Keep the Faith

As the Director of the Middle East Department, how would you assess Lebanon’s role in the region?

Lebanon is a particularly interesting country. And, despite its relatively small size within the region, it boasts a rich social fabric that is reflected in the way the economy functions. Many compromises are made and deals struck to ensure that each segment of the country and its communities enjoy economic benefits. Indeed, this has enabled the country to weather many of the crises it has gone through to date. When considering where the country is truly making an impact regionally, the financial sector and banking industry immediately present themselves. The banking industry is active across the region; in Syria and Iraq, including the Kurdistan region, and Turkey. The industry is performing so well that some would argue that it is keeping the country afloat. It is the receptacle of the billions of dollars remitted by Lebanese citizens living abroad. These, in many cases, extremely successful individuals, retain a very strong bond to their country. The flow of money returning is absorbed by the banking system, which is a crucial and pivotal instrument of the economy, and, by extension, the country at large. In that sense, and despite shortcomings and some criticism, both within the country and abroad, the banking sector stands out and allows Lebanon to shine throughout its region. Then there is the human factor. The Lebanese people are educated, intelligent, multilingual, and extremely entrepreneurial. And, while resident the world over, they are particularly active in this region.

Aside from the banking and real estate sectors, which areas have the most potential for growth?

Focusing on what is available today, and without talking about as yet untapped opportunities, the potential for energy generation is huge. In this context, water is an important national resource that remains largely neglected. A glance at Lebanon’s geography reveals mountains and valleys of incredible potential for energy generation. One would think that the strategic construction of a system of dams, for one, would generate sufficient energy for both domestic and regional consumption. It would make Lebanon a net exporter of energy. Imagine what Lebanon would look like if it is transformed from an energy-starved country to a net provider. Unfortunately, that is not happening due to institutional and political impediments and the practicalities of electricity distribution. In addition, and overall, if Lebanon is to become an attractive business hub for high-end companies, it requires energy that is both reliable and cheap. It would need a fully functioning telecoms industry, a modern transport network, and a dependable institutional framework conducive to long-term business planning.

What is being done to attract investment to areas other than Beirut?

If you look at the economic fabric of Lebanon, you note that a very large chunk comprises micro-, small-, and medium-sized enterprises. With this in mind, the World Bank has recently approved a project specifically targeting the development of such enterprises. The micro- and small-scale enterprises, in particular, play a key role in developing remote areas and enabling entrepreneurs to develop their own businesses and create economic momentum. By doing so, we are pushing back poverty and creating employment within the businesses individuals are working to establish. When considering SMEs, financing is a primary constraint, and so by working with the banking sector, including the central bank, and certain other intermediaries we have been helping small entrepreneurs obtain the urgent financing long unavailable to them. At the same time, we are working at building their capacity to put together viable business plans that represent attractive propositions for the banking sector to finance. In so doing, we not only provide financing opportunities but, also, instill the confidence that drives the entrepreneurial spirit. We provide incentives such as partial risk guarantees by working with the Kafalat SAL, an institution that helps filter and increase the funds that the banking sector is prepared to commit to this investment mechanism.