Executive Magazine

Preserving Lebanon’s water resources requires multisectoral collaboration

by Assaad Saadeh April 5, 2019

written by Assaad Saadeh

In winter, Lebanon seems to have an abundance of rainfall. When the rainy season is over, however, the country’s traffic woes are often compounded by large tankers blocking roads as they supply buildings with water.

Lebanon is rich in water resources, but these are replenished seasonally, through rain and snow that generally falls between October and April. With improved management, there is the potential to significantly enhance water storage, preserving the water supply for use during dry summer seasons and occasional droughts. Improving water collection and storage is not a difficult task, and one made easier with multisectoral collaboration.

Water gained, water lost

A 2001-2002 State of the Environment report by the Ministry of the Environment (MoE) presented the worst case scenario for Lebanon’s water supply: On average, yearly precipitation in Lebanon results in 8,600 million cubic meters (Mm3) of water, feeding 40 major streams and rivers, including 17 perennial rivers, and more than 2,000 springs. Of that, approximately 50 percent gets lost through evapotranspiration—the process by which soil loses moisture via a combination of evaporation and plant transpiration. Additional losses stem from surface water flows to neighboring countries, estimated by the Litani River Authority to represent almost 8 percent, and groundwater seepage estimated at 12 percent. This leaves Lebanon with 2,600 Mm3 of surface and groundwater, of which 2,000 Mm3 is deemed exploitable and available for supply. This is not far off 2014 estimates from the United Nations Development Program where Lebanon’s water balance in a dry year was estimated at 2,140 Mm3.

With the Ministry of Electricity and Water (MoEW) expecting the country’s total annual demand for water to increase to 1,802 Mm3 by 2035, Lebanon, in theory, has more than enough water available to supply anticipated demands for at least the next 15 years. However, local natural water availability is seasonal, and currently there are not enough water storage tools in place to avoid water shortages during summer droughts. This needs to change.

One prime example of a multisectoral water stewardship initiative to secure future water supply was set up following recommendations from a study on groundwater management in the Shouf Biosphere Reserve—The 2017 Groundwater Assessment of the Shouf Biosphere Reserve (SBR)-Lebanon. The report, prepared by global environmental consulting group Antea, in collaboration with Nestlé Waters, found that the area’s overall groundwater balance was positive, by around 12 Mm3 per year, but noted important seasonal water fluctuations as well as high impacts from climate change and human activities.

A multisectoral partnership involving water authorities, farmers, the private sector, the Shouf Biosphere Reserve, the MoEW, the MoE, municipalities, and others, was established to tackle the issue and is already beginning to help the reserve successfully enhance the recharge of natural groundwater reservoirs in the area during the rainy season. Through the use of retaining walls (micro dams in the valleys) and terraces that increase water infiltration, among other tools, the partnership aims to reduce the impact of summer droughts. Such recharge techniques enhance water infiltration into underground natural water reservoirs and can be good alternatives to dams, especially in karstic/fractured geological contexts, as they help store river and runoff water that otherwise flows naturally toward the sea and is lost during the rainy season.

A model to replicate

A full action plan recommended by the study’s authors has been underway since October 2018, aiming to improve the quantity and quality of water supply in the area. Its key recommendation—to improve water storage—needs to be rolled out across the country using varying methods dependent on a given area’s geological, environmental, and social needs. For example, if an area’s surface rocks are fractured and include faults and cracks, underground storage is preferred over surface water storage, whereas if surface rocks are impermeable and can store water easily, surface water dams are worth considering.

Other recommendations from the study include: to continue monitoring water resources in the watershed and improving the existing database; to improve protection around municipal springs and water wells, as well as their hygienic design to guarantee better water quality; to further reduce leakages from municipal networks and piping; to engage with farmers to introduce best irrigation practices; to promote the building of small reservoirs for irrigation on the catchments of Damour, Bisri/Awali, and Beirut rivers; and to form a steering committee of major stakeholders.

In a nutshell, water storage in winter is vital to mitigate summer droughts even during a wet year such as this one, where the registered rainfall amounts until end March were almost double the usual yearly average.

Actions being implemented at the Shouf Biosphere Reserve in collaboration with other water management stakeholders can serve as a model to be replicated in other water basins around the country in order to improve local water resource management. This is especially pertinent, given the collaboration is in line with the water code that was ratified in June 2018, which supports multisectoral collaboration.

The reality is that collaboration between multiple sectors is needed and can be easily established to ensure that water is stored during rainy periods, either on the surface by building well-planned eco-friendly dams, or underground by enhancing water infiltration to replenish groundwater reservoirs and springs.

More initiatives can and should be launched across Lebanon, each tailored to suit the geological, environmental, and social needs of different areas of the country: All they need is multisectoral collaboration.

April 5, 2019 0 comments

Public finances reach Court of Audit

by Nicolas Melki April 5, 2019

written by Nicolas Melki

On April 6, 2018, at CEDRE, donor countries pledged $10.2 billion in loans and $860 million in grants to Lebanon to fund long-awaited infrastructure projects in the country. However, the donor countries and organizations require of Lebanon a long list of fiscal, structural, and sectoral reforms in order to release the funds, of which anti-corruption measures are a part.

Desire to free up CEDRE funding is one of the main reasons behind the recent surge of corruption accusations flying back and forth between political parties. Everyone seems to be pointing fingers at each other to slingshot the blame over the not-so-latent corruption that post-war Lebanon has suffered to date. Ultimately, only one pointed finger will matter in terms of accountability, that of the Court of Audit.

Overseeing public funds

The Court of Audit is an administrative tribunal with financial jurisdiction that oversees the management of public funds; it is the highest financial tribunal in Lebanon. The court is composed of judges, controllers, and account auditors as well as an independent public prosecutor. The Court of Audit exercises both (i) administrative and (ii) judicial controls on the state administration, certain municipalities and public enterprises, and institutions and associations funded by the state.

The Court of Audit’s administrative control is twofold: A prior control to approve the use of public funds in specific projects/transactions and a subsequent control to confirm the proper use of these funds. The Court of Audit prepares annual reports with their findings on public spending.

The Court of Audit’s judicial control enables it to prosecute public officials if the court attributes any misuse of public funds to their actions. Such prosecution can only amount to fines if proceedings are brought forward before the court. That said, the Court of Audit can chose to transfer the proceedings to the applicable criminal tribunal if criminal charges are brought against a public official in relation to their misuse of public funds. The concerned official could then face a prison sentence.

Mission impossible?

The Court of Audit typically audits public accounts and submits an audit report to Parliament that votes to approve the public spending of a given calendar year. This procedure is paramount to ensure a proper control on public finances and to confirm the proper execution of the annual public budget. It also constitutes a condition precedent for the Parliament to vote on the annual budget. Since 1993 the Court of Audit has been publishing its annual reports based on incomplete information and documents provided to it by the government (it was exempted in 1995 from its constitutional duties for the years of the civil war, and then for the years 1991/2 in 2006, due to the impossibility of compiling the relevant documents). Moreover, until the 2017 budget, Parliament had last voted on the budget in 2005.

Pierre Duquesne, the French diplomat monitoring the reform progress after CEDRE, stated in early March that the 2019 budget had to be adopted by Parliament as soon as possible. Arguably this pressure is what led the Ministry of Finance to finally hand over all the statements and documents necessary for the Court of Audit to audit the public accounts starting from 1993 until 2017. The mission assigned to the Court of Audit is twofold: First, it must prepare the statement of accounts for 2017 to enable the Parliament to vote on the statement and discharge the government for the public spending of that year and simultaneously approve the budget for the year 2019 (this audit of 2017 is late, it should have taken place in 2018; likewise the audit of 2018’s spending is due this year.) Second, the court must examine the use of public funds from 1993 up until 2017—a task that will take two months to complete, according to sources in the court.

In order for the court to function as intended, and not just when it is politically expedient, certain things must change. First and foremost, the court should be sent all the necessary documents every year without fail and in time for it pursue its review process. In the past, this process has been disrupted, with instances of documents that were either lost, altered or destroyed. To minimize these risks, the Court of Audit should be provided with a fully digitized, comprehensive platform where data transfers and documents submissions can take place. This will result in a faster, more comprehensive, and more transparent audit process.

Fighting corruption starts at the very top of the pyramid. Being one of the few institutions capable of sanctioning corruption, the Court of Audit needs to be fully functional in order to efficiently assist in the fight against corruption. It remains to be seen if this effort is a one-off exclusively aimed at receiving the funds promised at the CEDRE conference or if it signals the beginning of the end of corruption in Lebanon.

April 5, 2019 0 comments

Design Design thinking Special Report

Is design the winning ingredient in tackling Lebanon’s public sector restructuring?

by Thomas Schellen April 5, 2019

written by Thomas Schellen

At any meeting these days, from academic circles to business and banking conferences, one is likely to hear more than one allusion to Lebanon’s reform challenges. Much more. Whether it is the pesky theme of electricity or the issue of fiscal and structural reforms in the public sector, the big questions that matter today are all about how.

Although Lebanon progressed painfully to finding its new government—something that seems to have almost been forgotten in some circles in the relatively short time since the ascension of this new administration—a myriad of problems are now maturing from the worry if reforms will ever happen, to the more pertinent question of how these reforms can be done.

One pressing “how-question” seems to have an underappreciated design answer. This is the question of how to tackle reforming the public sector into a citizen-centric sphere. Is it enough to compel all administrative units in Lebanon to digitize? Will transitioning from paper-based public processes—that sometimes requires days of roaming some of the country’s most fascinating corridors and offices with all the appeal of worn-out interiors from the days of the early republic—to electronic databases and files on computers suffice to upgrade public services at ministries to something that deserves the label “e-government”?

If any doubts were to linger in citizens’ minds about the feasibility of such a solution, design may be a big part of all more viable answers and provide better approaches, say Lebanese design specialists with expertise on multi-tiered levels of conceptual and specific approaches.

Digitizing the public sector in the sense of implementing electronic networks will not achieve any deep transformation, says Loubna Ibrahim, product and innovation lab lead at Ideatolife, a regional consultancy of developers and designers that is focused on technology-and-people-centered software solutions. From a human-centric design perspective, technology is not the main issue. “We have to focus on end-users and understand problems from a human perspective. This is the core aspect of design thinking and everything follows from this user centric approach. It is all about understanding humans, and then designing for humans,” she tells Executive.

The human approach

As Ibrahim explains, this prime mandate of understanding the humans involved in any digital transformation of public sector units in Lebanon means that such transformations need to start small and proceed incrementally. “Transformation does not come overnight and one needs to take it one step at a time,” she says.

On the reasoning that people are fundamentally afraid of change and often consciously or subconsciously afraid of technology and so hesitant to adopt unfamiliar technology, Ibrahim further advises that not only would the digital transformation of the public sector in Lebanon have to start small, but also that the solution for digitization would have to be different in every public sector organization and heavily involve the persons in every specific organization. “People in the public sector entities will have to co-create the solutions, because they are the ones who know the issues,” she says.

While some digitization progress has been made in Lebanon’s public sector units over recent months—especially since the new government’s arrival—and challenges related to issues such as basic infrastructure and partially wanting digital literacy in the country are on the mend, the obstacles to a complete digital transformation do not end there, says growth strategist Georges Abi Aad.

“We are not convinced that digitization is at the core of digital transformation of the government, because the first thing is to design the process. Processes tend to be outdated and serve agendas more than citizens. Before digitizing them, we need to look at processes and redesign them from scratch, because if you digitize a flawed process, it [still] will be flawed. However, if a successful process is digitized, it has the chance to succeed on larger scale,” he tells Executive.

Abi Aad works with Birdhaus, a Lebanon-based agency in the commercial communications sphere that seeks to twin client’s marketing and sales efforts through “novel marketing practices.” With the statement, Birdhaus hints at its integrated online (coding) and enterprise-engulfing marketing approach that is also described in the business by nine-year old buzzword of ‘growth hacking.’ In the context of digital transformation, a known focus of growth hacking is on rapid digital-world growth of organizations that are tight on economic resources. In its work, Birdhaus furthermore uses human-centric design concepts for online interaction that have in recent years been promoted in the digital communications media sector as UX and UI (user experience and user interface) design.

When applied to public sector administrations in Lebanon, such design will require a process that takes into account the needs of civil servants as well as be citizen-centric, chimes in Abi Aad’s colleague Marilynn Bou Habib, who is a UX/UI designer at Birdhaus. “To provide high-quality services through digitized systems, the public sector needs to have incentives for providing high-quality services and on the other end, the citizen needs to know the problems,” she says.

According to these two professionals, barriers to achieving true digital transformation in the Lebanese public sector must be expected in form of resistance and pushbacks because of the same basic human fears that Ibrahim had referenced. They also concur that political buy-ins by stakeholders and participants on different levels of a public sector entity and incentivization of all their involvement will be necessary.

Furthermore, according to Abi Aad it is a paradigm of UX design to boost the transparency of the process that is designed or redesigned. Initiation of such transparency—which Abi Aad describes as “presently completely absent” from public sector processes in the country—will reveal many layers of opacity that today exist in the public realm, adds Birdhaus Director Karen Abi Saab.

“Processes need to become more transparent as citizens are informed what they need to do throughout the entire process [of interacting with a public entity] whereas today citizens are told from one step to the next [what they have to do] and have no visibility of the whole process. It thus is an important step in digitization of public processes to have the public know the entire process,” she says.

The right people on board

It is revealed in course of a wide-ranging discussion with the team of Birdhaus and its parent company, Flag M Group, that they had encountered a further barrier of unfavorable mindsets toward its efforts to launch a mobile app with UX design inputs that would have been conducive to public sector digital transformation on the municipal level of in Lebanon. Embarking on the app’s development about two years ago (shortly after municipal elections in Lebanon and in parallel with work which the group did for two public sector entities in the United Arab Emirates), Flag M invested into the project on its own initiative under the notion that the mobile app might appeal to municipalities in the area of Keserwan and Metn.

The group approached several municipalities with the app that included features designed to improve communication between municipal authorities and their residents as well as elements such as an emergency connection button to police, but found that the municipalities were more interested in promoting their achievements than in communicating with residents. “The project got stuck because of a big lack of awareness [in the approached municipalities as to] why [they should want to] enhance the user experiences of the people,” explains Firas Mghames, the CEO of Flag M Group.

As one lesson of the experience, the team of Flag M and Birdhaus concluded that top-down buy-in will be required in Lebanon to achieve acceptance of digital transformation initiatives and that, moreover, the context for such efforts must be very conducive from political and budgetary angles. Municipalities that struggled to deliver basic services to their residents might not have been the best targets for digital transformation, Abi Aad observes.

However, while there are undeniable barriers that will have to be overcome on all levels when digital transformation of public sector entities is tackled, there are even more compelling upsides. The success of the effort of redesigning, from scratch, the interactions between citizens and their administrations in Lebanon would be likely to unleash significant cost savings in different ministries and administrative units. Examples from private sector experience in the region hint that the size of potential savings, which would range from paper needs to time wastage of citizens and also to more productive use of employee time in the units, will be huge, even as they today cannot even be properly estimated. Moreover, as Ideatolife’s Ibrahim points out, employing human-centric design methodologies —also called “design thinking”—will be a sort of dual speed process that can be initiated fast and rapidly show first results, even if years may be needed to produce the full results of the transformation process by design.

“When we work on digital transformation strategies with enterprises, we plan a five-to-seven year strategy but a country like Lebanon might need more like ten years,” says Ibrahim, but then emphasizes that, “changes will start to happen after the first six months.” As she explains, some six weeks after its start, the process would see the creation of first solutions on basis of user research that would thereafter be user tested and incrementally as well as continuously improved, with tangible outcomes. “If it takes more than three months to implement a solution, something is wrong,” she says.

For Maroun Sarrouh, board advisor at Flag M Group, Lebanon today is indeed primed to accomplish fast progress of its reform process and digital transformation. Based on fortuitous ending of regional conflict and economic bust cycles in conjunction with the external pressures and internal determinations of the current time, he sees the course set for reforms. He says, “Historically, when a decision in Lebanon is taken and covered, it is implemented. What is beautiful about this country is its ability to adapt and adapt very rapidly, because of the presence of its huge human capital. With the amelioration of the political/economic environment, I really think that all the ambitious projects that have been left in drawers for so many reasons, will now just pop into existence. Change can happen and it may be slow at first but then grow exponentially.”

April 5, 2019 0 comments

Artisnal crafts Design Special Report

Traditional handicrafts in Lebanon

by Lauren Holtmeier April 5, 2019

written by Lauren Holtmeier

Carpets, cutlery, glass, soap, furniture—these traditional Lebanese crafts have a valued place in the country’s—and the region’s—history. Industrial development in the last half of the 20th century has, inevitably, affected Lebanon’s traditional artisans. One the one hand, it has driven demand down for artisanal crafts that are usually more expensive than mass-produced imports. On the other, for local artisans who have weathered weary economic waters, access to a new global market has been made easier, a result of improved online marketplaces, social media, and internet-based communication. There are also multiple initiatives underway in Lebanon that seek to ensure Lebanese artisans find their place in increasingly crowded local and global markets. For traditional artisan crafts in particular, local and international organizations have worked to improve their sustainability by providing technical, industrial, design, and marketing support, and by providing a place for craftsmen to market their goods.

Sustaining markets

The United Nations Industrial Development Organization (UNIDO) and L’artisan du Liban are two organizations that have helped keep Lebanese artisanry alive by providing production support, serving as design catalysts, and offering a place for local craftsmen to market their wares. Established in 1979, L’artisan du Liban was Lebanon’s first social enterprise, and it sought to keep artisans active and safekeep artistry and heritage by providing local craftspeople a marketplace for their goods. UNIDO has been active in Lebanon since 1989, and supports sustainable development across multiple sectors, including its work with craftspeople. Both organizations have played similar, but distinct, roles in sustaining local artisanry.

Despite a strong history of design generation and export in Lebanon, recent economic stagnation has made it difficult for some traditional artisans to compete with cheaper imports from places like China. For example, where 10 years ago there were several glassblowers in Lebanon, today only one family, the Khalifehs in Sarafand, remain. The period between 2011 and 2018 marked a 37 percent increase in imported glass and glassware, according to data by Blominvest Bank, with which Lebanese glassblowers had to compete.

Artisans across the handicraft spectrum have had to adjust to shifting market trends and find new ways to make their products attractive to consumers in a modern market. Driven, in part, by shifting market trends and demands, artisans have used several tactics to stay ahead of the game, from introducing subtle, more modern-looking design twists, to adopting new materials and packaging methods to make traditional goods more marketable.

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The rapidity of changing trends, a clientele more aware of global trends and buying options, and the combination of rising ease of travel and digital advancements have accounted for the largest market shifts, says Hadi Maktabi, owner and curator of Hadi Maktabi carpets, who holds a PhD in Islamic Art from Oxford. Difficulty in identifying a unified “Lebanese taste” has also made marketing to a local audience challenging. And it is in this climate that producers and artisans must decide which model they want to adopt, whether that be identifying a niche within a larger market and catering to it, or following the “supermarket model,” which Maktabi defines as being largely mass-produced, cheaper wares made abroad that appeal to a broad audience (think IKEA).

“Fifteen years ago, it was the supermarket model, and you had five to 10 big dealers who catered to everything,” Maktabi says, referring to the carpet industry. He argues that where trends in the 1990s shifted every 10 years or so, recently they have begun changing every two to five years.

The advent of the internet and improved digital marketplaces have sped up the introduction of new styles over the last 20 years. Rapidly growing global markets also meant the Lebanese market was flooded with more affordable, modern products that were designed in Europe, but were produced in places with cheap labor supply. “Most people working on this [supermarket model] side are dealing with products mass produced in China and India, and then selling them here,” Maktabi says. “But what they’re selling now is not craft, it’s just a product.”

Carve out a niche

Now, within the last few years, more have tried to carve out a niche in a crowded market—like Maktabi’s focus on antique carpets and textiles—specializing in providing a specific product. Complicating the matter, on the local front, he argues, is the rising European influence and the need for the Lebanese to find their place within that trend. Even local geographical considerations play a role in this. “Drive a few kilometers south of Beirut, and it’s like entering a different time period,” Maktabi says. Torn between the occidental and oriental, this clash of cultures has made designers and artisans alike, who choose to follow the niche market approach, have to define a narrow target audience.

But those specialists, specifically some traditional artisans, have needed help finding a viable market for their niche crafts. A few kilometers south of Beirut, Houssam Outabashi is found in Ouzai with multiple workshops lining the street. Here, Outabashi, a master in traditional marquetry and inlay techniques, can look at a piece of mother of pearl and name its country of origin by its color. Marquetry is a process by which small pieces of different types of wood are bundled to form a pattern, and then shaved in thin layers, while inlay design is a process in which chunks of wood are carved out and replaced with the shimmery pieces cut from sheets of Mother of Pearl to create intricate designs.

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Outabashi specializes in the traditional styles of his craft, however, he has started modernizing some of his designs. L’artisan du Liban has provided him with support to help preserve his craft, which goes back as far as the 1800s through generations of his family. Nour Najm, creative director of L’artisan du Liban, says they work with Outabashi, designing objects that Outabashi creates by hand and then are sold in L’artisan du Liban store.

Further south in Sarafand, L’artisan similarly works with the Khalifeh family who create glassware out of recycled glass—which in a country that has an excess of garbage, is remarkable. The Khalifeh’s only turn on the oven five to six times a year, but can turn it on up to 10 times when there is an order to be filled—otherwise it is a resource drain. When it is on, six to eight people work in shifts around the clock for 15-20 days to fill an order. Najm says L’artisan makes sure to place a large order with the Khalifeh’s each time they turn on the oven.

In the small, run-down warehouse where the Khalifeh family makes their glass, Najm is thinking about what she can do to give the glassware a modern twist—for her, the answer is color. With colored glass she bought from the US, the glassblowers are experimenting with different techniques to potentially incorporate color into their traditional designs. Najm says they have introduced a lot of small details to modernize traditional designs and help make them competitive in today’s markets. “Small twists change everything,” she says.

Reimagining the craft

UNIDO has also worked with local craftsmen to help them update traditional designs and help artisans peddle their crafts. For example, UNIDO worked with Jezzine cutlery craftspeople—as well as local soap makers and tark el-fouda (embroidery) craftspeople—to help them modernize designs and industrialize production. Two years ago, UNIDO launched a program in partnership with the Ministry of Industry and funded by the Austrian government to help preserve traditional artisanry and improve livelihoods of artisans in these sectors, says Nada Barakat, national project coordinator at UNIDO.

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Jezzine cutlery, for example, was once thought of as a gift that sat in a wooden box unused; the product had to be re-imagined into something people would by to use and enjoy. Barakat stressed the importance of marketing: they did away with the old wood box and started packaging the sets in cardboard, which cut down costs and made the sets more practical. To better market the soap, they did the opposite and introduced an attractive olive wooden box as packaging. Jezzine cutlery, which was traditionally made out of olive wood and featured bird-like motifs on the handles is now sometimes made out of resin, but maintains the older features with a modern edge. Creating the mold for the resin-based handles made the production process and end-product marginally cheaper, but consumers can still buy the cutlery with the traditional wooden handles as well.

Barakat says that while the collection is primarily available to local markets, negotiations are underway with Coincasa, an Italian retail outlet, to market the collection there. L’artisan du Liban has a slightly larger global reach with their online store that opened last year. Najm says that less than 10 percent of their sales are global, but they have clients all over Europe and in the US, and they attend yearly trade fairs in Paris.

Both entities—UNIDO and L’artisan du Liban—have worked to keep Lebanese artisanry alive and are beginning to introduce traditional local crafts in international markets. Though industrial development made traditional crafts more expensive, recent globalizing trends and improved digital markets may help some local artisans find a viable market for their goods abroad. While it is too early to tell what the future holds for Lebanese crafts in the international market, at least here at home some local artisans have found the support needed to keep centuries’ old traditions alive.

April 5, 2019 0 comments

Leaders Opinion

Lebanese design deserves attention

by Executive Staff April 3, 2019

written by Executive Staff

Design, as the fruit of creativity that enables its user to co-define and express their identity, while optimally matching form and function of a product or process, has been around for as long humans have had the capacity to imagine.

Lebanon is a great example for the presence of design throughout the history of people living on the culturally fertile shores of the Eastern Mediterranean. When compared with the past roles and value-added functions of design—for example 100 years ago when the legendary Bauhaus was established as laboratory of ideas, architecture, and applied arts in 1919’s Germany—design capabilities today appear to represent an even greater asset in our times of societies’ digital transformation, economic globalization, and wide-ranging individual pursuits of new identities.

While numerous innovative design approaches have been fostered through the private initiative of design professionals, teachers, and thinkers in Lebanon over the last few years (as Executive has reported), the design sector in this country still remains sadly underappreciated, incompletely mapped, quite poorly understood, and even more poorly supported by important political and financial institutions. As our investigation of Lebanese design conditions in this issue shows, the ecosystem for design is growing, but marked mainly by individual efforts and scattered individual success stories.

The value of the ecosystem and support structures for Lebanese design industries have not been comprehensively and systematically assessed for their contribution to the struggling industry sector or the national economy as whole. There are many hints that creative and cultural industries—first-line beneficiaries of designer inputs—can thrive, but very little information is available on how design investments translate into economic gains in long-standing or newly reimagined crafts workshops.

Finally, design appears to be an underexplored and largely untapped mental resource when taken in the sense of improving not only the beauty and functionality of products, but in the sense of the importance of citizen-centric design for reforming heavily outdated, non-transparent, and wasteful processes in the interactions between citizens and their public servants.

Thus, at this time Executive draws attention to the need for greater appreciation of design as part of the revitalizations, the structural and administrative reforms, and the economic and financial investments that are the acknowledged priorities of Lebanon for 2019 and the coming years. Governmental support of design is needed and, under current pressures on the government, there should be an awareness and wide organizational buy-in into the importance of design as part of implementing e-government and digital transition in the public sector.

Many design stakeholders confessed to Executive that they would be delighted if the state would commit tangible support to design—in forms of sponsorship of export-enhancing design exhibitions abroad, easing of export procedures for design products, or fiscal and structural support for young ventures in creative and cultural industry with high-value added—but also say that, realistically, they prefer to not expect governmental support that will cost our cash-strapped state.

Design stakeholders believe that private sector support, on the other hand, could be envisioned to incorporate very impactful financial angles. This could be as fundamental as using design in manufacturing processes from the first moment and showing financial appreciation toward design contributions to products manufactured in the private sector by adequately remunerating their designers. However, it could be even more powerful if industrialists and private investors were to dedicate funds for investing into design clusters and enterprises, or engage with Lebanese designers in efforts of better defining and organizing the design sector as professional syndicate or association. Academic institutions with stakes in design development could broaden their course offerings to teach more of the history of Arab and Lebanese design (instead of prioritizing other aspects of this history), and they also would do well to improve efforts to encourage female design in what has been presented wrongly as a male-dominated realm.

Presently, many Lebanese designers, design workshops, consultancies, and agencies have their days fully filled by the struggle for financial survival. They have precious little time for organizing and advancing the design culture that can add a lot of economic and social value to the nation. If public and private stakeholders with great potential to benefit from design made in Lebanon consolidate their will to think design when taking Lebanon through its impending reforms, economic invigorations, and new expressions of its wealth of talents and identities, new economic and social potentials can be unlocked at low cost when compared to likely benefits. Executive thus sees great new value potentials in focusing on design from measuring the economic value of design inputs over further empowerment of the design ecosystem to, in the long run, viable financial inputs in form of private investments and public incentives.

April 3, 2019 0 comments

Editorial Opinion

A trap of their own making

by Yasser Akkaoui April 3, 2019

written by Yasser Akkaoui

It has been a year since Lebanon agreed on a path out of its crises, promising to undertake serious reform efforts in exchange for the $11 billion pledged by the international community at CEDRE. The nine months after CEDRE were primarily spent on political bargaining and government formation, all built on the hope that these funds were the way out of our current malaise.

These past two months our new government has become obsessed with securing the CEDRE funding, revealing how addicted our political elite are to handouts. Yet there has been no indication that the government is even capable of enacting the reforms needed to unlock CEDRE funding. Their hunger to divvy up the promised funds has blinded them to the reality of what reform really means. They have fallen into a trap of their own making.

In order to access the $11 billion, the government will have to dismantle a web of informal, unregulated, and illegal privileges that have been distributed from on high in order to extract the wealth of the Lebanese for the benefit of the few, and, in its place, create a national system that works in the public interest. And all this is expected to take place in a matter of months—good luck!

Alternatively, every industry in this country has a wealth of human resources and energy. If the government was able to engage on an industry level it could unlock a productive potential far greater than the promised $11 billion. The private sector’s energy, coupled with its knowledge and creativity, is a much smarter and adaptive resource for the government.

The Lebanese have a natural talent for design, one that has been honed over the years through the innovation and adaptation that has been necessary to survive. We expect our government to allow the private sector to step up its role and take the lead. It needs to migrate from an extractive model to an inclusive one—one were every stakeholder is engaged in order to improve productivity, efficiency, and value creation in the country.

It is only when our government becomes more inclusive, and puts creative thinkers at the heart of its efforts, that Lebanon will start solving its own problems and unleashing its true potential.

April 3, 2019 0 comments

Brand Voice

E-banking lands in Mar Mikhael

by Nabila Rahhal March 21, 2019

written by Nabila Rahhal

A walk in Mar Mikhael reveals that it has become the hub of hospitality for millennials in Lebanon; during the day, its appealing restaurants and quick snacks attract those who work in the area, while in the evening, it’s a destination for gatherings with friends over drinks or bistro dinners.

As such, Banque Libano-Française (BLF) was savvy enough to identify the street’s attraction to that young demographic. “We chose Mar Mikhael to launch our new e-branch concept, notably because it is vibrant and attracts the public, mainly millennials, into its restaurants and pubs,” explains Marwan Ramadan, assistant general manager and head of Branch Network Division at BLF, adding that more digital solutions will be available soon at BLF e-branch.

Millennials, who are often referred to as the “tech generation,” are typically more comfortable behind the screen rather than communicating with tellers or their bank managers for their banking needs. The new e-branch concept offers them, and all other BLF clients visiting the area, an enhanced digital banking experience, which includes several key and common banking needs.

For example, not only will customers be able to withdraw cash, they will also be able to deposit cash and checks, settle their credit card payments, pay for a wedding gift, and transfer money between accounts through two ATMs, making for a speedier and more efficient banking experience. BLF also eliminates the need to visit the physical bank by allowing customers to access their account, apply for loans, settle their tuition fees, track their outward transfers, in addition to the above mentioned ATM features, through the e-branch, BLF e-banking service, and the mobile app, My BLF, in a simple and secure way. This is yet another tool that will surely appeal to millennials, but also to anyone who is simply doesn’t have enough time to visit a traditional branch.

The e-banking concept is the latest tech platform through which BLF demonstrates its innovative mindset and its ability to stay up-to-date and allow its clients to benefit from interconnected platforms with the peace of mind of knowing that their accounts are safe.

Concerning the bank’s digital strategy and roadmap, Ronald Zirka, head of marketing and retail at BLF explains, “What differentiates Banque Libano-Française and gives a competitive edge to its digitization efforts is its ability to continuously enhance its digital platforms. Lately, the bank launched a new solution that allows its customers to track their transfers on the e-banking and the mobile app, My BLF, by checking their transfer step-by-step status, including the execution dates, and all fees and commissions charged by every correspondent in the chain.”

“Understanding our clients’ expectations is the main driver behind every change. BLF strives to anticipate those expectations to enhance the customer experience on all its physical and digital channels,” he adds.

What started in Mar Mikhael will surely spread to many areas across Lebanon, and as such, more BLF clients will benefit from technology to have easy, efficient and safe access to their bank.

March 21, 2019 0 comments

Last word Opinion

Factors keeping Lebanese youth unemployed

by Rena Temsah March 14, 2019

written by Rena Temsah

On the one side are Lebanese youths eager to work, on the other are local employers looking for staff. So why are businesses—especially those based outside of Beirut—not recruiting more local youth? This question was the driving force behind Mercy Corps’ Youth-led Market Assessment (YLMA) in 2018.

The YLMA explored the reasons why youth were not penetrating the labor market in three areas of the country: Saida, Tripoli, and Barja (Mount Lebanon). It was conducted as part of a three-year Canadian-funded program aimed at protecting youths’ well-being and providing better opportunities, particularly in those three areas. The study interviewed 800 employers and involved 75 local youth volunteers as researchers, as well as Remark, a Beirut-based research consultancy that is studying livelihood opportunities for Lebanese, Syrian, and Palestinian youth and their families.

Three main findings were gleaned from the research. Firstly, the largest barrier to Lebanese youth employment found was a lack of communication skills. Almost 60 percent of the surveyed employers, who worked in industries including retail, manufacturing, pharmaceuticals, services, and F&B, cited poor communication skills as a factor preventing those aged 16-25 from being employed (compared with just 8 percent raising the inability to work under pressure, 7 percent poor teamwork skills, and 6 percent poor time management). When asked to elaborate, participants highlighted a perceived inability of youths to talk to customers, to accept criticism, and to express themselves adequately.

To improve their communication skills, the report recommends that Lebanese youth attend life skills courses when possible; Mercy Corps currently offers such classes at its three branches of Bussma, local youth community centers (in Saida, Tripoli, and Barja). The report also suggests that technical, vocational, and educational training institutes across Lebanon include soft skills training in their curriculums.

Secondly, the study found that unemployed youth in Lebanon (Lebanese, Syrian, and Palestinian) were pursuing careers that did not match market needs. Work trends in Lebanon are geared toward industrial jobs in, for example, agro-food and STEM, but youths surveyed planned to pursue careers in photography, design, acting, dancing, and sport. Trade careers in demand, such as electricians and mechanics, are shunned in favor of accountancy or marketing studies. Social standards can play a role here; a director at a vocational training institute cited a huge demand for waste management and sanitation specialists, but said that Lebanese students refuse to go into this field as it is deemed shameful.

To break this disconnect between the careers in demand and the careers studied, the report recommends that technical, vocational, and educational training institutes and universities provide more information to prospective students about in-demand jobs—thought by the interviewed employers to be in retail, creative industries (such as jewelry design and our craftsmanship), agriculture/ago-food, and tourism.

Thirdly, the study debunks the commonly held assumption that the Syrian crisis has increased the unemployment rate in Lebanon. The study focused on recruitment trends for Palestinian and Syrian youth and found that they often take jobs requiring intense physical labor in the agriculture, environment, and construction sectors—and are not competing with locals in other sectors. These sectors are shunned by local youth, who are pushed by societal pressures into careers in the banking, services, or public sectors.

On the other hand, employers admitted to preferring to hire Palestinians and Syrians as they can do so for lower wages, no benefits, and no official contract. But these youths rarely make managerial positions, and some employers stated they always hire Lebanese for positions in direct contact with customers.

The results of this study were shared with another 2,000 youths living in the three target areas over the last six months, with information sessions to help them better understand how to approach labor market opportunities. Syrian and Palestinian youth were encouraged to seek safer jobs with better legal protection of their rights. Lebanese youth were told to pay attention to market needs and specialize in jobs in demand. Mercy Corps also called on employers to develop an “open-door policy” toward youth by creating short-term internships and mentoring opportunities. As for the government’s role, the study suggests it should invest more in local businesses to increase job vacancies and invest in developing young people’s skills to better integrate them into the labor market.

March 14, 2019 0 comments

Business Comment

Creating a price-stable cryptocurrency

by Thomas Coughlin March 14, 2019

written by Thomas Coughlin

It has been a tumultuous time for cryptocurrency investors and advocates alike who have watched the market value of the industry drastically drop in the past year. However, some optimism is growing in the space as committed developers and blockchain advocates shun the daily obsession over price changes. The highly speculative nature of the crypto-market leads to price fluctuations, which can be very taxing on investors. To break free from this instability, industry professionals are now looking into using blockchain to create a stablecoin as an optimal digital currency that would have the following characteristics: price stability, scalability, privacy, and decentralization.

The value of gold

A useful currency should be an efficient medium of exchange, a unit of account, and a stable store of value; digital currencies excel at the first, but fail as a store of value or unit of account. A currency cannot be an effective store of value if its price fluctuates by 20 percent on an average day. This is where stablecoins come in. Stablecoins are price-stable digital currencies, meaning their market price is pegged to the value of an underlying asset, such as precious metal or fiat currency like the US dollar. By pegging their value to real-world assets, stablecoins promise price stability that can bring digital currencies into the mainstream, making the stablecoin the Holy Grail of the crypto ecosystem. However, with fiat currencies experiencing their own fair share of volatility, the historically stable nature of gold is looking increasingly attractive to investors.

In light of increasing political feuds and trade wars hitting economies around the world, gold has seen a surge of interest. Global gold purchasing in 2018 was 74 percent higher than in the year before, with central banks gold-buying hitting a half-century high. Physically, gold does not corrode nor shift in shape despite changes in temperature, location, and time. Even after thousands of years, gold remains pure and free from external elements, which allows for immediate processing, if needed. As a currency, these traits provide a sense of confidence that the value will be preserved.

This potential of innovative blockchain technology has attracted the attention of many industry experts. The institutional gold exchange, the Allocated Bullion Exchange (ABX), is leading innovation into how gold can be used as an international currency. Real, physical gold ownership is being digitized with ownership securely recorded on blockchain technology, so that physical gold and silver can be spent just as easily as fiat money, in the same way that banknotes used to be IOUs for gold. Incentivising use and adoption through a recurring income delivered via a unique yield system, which works in the same way as a bank deposit, incentivises use and prevents hoarding behaviors. This system combines new world-decentralized technology with the oldest, fairest, and most sustainable form of money, gold.

Throughout history, people have been fascinated by gold; it has been valued by civilizations across the globe and has been a significant part of the Middle Eastern culture for centuries. It holds deep economic and cultural relevance in these nations even today, maintaining its status over time as the most effective store of value. The UAE and Saudi Arabia are listed respectively as the fourth and seventh largest gold jewelry consumers in the world, according to the GFMS gold survey for 2018. The Middle East is also gradually embracing blockchain and cryptocurrencies, with Dubai setting a goal of securing all government documents on blockchain by 2020, and Iran last year announcing it is developing its own digital money.

Providing stability

By introducing a stablecoin with a 1:1 allocation to gold, a digital currency like Kinesis Money can provide the stability and liquidity required in the crypto space. Each stablecoin minted would represent a physical bar of gold/silver secured safely in vaults around the world, subject to stringent third-party audit and quality assurance processes. Not only will this assure investors of the stable value of their investments, it would also allow them to request the exact value in precious metals when physically needed. This will usher in a new era of stability to the crypto market, ensuring they are well on their way to achieving their ultimate goal—the development of a decentralized and internationally usable replacement to the current fiat-based monetary system.

March 14, 2019 0 comments

Business Cybersecurity

Investing in cybersecurity companies

by Thomas Schellen March 14, 2019

written by Thomas Schellen

When it comes to predictions for this year, there are some prophecies that are practically risk-free, even outside the notion that the biggest risks of 2019 are not related to financial markets or even economic uncertainty. One such virtually risk-free prediction is that the digital transformation will continue. Another safe one is that Big Data and artificial intelligence (AI) will not wither.

The list of safe predictions for aspiring cyber gurus goes on, simply because many upside and even more downside developments are beckoning from all spheres of the wide digital cosmos. E-government tools will help improve the efficiency of public sectors in countries that improve e-governance and digital identity facilitation. Cybercriminals will use new attacks, and there will be spectacular and horrific breaches. Some of the attacks by cybercrime syndicates will employ AI tools. The financial damages count from cybercrime will be a multiple—a very substantial multiple—of investments into cyber-defense by public and private stakeholders (and this will by far not just be the case in Lebanon).

Even scarier, new cyber terrorism incidents will happen and target infrastructure or IoT (Internet of Things) vulnerabilities. There will be an arms race toward building new cyberwarfare arsenals, and in the daily life of humanity, plain old digital shit will happen—and probably escalate to unprecedented calamities. Digital futures will baffle us beyond our expectations and all predictions will be dwarfed by reality. In cybersecurity, the biggest risk will be the human being, but there will not be a worthwhile cyber future without humans.

What then is a non-geek enabled, or cyber-enhanced human being to do when one is faced with a digital future but has ethical and technical barriers against morphing herself or himself into a master black-hat hacker, devious digital snoop, or voracious cyber-predator? And what to do for someone, like an alert investor or an entrepreneurial whizz, who lives in a country that is lagging a felt 50 parsec (163 light-years, or more than 1,500 gazillion kilometers) behind its enemy state next door when it comes to creation of a competitive digital edge in robotics, artificial intelligence, and machine learning, as well as general corporate research and manufacturing for the cyber age, or cyber attack and cyber defense preparedness?

If you can’t beat them

Just over a century ago, when wars were overwhelmingly matters of human mass mobilization and deployments of ships, tanks, infantry, and artillery, the patriotically minded in the warring countries were asked by their governments to invest in war bonds. Similar financing tools for looming global conflicts in the digital era have not been developed. However, adapting the paradigm that “if you can’t beat ‘em, then you should join ‘em” to digital transformation and the global financial markets environment, even investors from the most digitally backward countries at least can turn to developed stock markets for gobbling up slices of the digital future and the prowess of listed cybersecurity companies.

Scanning the early 2019 results season in the investment landscape for interesting narratives of cybersecurity stocks yields another confirmation that digital security is one big bed of where the future lies. Undertaking a non-exhaustive or fully representative journey across February’s earnings news of companies with exclusive cybersecurity focuses or significant involvements in the area, Executive noted that companies tracked by exchange-traded funds (ETFs) made quite a splash. According to Seeking Alpha, an online financial publication, Fireeye—a cybersecurity company that was listed in 2013 and has a multi-year track record of rapid growth—achieved a 10 percent year-on-year increase in its billings in Q4 of 2018 and exceeded analyst expectations. Similarly, Fortinet, a cybersecurity company that, like Fireeye, is included in a pioneering cybersecurity ETF, achieved a 22 percent increase in fourth-quarter 2018 billings and topped Wall Street expectations according to a report by Dow Jones’ MarketWatch.

In mid-February 2019, the stock of Israeli cybersecurity outfit CyberArk Software rallied as Q4 2018 earnings and profits greatly exceeded expectations. Akamai, a company with expertise in networks, cloud computing, and cybersecurity, for Q4, 2018 delivered 8 percent year-on-year earnings growth that was driven largely by a 36 percent year-on-year revenue growth in its cloud security unit.

And if you want to take a guess at what cybersecurity company Palo Alto Networks announced to investors in the last days of February: Yup, Palo Alto’s revenue was up 30 percent year-on-year in its fiscal Q2 2019 results and the numbers were above analysts’ predictions, while the stock rose over 8 percent to an unprecedented high.

Digital disruption

All aforementioned stocks are on the portfolio lists of at least one cybersecurity-themed ETF. Further on, from lesser known niche players in cybersecurity to big established names such as the security and networking stalwarts Symantec and Cisco, market augurs promote them as promising on account of being anything from small risky plays with huge upside potentials to good investment opportunities because of strong share price performances and/or gain potentials, earnings-per-share forecasts, or dividend outlooks.

Prominent cybersecurity ETFs, such as ETFMG Prime Cyber Security Fund (known as Hack) and First Trust NASDAQ Cybersecurity ETF (CIBR) in the first two months reflected the good share price performances of stocks in their portfolios. Although both ETFs experienced a three-month slump in Q4 of last year, according to Bloomberg data CIBR at the end of February 2019 showed a return of 21.2 percent for the year to date (ytd) and a one-year return of 13.7 percent. Its three-year return was 21.1 percent. Also according to Bloomberg, Hack achieved an ytd return of 19.3 percent at the end of February and had one and three-year returns of 17.2 and 22.4 percent, respectively.

However, such fleeting observations should not be read as suggestions that individual investors and especially retail investors would be in for smooth rides to high returns by allocating large portions of their personal to passive funds with cybersecurity themes. For the moment, many analysts judge cybersecurity ETFs as having characteristics that justify minimal exposure even as the overall theme of cybersecurity might be perceived as a very attractive road to financial participation in the world’s digital transitions.

Executive asked Christian Gattiker, chief strategist and global head of research at Swiss bank Julius Baer, about his views on digital themes, cybersecurity stocks, and related ETFs for international investors at the end of last month when he came to Beirut for a presentation to the bank’s local clients.

The economist (who confessed to an infatuation with technical analysis, despite his training as an academic economist, during the evening’s presentation to investors) confirms that topics such as cybersecurity feature within what the bank describes as the investment theme of digital disruption. However, his view is leaning to active investing strategies and he would refrain from passive or static approaches when it comes to the sector. “We advise using active investing on those topics,” Gattiker says. “These [digital disruption and cybersecurity topics] are highly active themes and many of these markets are winner-take-all markets. Thus, if there is any shakeout in the industry, you lose as an investor if you hold all of [the involved stocks] because you win on one stock and lose on eleven others.”

According to the Swiss banker, investors parsing cybersecurity stocks should thus make their own decisions instead of buying into a themed ETF. He advises further that investors should rely on analysts who have a good track record in calling these markets and that investors also should be nimble as to shift exposure if they sense any surprising change in the markets for these stocks when one winning cyber solution starts to rise at the expense of its competitors.

But in the sum of what Gattiker perceives as the biggest race there is in terms of companies competing for the crown of digital dominance, and one where the final outcome might not be determined for up to 10 years, he concludes, “Digital disruption is a big topic and digitalized healthcare is another one. These are big structural themes that can be of advantage to investors, but in very specific companies.”

March 14, 2019 0 comments