port explosion, he considers Beirut as a good choice for Podeo’s operations. “There is a great added value to working in Lebanon: We have access to a huge pool of readily available creativity and talent here,” he says. The company’s UAE arm, Podeo inc., comprises a much smaller team, focused mostly on sales and content.

Podeo aims to use its recent seed funding to grow its team and resources in the region, betting on localization to accelerate uptake and contribute to the development of more communities. For the fourth quarter of 2021, Fallaha hints that the platform will partner with a global player and will also be rolled out with operators based in the UAE and Saudi Arabia. “We are able to localize and restrict or highlight content by region as well as by user,” he mentions. As part of that growth strategy, he tells Executive that the platform is currently working on simplifying and streamlining its internal hosting dashboard to draw in more users and generate more content, at no extra cost.

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AgricultureAnalysisBusinessEconomics & PolicySpecial Report

Neither wanting nor wasting

by Alexis Baghdadi
written by Alexis Baghdadi

The new social enterprises in Lebanon’s entrepreneurial landscape

Lebanese industries have not been able to take part in the post-COVID-19 global recovery and accelerated reopening; already severely crippled by limited access to financing and the loss of a sizeable portion of their imports, they also have to contend with the surge in prices of commodities worldwide, making it ever more difficult for them to maintain productivity, much less profitability and job creation. With this upward price trajectory showing no signs of slowing down so far, the trend is toward adopting lean manufacturing principles, exploring new investment vistas, particularly the growing number of social and impact investment funds for enterprises that implement environmental, social, and governance (ESG) principles, focusing on exports, and rethinking raw materials from a local sourcing perspective.[inlinetweet prefix=”” tweeter=”” suffix=””] For budding social entrepreneurs, the last point present interesting opportunities that could eventually translate into profitable business models, create jobs, and even alleviate some pains in the local market.[/inlinetweet]

Thinking outside the norms

Taking a step back is necessary to start understanding the landscape in terms of local and sustainable raw materials. The list isn’t very long and consists mainly of agricultural produce and limited construction materials (think cement). The first category can easily meet environmental and social standards, being local, necessary for food safety, job-creating, and requiring limited imports and inputs – or almost none in the case of organic or fair-trade crops so attractive for export markets and able to bring in “fresh” US currency. It also aptly supplies growing domestic demand, exacerbated by the dearth of imports and their rising costs. Construction materials, on the other hand, do provide jobs and may generate income from exports, but they are a long way from meeting ESG standards; the main three companies in Lebanon hardly give anything back to the community and their production processes are hungry for imports of fuel and equipment, not to mention they are not exactly environment-friendly. While these producers await positive political and economic developments to resume their exports to Syria and Iraq, they will also have to contend with regional giants in Iran and Turkey, according to International Cement Review, one of the leading publications in the global cement industry. A more sustainable long-term strategy would be investing in research and development of cleaner alternatives and production chains. 

In both sectors, Executive looked at a few promising examples of social entrepreneurs already actively working towards viable alternatives and models. On the more business side of things, [inlinetweet prefix=”” tweeter=”” suffix=””]local startup Plastc Lab, the brainchild of brothers Rami and Ralph Sbeih, is developing specialized construction materials from an unexpected and environment-friendly local source: plastic waste.[/inlinetweet] Taking a less profit-oriented approach, locally-based US-born entrepreneur Brant Stewart is working on repurposing and revaluing the production, processing, and distribution chain of local wheat and other agricultural products by operating as a social enterprise.

Life-size Legos

In 2019, Rami Sbeih, a biochemist by education, and his brother Ralph, a civil engineer, were introduced to preciousplastic.com, an open source of courses and diagrams for alternative plastic recycling systems, encouraging more individuals to build new products from this resource and even start businesses. The most commercial applications involve pressing plastic waste into sheets, extruding it into beams and bricks, or injecting in free-form for more customization. The brothers were immediately won over by the idea and saw the environmental benefits in it, as well as its business applications. “We have the opportunity to create a product that is 100 percent locally sourced and high in quality, and we are well-positioned to do so,” says Rami. While there is no accurate data about waste in Lebanon, he estimates that plastic accounts for a large portion of that waste and that less than 10 percent of that plastic is not recycled. The brothers began experimenting in their family home, and eventually launched Plastc Lab in July 2020 after receiving $17,000 in support from Omdi, a program financed by the French Institute and French Embassy in Lebanon, in partnership with the makesense incubator. The cash was used to order a shredder, a sheet press, and an extruder from Europe in order to produce sheets, beams, and blocks that could be used in outdoor structures and interior design. While dealing with unexpected shipping delays, Plastc Lab applied for and received support from Berytech’s Cleanergy Accelerator Program, which allowed them to develop the business side of their idea but also to locally assemble their own shredder and sheet press, and rent a 1,500 m2 warehouse in Halat to start research and development. Recently, Plastc Lab won a competition organized by Seeders, a group of angel investors and part of the IM Capital investment fund, receiving financial and in-kind support that will go towards further bootstrapping their operation.

In addition to the Sbeih brothers, Plastc Lab currently employs up to 3 workers on a part-time basis. The current operating model will serve as a blueprint for future large-scale production when a larger team will be necessary. First, the company buys plastic waste from local recyclers such as Live Love Recycle and Arcenciel. Rami explains this choice: “We are not interested in collecting our own waste, although we do have a small collection point outside our warehouse where friends and neighbors drop their waste. What matters to us is integrating the existing ecosystem of recyclers. By buying from them, we are validating their work and helping maintain their operations. In addition, some recyclers sort their plastic waste by type, which facilitates our job.” Even so, the second step in the process involves hand sorting on-site by type and color of plastic. There are seven types (numbers) of plastic used in different products, and most fit the bill for Plastc Lab, except type 1 (polyethylene terephthalate or PET, used in water bottles but not ideal as a resistant material) and type 3 (polyvinyl chloride or PVC, used mostly in water pipes and considered toxic to foods). Apart from type 1, the most common plastic products are type 2 and 5 (both used in food, shampoo, and other liquid containers and caps). The process could be mechanized with sophisticated infrared-equipped sorting machines but this is not on Plastc Lab’s radar for now. “Taking time to sort by hand is an added value for our products, and it guarantees its composition and quality,” says Rami. The plastic is then shredded and pressed into sheets at 200 degrees Celsius, or processed through and extruder to produce beams. Once Plastc Lab receives delivery of its block mold, it will also be able to produce construction blocks.

In the coming months, Plastc Lab s.a.l. will be incorporated in Lebanon while the Sbeih brothers will complete enhancing the physical characteristics of their product and acquiring all the necessary quality certifications to market their product. Once everything is set up, the company will seek Series A funding from local and international sources. Both envision maintaining their operation in Lebanon despite the country’s decline. Their products will be targeted directly to contractors, architects, and interior designers, and will priced competitively according to Rami: A 1m x 1m recycled plastic sheet will cost around $15, almost the same as other materials, but with the added feature that it requires no maintenance and can be recycled over and over. They have notably developed interesting synergies with Modeo Systems, a Lebanese designer and manufacturer of modular furniture also interested in sustainable locally sourced materials. “We want to show people that plastic can be recycled well and that it is a valuable resource. Even people who sort their waste do not know what becomes of it after they drop it off. It could end up in landfills or be recycled as cheap plastic products. We want to raise awareness and show how the loop can be closed with zero waste,” Rami says. To that end, part of their warehouse space will also eventually be dedicated to holding awareness sessions. 

From field to table

Near a trending corner of Gemmayzeh, Mavia Bakery is known to its customers and followers on Instagram for baking sourdough bread and other goods using locally grown wheat and other ingredients. Behind this seemingly innocuous operation is a growing network of local and international individual partners and donors concerned with revaluing local produce and also providing free food to needy Syrian and Lebanese families in Lebanon. The operation is headed by Brant Stewart, a documentarian and baker who has been seeking ways to help vulnerable demographics since he first visited the country in 2013. Initially, Stewart registered a non-profit public charity in the US under the name “Sadalsuud” (the conventional transcription of the Arabic name “luck of lucks” for a group of stars in the Aquarius constellation) and collected donations to facilitate access to education for families in Tripoli. In 2017, his operation was hosted by the Shift Social Innovation Hub in the city, and it is there that he began hobby-baking in the center’s shared kitchen and teaching local women about sourdough, eventually creating a buzz. He was also introduced to local wheat varieties such as “salamouni” and “bekaai” and was surprised to learn that these were not held in high regard by local producers, as commercial bakeries and wheat mills prefer imported hybrid varieties. This set the wheels in motion and by the summer of 2019 Stewart shifted his organization’s main focus to building a model full-circle operation around local wheat, from growing to harvesting, milling, baking, and even free distribution for the needy. [inlinetweet prefix=”” tweeter=”” suffix=””]“I believe in local wheat, and I think it is unhealthy for a country to depend so much on imports when it can grow a perfectly good alternative,”[/inlinetweet] he comments.

Despite the unfortunate timing, by May 2020, Stewart had managed through donations to rent and equip a location in Gemmayzeh, even employing a number of women from Tripoli. “Bringing people from different backgrounds together was always at the heart of what we wanted to do, but we realized Beirut was more cosmopolitan and it was easier to bring the country to Beirut than the other way around,” he explains. In efforts to provide women from underprivileged backgrounds to generate their own income and take pride in their work, the name “Mavia” harks back to a fourth-century warrior queen who ruled over Tanukhid semi-nomadic tribes in southern Syria. By Stewart’s account, the bakery’s customer base was growing steadily, a chef was brought on board to develop a lunch menu, and a number of local farmers and landowners showed interest in planting or donating land to grow local wheat varieties. August 4, 2020 put a temporary halt to this, with the bakery taking its share of the heavy damage from the explosion. But one month later, the bakery raised $2,000 through crowdfunding and donations from different parts of the world to rebuild and was soon back in business. In the immediate aftermath of the explosion, it served as a soup kitchen providing meals for residents of the most hard-hit areas, in collaboration with the Basmeh & Zeitooneh NGO, and the Nation Station initiative.

One year on, things are back on track for Stewart, with operational growth still rooted in donations. As at July 2021, he had managed to bring in his first harvest of wheat from Lebanese varieties, grown in different plots in the Bekaa, including in collaboration with a local seed-preserving NGO named Buzuruna Juzuruna. A state-of-the-art stone mill is on its way from Austria, which will produce whole-wheat flour for the bakery, but also for sale at a subsidized price to partner bakers, bankrolled by donations at first. As it stands, the price of wheat from local flour hovers above 10,000 Lebanese pounds per kilo, compared to 1,400 Lebanese pounds per kilo for mass-market commodity flour. The mill will also service small growers and their wheat harvests, in an effort to generate better interest in local varieties. The third component in his growth plan is the establishment of a free, subscription-based bakery in the Bekaa, serving the families most in need. From a business and logistics perspective, this plan will require partnerships. “There is much unused or mismanaged land, and we want to make it clear to landowners that they can turn a profit and contribute to improving food security simply by growing wheat conscientiously and reviving local varieties. Oversight will be necessary every step of the way,” he says. Closing the loop, will be individual consumers who will drive demand. “We want to take deliberate and intentional steps to encourage people to consume better quality local products, whether through our own customer base, or through select partner bakeries buying flour from our mill at subsidized prices so their products stand out among the competition,” he says. A vast program for which Stewart is currently considering incorporation, either as an NGO, or as a business, unless opportunities arise for partnering with existing entities. He admits that sales of his baked goods, while reasonably priced, are not close to generating profits at present. Current gross income stands at around 660,000 Lebanese pounds per day, but this needs to rise to 2,300,000 per day to break even. “The sad current reality is that it’s easier to raise funds from donations in the US than from sales in Lebanon,” he says.

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Last WordOpinion

Housing rights after the Beirut port explosion

by Public Works Studio
written by Public Works Studio

Heightening violations

In addition to its tragic toll on human lives, the August 4, 2020 Beirut Port explosion intensified existing injustices and threats of permanent displacement to tenants. A survey by the Order of Engineers and Architects shows at least 1,120 buildings are in need of repair in the neighborhoods closest to the explosion, consisting largely of old or historical buildings densely inhabited by tenants. The official response to one of the biggest explosions in history came in October 2020, in the form of a law meant to protect the damaged and affected areas and support their reconstruction. However, the main motivation behind the law is to protect real estate interests, while only 30 percent of the affected neighborhoods’ residents have indeed returned to their homes to date, according to CARE figures.

The law once again stresses the sanctity of individual property rights and the freedom of contract within the framework of free market economics, while ignoring the fundamental right of housing. Moreover, and in clear disregard for the concept of social justice, the law deprives residents from agency in the rapid restoration of their damaged buildings and fails to stipulate criteria and priorities for the recovery of the most affected neighborhoods. Although it provides for the extension of residential and non-residential lease contracts in damaged properties for a period of one year, preventing evictions in that period, most residents are unaware of their rights and there have been no official attempts to enforce the law. Additionally, the extension period is clearly insufficient amid the stifling economic, financial, and social crises plaguing the country, especially considering that building restoration is a lengthy process and compensation distribution is slow.

Tallying violations

As at end-June 2021, the Housing Monitor had recorded 127 eviction threats from the most damaged areas. Over half of those came from Rmeil, Mdawar, and Saifi, the cadastral sectors protected by the law; other threats came from Bachoura, Karm el Zaytoun, and Burj Hammoud, which were heavily affected, yet not included by the law. Based on the above reports and further fieldwork, we can summarize housing rights violations as follows:

The failure to provide alternative housing while repairs are pending. The state has left the most vulnerable groups exposed to homelessness and obliged to bear the burden of securing housing within a context lacking social policies that produce affordable and decent housing. 

The failure to provide a clear plan for renovation. The rapid, temporary relocation necessitated by the blast risks turning into permanent displacement. According to a survey Public Works conducted on a sample residential neighborhood between Armenia Street and Al Khazinein Street in October 2020, 42 percent of apartments were permanently vacated, compared to 58 percent classified as temporarily vacated until the completion of repairs. Many tenants were evicted or permanently relocated. Some of them left permanently before the end of their written or oral contract, unable to bear the costs of renovation or the psychological trauma, or unable to wait for hypothetical repairs. Many were unwilling to front repairs, given that the legal framework does not protect tenants but allows owners to increase rents or simply refuse to renew the lease. The Directorate of General Antiquities is the only official body undertaking renovations, but its selection of historical buildings is not based on an occupancy study that understands the socio-economic background of the residents, and therefore does not prioritize the return of the most vulnerable. 

The failure to remove obstacles pertaining to renovation permits. The bureaucratic pathways for obtaining such permits that are solely granted to the total shareholders of a property, have not been waved despite the catastrophic blast, and have consequently compromised the right of tenants and residing small property shareholders to renovate their homes or places of work. Indeed, property owners have exploited the explosion to prevent renovations and evict tenants.

The failure to protect tenants from evictions despite article 5 of Law 194. Eviction threats come in many forms: Owners increasing rent upon the completion of repairs paid for by NGOs; attempting to confiscate allocated aid before it reaches tenants; refusing to repair or allow tenants to repair themselves; attempting to terminate leases or refusing to renew them. 

The rising threat of abusive behavior and inadequate housing conditions. Eviction threats were not only verbal but involved physical violence and forced evictions that have been carried out, exacerbating the suffering of residents who survived the horrific blast. Moreover, many previous and new residents of affected neighborhoods reside in damaged houses with inadequate living conditions. These neighborhoods have become a main destination for the socioeconomically vulnerable because they host aid-providing NGOs and offer social protection for the LGBTIQ community.

True justice entails the right to housing for all, the protection from permanent displacement, and an uncompromising zero evictions policy.

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Economics & PolicyPoliticsSocial

Use that rage

by Thomas Schellen
written by Thomas Schellen

It was such a normal day. Hot, but not unbearable. Beirut was plastered and yet void. Plastered with cars and bad drivers, plastered with hot air from air conditioning units and hotter air from empty political promises. Plastered with inflation, escalating inequality, and economic depression. The city and the country were plastered with work for the lucky and void of work for too many. Plastered with corruption but void of civil and political sanity. Void of certainty, void of equality, void of water and electricity. No mind. After regular working hours there was food shopping to be done. It was such a normal day.

Until right after 6:00 p.m. when the signs of the catastrophe announced themselves in an alleyway halfway up the hill of Achrafieh with a roaring noise that this writer’s heuristic had never known and thus misidentified as the noise of jets breaking the sound barrier. Something that he had witnessed a couple of times in his life.

Memories that shape collective memes of human groups and entire societies, informing and altering their behaviors, are tied to dates. In this young century alone, there are the dates of natural disasters such as the Indonesian tsunami on December 26, 2004, the Haitian earthquake on January 12, 2010, and the Japanese Tohoku earthquake and tsunami on March 11, 2011. Those disasters, killing tens of thousands or even hundreds of thousands and destroying countless further livelihoods, became memes of human impotence in the face of forces beyond their control. Irrespective of the question to what extent the human species was involved in whatever caused those “natural” disasters, these respective dates make us remember our limits.

Then there are the dates of disasters wrought upon us by our fellow beings with full intention, culprits whom their victims are tempted to call human animals. These dates of terrorism, murder, invasion, and mass destruction turn into memes of a different sort, of calls for justice, sometimes revenge, but also of forgiveness and new beginnings. 9-11 marked the most paradigmatic and global of those memories in our 21st century experience thus far, but Lebanon experienced its own such date on February 14, 2005 as the day when the murder of Rafik Hariri became the inflection point that altered the country’s post-civil-war trajectory. Most probably nothing that politically did happen, and more often did not, in Lebanon since that day (like reforms), can be comprehended without recognition of this horrible meme day.

And then came August 4, 2020, the fateful day when a humongous disaster, the largest non-nuclear explosion in an urban setting, brought about destruction of lives and livelihoods that, despite the city’s many fairly recent experiences – that is experiences of living memory – with invasions, terrorism, armed conflict and internal war, had previously been unimaginable to the people of Beirut. Irrespective of the supposed non-intendedness of the Beirut Port explosion, this disaster was anything but natural. It marked a previously unscaled height of criminal negligence. 

In a fellowship of suffering

On this day, one year on, together with the people of Lebanon and all the world, Executive gratefully remembers the martyrs of the first hour, the saviors of the wounded, and the countless selfless helpers who made lives of average August 4 survivors more bearable in the days and weeks that followed. Executive in the full sympathy of a fellow sufferer commemorates the hundreds of dead, the thousands of maimed and displaced, and honors all the living victims of the Beirut Blast on this day, recognizing the sad, absurd reality that one year after the catastrophe it is still far too early to reach any emotional closure and approach forgiveness. [inlinetweet prefix=”” tweeter=”” suffix=””]There especially cannot be institutional forgiveness today because there has been no justice [/inlinetweet] and no, personal and institutional, accountability on the highest levels of responsibility for the horrors that struck the people of Beirut in both the most affected neighborhoods and the luckier areas (most of the city) that saw less severe or no damages.

Even if the ever optimistic and altruistic human mind today were inclined, or eager, to seek closure and talk forgiveness, the social and political catastrophe that Lebanon has become, is not over. There is no evil wind of physical destruction blowing today but the disaster is still in its worst, and fullest, swings of tumbling from one empty political promise into the next economic hole. All that can build in this desolate wasteland, is rage.

(One can discern and discover that there have been and are constructive efforts, inspiring economic initiatives, and heroines and heroes of social entrepreneurship at any point in the past 12 months. But whenever the mind turns to the macro environment and issues of positive and accountable leadership, all that can be mustered is righteous rage over the hundreds of procrastinations, the costs of missed reform opportunities, and other unforced failures of leaders who remunerated themselves with spoils in the true fashion of war and feudal lords while performing like the most pathetic clowns, entrenched in denial even as world media outlets call them out on their responsibilities.)

On berserkers

[inlinetweet prefix=”” tweeter=”” suffix=””]If there is no counter-party willing to engage with the sacrificial and resilient citizen, resilience can be an obstacle to change. Rage tends to solve this problem.[/inlinetweet]
Rage is the driver of human action that is fundamentally associated with mad and violent behavior outcomes. Both are destructive impulses. But rage has other aspects that have to be considered today. One aspect is that rage is accumulative. It builds into a reservoir of tremendous mental energy. The other aspect that could aid the Lebanese at this time is that rage is an antidote to longsuffering resilience. The resilience of bending and not breaking has been an asset to the country’s entrepreneurs and stakeholders on every level but it cannot fulfill any purpose on its own. 

[inlinetweet prefix=”” tweeter=”” suffix=””]The rage that is manifest on and around the first anniversary of the Beirut Blast is just one, albeit very clear, popular response to the callous injustices that have been inflicted upon the Lebanese people in the recent past.[/inlinetweet]
This aggregate rage will not cease just the next day even if there were to be those improbable government reforms and electoral resets that are on constructive minds.

A well-known myth about the power of rage is the narrative of the berserker, the bearskin-clad warrior who enters a state of bloodthirsty, feverish madness. But people who “go berserk” can, according to the same myth, accomplish impossible feats. A rage of masculine blood-lust will not guide Lebanon out of its homemade abyss. This polity instead deserves a controlled, righteous and inclusive rage for justice and accountability, a righteous rage for recovery of Lebanese dignity. It needs actions that direct the tremendous energy of aggregate rage to raze the instituted bastions of dysfunctionality and self-interests. It deserves rage like an irresistible flower.    

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Editorial

Cry Treason

by Yasser Akkaoui
written by Yasser Akkaoui

The wound is still bleeding and the pain even more agonizing. Look at the mortified fury in the eyes of all those whose lives got affected by the blast.  Their eyes, and their voices, are asking for justice. Their wound is open until justice is not a slogan but reality. Justice has not been delivered to this day. Are we surprised? We knew that there was nothing to expect from the criminals that allowed this explosion to happen. Perhaps we shouldn’t be shocked then. But the question left to ask is this: Who but ourselves shall we turn to when all evidence points at those who were entrusted with protecting us?

[inlinetweet prefix=”” tweeter=”” suffix=””]Justice is a long and painful process especially when those who were busy facilitating and covering up for this mass murder rather than preventing it are roaming free.[/inlinetweet] Adding to the wound is the fact that they are appearing on media insulting our intelligence with their deceitful empty words. We know the truth, thanks to the collective 46-year-old familiarity with the ways that our warlords of any color have treated us. You deprived us of our dignity – justice will be served. 

It is figuring out how to effect change and justice that is keeping us busy. Our home-grown elites who never learned about the nature of their sovereignty, have become the criminals who never fail in one single thing alone: cheating the citizens. Year in and year out they have conspired criminally and obscurely while we were busy creating, innovating, growing value, and creating jobs, all while enduring against all the worst odds that they wreaked on us. 

One year ago on this day, Beirut was presented with the final bill of their corruption. Today we wish to inform them: More than ever, we are determined to hold you responsible to your criminal actions.

And we will. 

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Brand VoiceBusinessTechnology

Dedicated to SMBs, Microsoft launches Dynamics 365 Business central in Lebanon

by Microsoft
written by Microsoft

Microsoft is dedicated to enabling digitalisation across the Middle East and Africa. With digital transformation now a necessity, small and medium-sized businesses are seeking cost-effective, streamlined systems that will make their transition seamless. Addressing this need, Microsoft’s cloud-based business management solution, Dynamics 365 Business Central, will launch in Kenya, Nigeria, Tunisia, Morocco, Algeria, and Lebanon starting July 2021.

“Dynamics 365 Business Central helps small and medium-sized businesses (SMBs) connect their financials, sales, service, and operations to streamline business processes and improve customer interactions,” explains Maher Al-Khaiyat, regional business applications director for Microsoft MEA Emerging Markets. “Multiple, disconnected systems are now easily combined under one secure, centralised application.”

Using Dynamics 365 Business Central, efficiency is boosted through automated tasks and workflows — all from within familiar Office tools like Outlook, Word, and Excel. “What businesses get,” adds Al-Khaiyat, “is an end-to-end view of their operations, with built-in intelligence when and where they need it.”

The application is easy to tailor and extend to meet unique business or industry-specific needs. By putting flexibility at the core of your business, Dynamics 365 Business Central enables you to start quickly, grow at your own pace, and adapt in real time, making it the ideal solution for SMBs. 

SMBs account for over 90 percent of all businesses in Kenya, Nigeria, Tunisia, Morocco, Algeria, and Lebanon, where Dynamics 365 Business Central will launch. SMBs across these markets will be empowered to accelerate the digital transformation of their own business processes using this innovative all-in-one solution.

Connecting all aspects of your business

SMBs can bring people, processes, and data together to manage their business end-to-end, instead of juggling standalone systems that disrupt business flow. With previously disconnected systems now brought together, tasks like connecting workflows across sales and accounting to automatically track cash flow are made effortless.

Dynamics 365 Business Central is easy to integrate with applications like payroll, banking apps, or custom Application Programming Interfaces (APIs), with the same consistent and secure experience across devices, from laptops to phones, no matter where teams are accessing the application from. 

Full Office 365 integration means teams can use familiar tools to work together and connect with colleagues and customers, whether creating professional-looking business documents in Microsoft Word templates, or exporting and updating data in Microsoft Excel. 

Helping you work smarter, not harder

A centralised, unified overview of your business offered by Dynamics 365 Business Central helps business owners and leaders make smarter, more streamlined decisions that improve productivity. 

Thanks to easy to create dashboards and built-in analytics, leaders can proactively inform and guide employees, manage budgets, and monitor progress with real-time data on available resources. As a real-time online application, all data stays up to date, making it simple to spot trends, prevent issues, and deliver great customer experiences. 

Tracking ongoing sales performance is simple, enabling teams to leverage actionable insights to focus on customers that have the greatest potential for long-term growth. 

A tech solution that grows with the business

Dynamics 365 Business Central is easy to install, getting the business up and running quickly. Start with what the business needs and grow at your own pace to run the entire business in the cloud. What businesses get is easy set-up, management, and scalability. 

Each business has unique needs, which Dynamics 365 Business Central caters for by easily integrating add-on applications and industry-specific solutions. Importing data from other solutions using data migration wizards and assisted set-up is simple. Plus, with a user-friendly drag-and-drop interface, it’s simple to rearrange fields, rename groups, and reposition elements to create workspaces for specific roles. 

SMBs can deploy Dynamics 365 Business Central in the cloud, on-premise, or with a hybrid approach; no matter the requirements for data residency, compliance, or security, companies can run their business wherever and however needed. A universal, mobile-enabled user experience means users have the same powerful, intuitive experience across deployments and devices.

Today’s all-in-one solution for tomorrow’s business growth

The business management solution that growing SMBs need is one that is secure, centralised, easy to adopt, and capable of integration with other line-of business systems. They need a cloud-based solution that is flexible and adaptable enough to handle increased inventory and transactions as the business grows. 

“Microsoft’s unique ability to deliver the depth of integrated business applications necessary, alongside fully integrated analytics, productivity, and IoT solutions at cloud efficiency, and scale, drives the success of its Dynamics 365 Business Central solution,” explains Al-Khaiyat. “This is the all-in-one solution to meet every SMB’s business-management needs.”

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2018 BudgetEconomics & PolicyManufacturingSpecial Report

What they crave

by Walid Slaiby
written by Walid Slaiby

Following the roundtable discussion on Manufacturing, we quizz the chief executive officers of two high-profile companies that are adding value to the real economy of Lebanon: cloud infrastructure component maker Multilane in high-tech manufacturing, and paints producer Sipes International, a stalwart player in the chemicals sector. With all the infrastructure shortcomings of Lebanon, fulfillment of one practical want would set these industrialists’ minds onto steeper growth: the implementation of dedicated manufacturing zones or “special economic zones” (SEZs) as building blocks of a real-economy industrial ecosystem.

Chief executive officer of Multilane, Fadi Daou, sums up how he perceives the fundamental problem of manufacturing in Lebanon. “All the existing laws in our system center around a consumer industry and none of them focus on the export sector,” he says.

Like approximately 90 percent of systemic industrial manufacturing problems, this battle over the creation of industrial zones or SEZs is nothing new but all the more enmeshed in sticky interests. According to a World Bank report from 2018, Lebanon has had a program for establishing industrial zones “for several decades” and a strategy for such zones was developed in 1995 by the Investment and Development Authority for Lebanon (IDAL). More recent by comparison was that some five years ago, a program for SEZ master-plans and pilot zones was heaved onto the political table as result of a collaboration between UNIDO and the Ministry of Industry. This occurred after several years during which the topic of industrial zones in context of the Syrian refugee crisis had been shouted by UNIDO from the country’s development rooftops. Back in 2009, the Lebanese Parliament started to discuss the establishment of a SEZ in Tripoli which was enacted as a law but until now has never seen the light of day. A certain plot of land allotted for the creation of this zone and the appointment of its chairman are all that has been done in this direction so far.

Daou comments that “the Tripoli SEZ was founded as a quasi government organization and it won’t be able to operate as an independent free market industry sector.”

Daou stresses the need for a private sector-driven SEZ to operate outside the local jurisdiction, saying: “We need to create an echo system or a legal setup that will allow a competitive operation of multinational companies in Lebanon which have been able to operate in the SEZs of Dubai, Vietnam, Tunisia, Malaysia and Thailand.” He tells Executive: “SEZs will help us export products rather than export people and will become the foundation for creating jobs.”

Wajih Bizri, president of Sipes Group, echoes Daou’s views by saying “the best lobby we can do as businessmen and as industrialists is to put an effort to create the SEZs which should be completely independent from anything related to the government bureaucracy.”

He continues, “There is a need to have multi SEZs in different areas geographically and demographically to be available for different sectors.” According to him, future SEZs will serve as a hub for IT export and for exportable services, adding that “On top of that we can open hubs for small and medium size businesses in these zones and let them develop.”

“If we succeed in that then we can talk about developing the five sectors we talked about at the roundtable especially IT, Intelligence, other industrial sectors and even service sectors,” Bizri says. He moreover suggests merging some of the industries discussed at the roundtable or having a common export bureau for these industries.

While he considers lobbying with the current public sector a waste of time unless it is restructured according to the International Monetary Fund (IMF) demands, he advocates for bringing in European experts who can assist industrialists and show them the way to export to Europe, especially with the devaluation of the Lebanese pound and the drop in salaries in Lebanon.      

Lebanese brand

When asked about how important the brand of Lebanon is to his enterprise, Daou says, “For me as a manufacturer it is not very critical. In our sector our end customers don’t necessarily care where the product is coming from. They care that the supplier, us in this case, is not at risk of delivering a high-quality cost-competitive model on time.”

While being committed to these standards, Daou’s high-tech manufacturing venture could build a Lebanese brand, a brand which, according to him, “has been damaged because Lebanon is viewed as a country of risk.” For some other industries, namely fashion or food products, Lebanese branding could be relevant “for sympathy purchasing,” he says.

Daou adds, “The brand of Lebanon can best be improved by us being able to create a more competitive environment in which we can meet the delivery needs of our customers. I believe what we really need to do is to mitigate the risk by removing the financial risk to our market segment to be able to freely transact in the banking sector as we would in any other country and we need to eliminate the historical barriers that have existed in our sector and have prevented us from growing or creating or helping or enabling other companies in our sector to grow in this country.”        

For Bizri, the brand of Lebanon has suffered a lot in the past three to four years. However, he says, “It is still an important brand in the agro industries where it has an advantage. Other than agro industries, the brand of Lebanon does not have an added value in the present circumstances because of the lack of transparency linked to Lebanon and its government.” 

“To best improve the brand of Lebanon, it is a must to have a transparent government. And we have to start moving forward with the IMF. Besides, we need to have political stability which will eventually lead to some economic stability. You cannot put all your efforts on branding something which cannot be branded,” Bizri concludes.  

Synergies

Regarding the creation of synergies with the other industries that were discussed at the roundtable series, Daou says, “I don’t necessarily see from my industry a relevant collaboration with an agro or fashion or hospitality industry which is completely unrelated in terms of their needs. However there are common principles for operating any business in that there needs to be a synergy, for example the most critical thing is the banking sector. Today, we are underwriting the banking sector and it is not as effective and efficient as it used to be. Another area could be rendering the labor laws to be more compatible with the free market economy.”

He emphasizes that access to finance is not what is holding him back but cautions that the current system is not viable for the creation of new industries, adding that the formation of an ecosystem will achieve more than subsidizing the sector. However, the banking sector needs to be stabilized by creating mergers. “There is a need for creating a hybrid model system, a crypto currency for that matter. Any way that will let us be able to transact with our people and to receive money from abroad without being charged a huge amount of money,” he says.

For Bizri, Lebanese industries face daunting but surmountable barriers of finance. “Accessing finance today is very difficult with all the question marks about the Lebanese economy. But it is not an impossible mission. We need to concentrate and depend somehow on the Lebanese diaspora by offering them interesting investment opportunities,” he says. 

This, however, relates to a bigger challenge that exceeds private sector bargaining. “It is a very difficult mission today to access the money markets and convince them to invest in Lebanon before the government does something very transparent with the IMF,” he adds.

Survival and growth

Some segments of the manufacturing industry that managed to survive the financial and economic crisis in the country so far are considered a hub for future growth.

“I strongly believe that our industry segment can be a cornerstone for the creation of tens of thousands of jobs in the country,” Daou enthuses, citing the success of Multilane in reaching as clients top-shelf names in the knowledge economy and purveyors of global cloud services. “In this sector, manufacturing is becoming competitive and the labor costs in Lebanon have become more competitive and affordable,” he says.

Mismatches of supply and demand are in favor of companies that supply quality components to cloud computing infrastructure and create new opportunities for Lebanese high-tech manufacturers with their recently improved cost structures. “What we need to do is create a demand model for these jobs in Lebanon through enabling an ecosystem,” Daou explains.

In addition to the tech industry, the agro, pharmaceutical, cleaning and personal care industries are doing very well according to Bizri. “These industries can improve their exports even with the crisis hitting Lebanon. They are working with very high capacities and their possibilities for export are very high,” he says.

Export opportunities nonetheless do not automatically solve challenges that have arisen in the past year of domestic distress for Lebanese manufacturers. “My field [of paints manufacture] is down since it is related to construction which is on hold in Lebanon nowadays. So we are facing real problems like not having demand for any construction material,” Bizri explains.

Plan B, sort of

Industrial companies that survive the current crisis are considering a plan B in case things become worse.

“We have survived because in our business we don’t depend on local consumption. Our market focuses primarily on exports. We are getting fresh dollars and we are able to grow but the risk is the country risk,” Daou says. This perception of Lebanon is a measurable impediment and will not just disappear tomorrow. “In the global economic and banking sectors Lebanon is seen as a risk country. Our company, which is growing at a 25 percent rate per year, has mitigated the country risks by having operations in different parts of the world like the Far East, Silicon Valley, Munich, and Dubai,” he explains.

The litany of potential disruptions is familiar. Daou cites airport closures, the inability to buy diesel for the company’s generators, the loss of all governmental electricity supplies, the cutting off of internet access, and the blockage of the company’s imported raw materials or banks’ ability of receiving fresh dollar transfers from Multilane’s foreign customers as obvious risks. But if the company’s ability to supply its customers from its plant in Lebanon were to be paralyzed by any of those potential impediments, it would adapt – just not from Lebanon.

“We have plans that enable us to click the switch and start operating and manufacturing completely from places outside Lebanon so the supply to our customers will keep flowing,” Daou says, adding the sobering view that transacting out of Lebanon is becoming increasingly difficult even for agile manufacturers with strong exports.

For companies that don’t have overseas operations like Bizri’s company, the situation is still more complicated. “We are trying as much as possible to reduce our overheads and to diversify into different businesses like anything related to chemical industries. Besides, we are trying the possibilities of export today,” the industrialist explains. His Plan B is survival of the core, preservation of manufacturing capacity even if hardships strangle the sector further. Bizri says, “In case the situation gets worse, we have to reduce further our overheads and to reduce our working period from six days per week to three days.”

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Economics & PolicyManufacturingSpecial Report

Damn the torpedoes and full speed ahead

by Thomas Schellen
written by Thomas Schellen

Initiating the deliberations on the real economy stalwart sectors of manufacturing industry and the food-processing and agro-industrial enterprises, Yasser Akkaoui, Executive Magazine’s editor-in-chief, outlines the session’s structural design as one that combines a first part of qualifying and quantifying the size and economic impact of industrial manufacturing in Lebanon with participants’ proposals for solutions and builds towards an action plan for development of manufacturing as industry and for individual enterprises. “De-risking industries and manufacturing today is not an easy task especially when we’re doing this in the absence of any government,” he acknowledges the roundtable’s challenge.

As a preamble, Thomas Schellen, Executive Magazine’s editor-at-large, cites two quotes, the first from a paper by the Trade and Investment Facilitation initiative that is affiliated with the United States Agency for International Development (USAID), emphasizing that “manufacturing is in position to push creativity by developing innovative products.” From the Executive Magazine’s brief on manufacturing, the moderator further paraphrases a quote saying that development of manufacturing industries is crucial for growing employment, growing productivity, fixed capital formation, and for improving exports and overall GDP of Lebanon. “In this spirit I invite you to give us your views if manufacturing is the glass which is half full or the glass that is almost empty but has a lot of room to be filled,” he says.

Paul Abi Nasr, board member in the Association of Lebanese Industrialists (ALI), and CEO of an industrial company: cites well-known challenges of past 15 years including bad infrastructure and deficient legal framework but adds that a special challenge for manufacturers was the subsidization of imports by way of the dollar peg. “When you subsidize your imports it makes it much harder for your local manufacturing to pick up,” he explains.  Many weaker players are forced to withdraw from the market and only a few champions of manufacturing who could by innovation to make up for the additional cost created by subsidization of imports, by the lack of ecosystem, and the lack of infrastructure.

Manufacturing has a very high multiplier effect in terms of jobs, adds financial expert Maya Dada, by creating direct jobs in the sector but also indirect jobs that support the sector and induced jobs from the growth and value added that manufacturing contributes to the economy the economic model in Lebanon. This makes it very important to enhance the manufacturing industry, she emphasizes: “[we have to] think how we can improve and focus on the sector, recreate, redesign, and support it in all ways possible.”

Opportunities or not?

Adding that he experiences economic realities from the diverse sides of being a private equity manager, investor, shareholder as well as board member of several Lebanese banks, Romen Mathieu zooms in on the role of finance. “Industries need funding in order to grow, and the question of finance in Lebanon today its dual,” he says, highlighting that the presence of lollars and dollars which manufacturers need both translates into local and external funding requirements. Although political barriers stand against the inflow of foreign investments until there is a political solution in the country, some 70 billion lollars could be deployed as investments into manufacturing industries, notwithstanding current discounts on lollar values, and used for purposes such as paying down old debt or purchasing local manufacturing inputs. “Bankers are looking to [keep] this money and depositors want to take it out of banks. So I think the best thing today is to focus on finding solutions on how to remove part or all of these billions,” he says. 

Different stakeholders in the manufacturing industry, including associations, are in agreement on many needs, such as creating new export promotion channels but are not engaged in active collaborations, explains Halim Choueiry, who has been involved with USAID’s Trade and Investment Financing (TIF) project research. “What really struck me is that there is no collaboration between the people. Everyone is in his own cocoon. They all come up with great ideas but they don’t fully divide those efforts, in order to really come up with something that really can work,” he says. This means that vast knowledge of long-standing problems and prudent solutions exists in the industry circles but the open question remains on who will carry those solutions onward, Choueiri points out.  

Investing lollars into industrial projects would be prudent, Nada Rizkallah, vice president of the board of bank Credit Libanais, concurs with Mathieu in returning to the finance problem. Investor participation in financially distressed small and medium enterprises could bring win-win solutions for investors and SMEs but will require “more governance, [and] more transparency,” she points out. Getting manufacturing industries of all sizes better prepared for environmental, social and governance (ESG) requirements by investors and international financial institutions such as the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) would be a good start even before an eventual political solution in form of a trustworthy government will come into play, she says.

As discussions continue to circle around the access to finance issue, Dada affirms that lollars can be activated for some needs of the manufacturing industry but that those industrial enterprises will still be in want of fresh investments. “Financing is a big challenge these days, but I look at it as an opportunity to explore other options, other channels,” she says in reference to alternatives to bank lending.

Following her remarks, Wissam Ghorra, manager at the Cedar Oxygen ESG Fund says that the young fund is indeed addressing many of the issues that had been under discussion at the roundtable until this moment. “So today, I’m happy to say that we have a partial solution, let’s be accurate, it’s a partial solution for Lebanese industrialists sourcing fresh funds facilities,” in the financing pillar of Cedar Oxygen, he says, in addition to which the fund is engaged with the organization of the first virtual fair of Lebanese industry in Europe, in partnership with the ALI and Investment Development Authority of Lebanon (IDAL).

Economic policy expert Rayane Dandache takes the discussion onto the territory of job creation and productivity by noting how manufacturing industry had on one hand been resilient in the many long years in which the past Lebanese rentier economic approaches had been detrimental and littered with public sector mistakes, but how this industry on the other hand has missed out on so many opportunities. The current opportunity to focus on according to Dandache is the temporary comparative advantage created by the depreciation of the Lebanese currency. “I want to hear from industrialists how they see us benefiting from this small window of opportunity,” she says.

Tech industrialist Fadi Daou responds to the question of missed or underused manufacturing opportunities by outlining his experience as a maker and exporter of ICT cloud infrastructure products that have next to local market at all. “We have survived the challenges and are still producing and exporting high-tech equipment that is designed in Lebanon. On a weekly basis, we ship four to five thousand high-tech items to China, Japan, US, and Europe,” he says.

Emphasizing that while one can build a business case for such a company in Lebanon as he did and succeed in with dedication and determination on an interesting personal journey as entrepreneur, access to finance and investment issues that manufacturers need to think about, relate fundamentally to the question if they are building products for the local economy or the global economy. If one aims to produce for the size-wise very limited local economy, one cannot be very innovative or build what can be considered an industry and scale production, Daou says, but if one wants to be innovative on industry level, an addressable global market is needed. Finance, according to him, is not the issue as much as the need to identify and build an industry that can address global markets and is suited to Lebanese knowledge-based economy and educated workforce.

“I believe what is happening globally today is a great opportunity, for building up the [Lebanese] industrial sector, especially with high-tech companies, and impacting the market,” Daou says but cautions that he sees the biggest problem standing against this industrial expansionism in “the system that we are in,” namely a system of corruption and weak laws. Thus the real opportunity for Lebanese industry according to him thus is to create a model that can operate outside the local jurisdiction, attract many international companies, and focus on multinational companies in high-value industry.

Dire financial straits 

Wajih Bizri, industrialist in the chemical sector and head of the International Chamber of Commerce for Lebanon, in turn emphasizes the role of existing manufacturers and the many problems that they face. According to him, the majority of the manufacturers are facing problems and the need is to bring them together under one umbrella rather than having weak manufacturers with limited capacities.

“All manufacturers are facing basically financial problems. If they stay fragmented the way they are today, you will find most of them shutting down within a few years. Instead of waiting to see this happen, one of the ideas is to bring them [together], which is not easy, with the Lebanese mentality where everyone wants to be the president,” he notes. 

For Lebanese SMEs which have been starting to export and participate in international markets, his experience has shown that they encounter difficulties when receiving follow-up orders, says Dani Elias, a manufacturing consultant specialized in SMEs. “When the second order comes, they have an issue in understanding and evaluating their capacity. So it’s not only about opening in your market; it’s about sustaining the levels of operation and managing them,” Elias says.

He concurs with the views saying that clustering, better or perhaps joint capacity utilization, and changes of ego mentalities are key needs of Lebanese manufacturers today, including SMEs. “It’s now the time for Lebanese industries to work together to sustain, build the system and deliver a more productive management system and product so that we can sustain our export markets,” he says. 

In conclusion of the first round of deliberations, Nabil Makari, sections editor at Executive Magazine, offers his recapitulation and comments on what was said. In his tracking of arguments, the dominant issue in the discussion was the contradiction between manufacturing opportunities that are specific to the economic realities in Lebanon and the full absence of public sector reform.

Focus on development

In response to Akkaoui’s request for naming solutions, Mathieu emphasizes that in the environment of absent will for funding from foreign investors and after divesting of expectations for a quick government formation, private sector industries need to rely entirely on their own powers for resolving problems. “Let us find solutions; we can solve this among [ourselves],” he enthuses.

Specifically he proposes to return banking to an investment banking business model, saying this could be done very quickly. Doing this smartly would over time transform Lebanese banking dollars to real dollars with benefits for all involved. Expecting it to be difficult and time intensive to unite diverse industries under an institutional umbrella of mutual interests as proposed in the first part of the RT discussion, he suggest to prioritize a fast creation of private sector export agency. SMEs being hard pressed by cost of sending own marketing experts overseas, Mathieu says such an entity should serve both solely export-oriented Lebanese manufacturers and locally focused industries with small export ambitions.

The discussion, turning to the question which manufacturing industries are best for development, and what measures have been suggested by the ALI, Abi Nasr reiterates that the dollar peg was subsidizing cost for manufacturers who relied on imported inputs. He reminisces on his participation in numerous export promotion initiatives and says that export propositions have become stronger since the effectual end of the dollar peg but juxtaposes this recent advantage with longer time needs for unlocking specific export markets after many years when most Lebanese companies were not present there. 

While agreeing that private actors can do many things together as they understand those needs, Abi Nasr also sees large needs that cannot be met by private sector initiatives, first among them creation of currency stability. He adds that lollar funding was seen as an option in 2020 but as the manufacturing sector was slow to act and not ready for it then, he currently does not see lollar funding as viable solution of investment needs in manufacturing. Maya Dada, who concurs with Abi Nasr that the use of lollar is not a universally strong value proposition for all manufacturing enterprises, tells manufacturer to look at sustainability and generally adopt a long view of seeking to compete internationally not on labor costs but on “quality and uniqueness and sophistication.”

Sharing images from a report and recommendations with his peers, TIF’s Choueiry says that a large need and solution for the manufacturing sector exists in the creation of research laboratories and centers. Countries that are leaders in product development show significant allocations to research, something that is missing in Lebanon. 

Basing herself on observation of customs data, finance and ESG expert Nada Rizkallah points out large trade imbalances in areas such as prepared foodstuffs and live animals. These negative balances should be addressed by development of synergies between manufacturing and agricultural producers, as well as focuses on collaborations between manufacturing branches such as packaging and industrial manufacturing. Acknowledging that there has been loss of trust in the banking sector, she notes that with all the need to restructure banking and implement a full reform of the economy on all levels, in the end banks – which have provided much financing to industry before the current crisis – “have to retake their roles.”

According to Rayane Dandache the current search for solutions in manufacturing industry will prudently focus on quick wins but also prepare the stage for long-term gains. “We need to focus on the firms or the industries that were able to stay resilient despite all the crises, because the lessons learned from those industries are going to help us look into medium term and long term plans,” she argues.

Seeing that the Lebanese economic model of the past 30 years has not been conducive for fixed capital formation, the exact best path to the future will have to comply with the basic economic equation of achieving growth by ways of investments but will also be requisite of a government that can secure an enabling environment of a strong legal and regulatory framework, in addition to an agreement with the International Monetary Fund. In this regard, the government is not the only blameworthy party, she adds: “Talking bluntly, not only the government is corrupt; Lebanese people are corrupt as well. I’m not talking about everyone but about the majority, whether we like it or not.

Needs of manufacturing development mentioned in closing remarks of participants included adoption of lean manufacturing principles for improving competitiveness and productivity, preparing draft laws for addressing ESG priorities, and activation of research partnerships between industry and academia. In a concluding comment, Georges Frenn of USAID, complimented participants for their dynamic engagement with the roundtable, saying: “There is a great need to work together and this is exactly what we are trying to facilitate.” 

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