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The Knowledge Economy

A strategic priority for economic growth and job creation in Lebanon

by Adel Afiouni

When I was appointed Minister of State for Investments and Technology (MSIT) in February 2019, I was thrilled to champion the most promising and vibrant economic sector in Lebanon. Technology is often reduced to mean “iPhone” or “app”, but the term can also refer to a rocket, a vaccine, a driverless car or a smart mattress. Technology, embedded in and propelled by the knowledge economy, has skyrocketed over the last 100 years, enabling societies to leapfrog across sectors. And leapfrogging is exactly what Lebanon needs. The country faces colossal problems: rampant poverty, the economic crisis, health, environmental, educational and infrastructural failures. Our success, our triumph, is dependent on centering and strengthening the rise of the knowledge economy in Lebanon.

What are we waiting for?

We desperately need to reinvent the Lebanese economic model: to focus on productive sectors, producing and exporting more. This collapse is a pivotal opportunity for the Lebanese, and its youth in particular, to use the knowledge economy to create a new economic reality.

The knowledge economy is a sector that is asset-light and talent and skill-centric; its benefits spanning across all other economic segments. Lebanon does not have a tremendous amount of natural resources. Our strength and primary asset is our human capital: Lebanon has a highly educated, multilingual, multicultural, and entrepreneurial talent pool, as well as a global and successful diaspora network. In 2017-2018, Lebanon was ranked 4th in quality of education in maths and sciences in the World Economic Forum Global Competitiveness Index. The knowledge economy is therefore precisely the one productive sector where we can boast our competitive, scientific advantage. With our human capital, we can and should aim to become a regional leader, as well as a thriving hub for economic prosperity.

As such, when I embarked on my ministerial journey, I set an ambitious vision and a concrete plan to execute our road to the knowledge economy.

What is the vision?

The MSIT vision is to drive the digital transformation of our economy, boost the contribution of the knowledge economy to GDP and job creation, and transform Lebanon into a regional hub for technology and innovation.

Thanks to technology, our abilities can begin to draw near our ambitions, for the first time in history. Imagine a Lebanon with clean water, nutritious food, affordable housing, personalized education, top-tier medical care, and non-polluting energy. Imagine a Lebanon with digital government, electronic transactions, transparency, efficiency and without corruption. The knowledge economy can help us meet these challenges head-on.

Translating potential into reality

This is precisely the objective of the MSIT action plan, The Roadmap Towards Digital Transformation. The plan was built as a result of consultations with major stakeholders in the private and public sectors, and crafted with support from major international institutions, in particular the World Bank. The action plan is high impact, actionable and concrete, combining short and long-term initiatives and strategic projects. Job and value creation are the first priorities.

We set the following as 2025 targets:

  • Double the contribution to GDP of the knowledge economy sectors from $1.5 billion to $3 billion
  • Grow the knowledge economy exports contribution to 25 percent of total exports
  • Grow yearly VC funding to $190 million a year
  • Grow the number of start-up ventures from 50 to 200 per year

The action plan is divided into two tracks. The first is inward-looking and focuses on improving the local tech ecosystem and creating a stimulating and competitive business environment in Lebanon. The second is outward-looking and focuses on global markets, on the reforms and policies needed to increase business and investment appeal, and how to grow cross-border investment and trade. As part of the plan, we identified seven areas of focus, the “Seven Pillars of Lebanon’s Roadmap to Digital Transformation.” These are the areas we need to tackle to unlock the full potential of the knowledge economy.

What are the seven pillars of the action plan?

1. The Business Environment: An “Ease of Doing Business Reform Plan” in 40 action points was prepared and submitted.

2. The Investment Environment: Address the funding gaps in the ecosystem, mainly at the early ideation stage and at the later scale-up stage, by creating public-private investment matching schemes and by establishing a comprehensive set of fiscal incentives to stimulate investment.

3. The Education Environment: Fill the knowledge gaps between the academic curriculum and the industry and business needs by launching a national “Digital Up-Skilling and Awareness” program.

4. Transforming Lebanon into a Regional Knowledge Economy Hub: Launch an outreach campaign, a comprehensive business reform, and incentives agenda aimed at attracting international companies and entrepreneurs to Lebanon.

5. Boosting Exports: A strategy to boost and promote services exports, complemented by reforms to increase e-commerce and digital payments.

6. Regional Development: Decentralize the tech ecosystem and develop thematic “Special Digital Zones”, for example, the Tripoli Knowledge and Innovation Center, which is ready to launch. The Knowledge Economy is a major agent for the reduction of regional inequalities and for fostering job creation and economic development across all Lebanese regions.

7. Research and Innovation: Launch a major overhaul of our research and innovation programs, and radically upgrade our legislative toolbox in order to accompany and stimulate innovation.

While we did not get the chance to implement our action plan because the government resigned in October 2019, we still managed to pass important reforms in Summer 2019 to stimulate job creation and skilled-labor hiring in the tech sector.

Our plan has the merit of providing the foundation of a detailed, structured, and comprehensive roadmap. Crucially, we centered the knowledge economy as a strategic priority for Lebanon and we set the stage for the next government or any future decision maker to hit the ground running.

MSIT was the first ministry in Lebanon dedicated to the knowledge economy. Our ambition was to convert the state ministry into a permanent ministry for the digital economy. Unfortunately, the next government dropped the mandate and the knowledge economy sector fell back through the cracks of various ministries, and so did the MSIT action plan.

But I hope this dream will come true one day. I hope that the momentum that we initiated will continue. I hope that Lebanon will build the knowledge economy needed and deserved by our citizens and our youth, and that our country will enter resolutely into the fourth industrial revolution.

Final thoughts

I cannot deny how challenging it was for me to come back to Lebanon after 31 years abroad working in banking and finance, and dive straight into the treacherous waters of the Lebanese public sector. I also cannot deny how difficult it was for me to weather the numerous political storms in the background and to try to progress against a backdrop of severe economic and financial crisis. I was appointed into a “start-up” ministry, with no allocated resources, no funding, and no existing projects, just an office and a desk.

But to have been given the opportunity to serve my country, even in such testing times, was a unique honor and my only drive. I will be eternally grateful to all those who trusted me and supported me during my short tenure. The encounters and the collaborations with so many bright Lebanese minds, successful entrepreneurs, high-spirited youth, and hard-working and determined women and men were all a true inspiration, and the reason I will always have a strong faith in the potential of our country, Lebanon.

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Adel Afiouni

Adel Afiouni is former minister of state for investments and technology (2019-2020) for the Lebanese government.

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