There is an emergency in Lebanon. Not the
emergency you may think; beyond the political debates and divides,
beyond the clashes and the international tensions, we are suffering
from a crisis of direction. We need to step back from the present
and focus on the big picture, on building the Lebanon that we want
to pass on our youth and children, whatever their location,
background or gender. More precisely, we should answer the
question: what kind of ecosystem will our young people be working
and thriving in, in the future?
Though there is a recognition, in our society and in our decision making institutions, that a coherent and sustainable future development is essential for Lebanon, recognition is one step; action is another. Creating a long term vision is nothing new. Countries in the region and across the world have embraced this approach. It is time we do it here in Lebanon. The vision time span should not be too short, so that results can be achieved, nor too long so that we don’t lose focus and buy-in from the majority. A Lebanon 2020 vision would be the ideal gathering banner.
The issues involved in establishing such a vision are detailed and complex but let’s take a moment to ponder one particular of our environment that is an essential catalyst for the development of the Lebanese economy: our small and medium sized enterprises (SMEs) and the entrepreneurial ecosystem.
When we look at the landscape of the Lebanese economy, we have
on one side large and established companies, usually family led,
employing a large number. On the other side, we have a myriad of
small entities that are often part of the informal economy. Though
no statistics are available, some estimates suggest that 95% of all
establishments operate at a small scale, with less than 50
In between these two extremes, the number of firms is limited and this is where we have an issue. In most countries, SMEs (note: the European definition of an SME is a company of less than 200 employees) are not only the major source of employment but also the source of much innovation and growth. These are the companies that make a country vibrant and dynamic. Because these companies exist in the gap between the large established firms and the small struggling ones, they must innovate to compete and grow and put in place processes and systems to support and sustain that growth.
These companies employ the talented young graduates who too often look for opportunities abroad because they cannot find them in Lebanon. These are the companies that help to create and sustain the middle class, the companies that boost productivity and lift wages, translating into higher purchasing power (consumption) and better standard of living. Productive companies lead to wealth creation, purchasing power increase, consumption and economic growth: this is a virtuous circle.
When it comes to retaining this talent, Lebanon has many strong assets that have not been fully utilized. As some suggested years ago, “the best produce of Lebanon is the Lebanese.” Lebanese brains and imagination are the future of our country. This is why we need to develop a vision in the medium to long run to establish the kind of ecosystem that will give our youth an environment in which they can thrive. It will allow them to show their full potential, not only within Lebanon but also to the outside world.
An international outlook is essential for Lebanon’s entrepreneurs. Nowadays, we play in a global market. We have heard that the world has become flatter: communication and transport systems can link us to anyone anywhere around the world. To compete on a global playing field, one has to play by global rules that apply to each and everyone. If SMEs focus purely on the domestic market in Lebanon, we will miss half of the equation. We need to create an ecosystem that boosts our competitiveness as a country and puts our entrepreneurs and companies on a par with companies from competing foreign countries - be it China, Brazil, France or any others.
Lebanon is de facto a small market. With about 4 million inhabitants and limited purchasing power, our growing companies have to look to outside markets for growth and opportunity. It is always easier to increase the size of the pie then to share the same pie with many other players. Until now, the companies that have ventured outside have often done so with success. International reach grants a much larger potential market. When serving a larger market, our companies will recruit more employees, creating jobs for our local talent while also generating more overall wealth , and paying more taxes. It’s not just a virtuous circle, but a necessity in a small market; we either export, or population growth will become unsustainable.
Our ability to compete in international markets will then depend on our ability to find the areas where we can create sustainable competitive advantage. We will not be able to compete with the Chinese or other East-Asian nations for large scale manufacturing (based on low cost labor), but this should not be the objective. We can compete, however, on the creation and development of innovative products that will eventually need mass production in these countries. Some of our SMEs are already working on this model and they are doing this very successfully (for instance Multilane).
Similarly, we may not be able to compete with other countries on large-scale agriculture production; however we can definitely compete in the domain of niche and high-end products, and in branding. If properly developed and promoted, our niche agriculture products such as our olive oil (such as Olive Trade) or wine (such Chateau Musar or Chateau Belle-Vue) can position themselves on the international market competing with other “major countries” in those fields.
Our creative industry provides an excellent example of how we can exploit the competitive advantages that Lebanon has. Lebanese have always been known for their creativity and imagination. Our fashion designers (such as Elie Saab), jewelry designers, filmmakers (such as Nadine Labaki, etc.), or our writers/poets (such Khalil Gibran, Amin Maalouf, etc.) are known internationally. Our media industry leads the region in content, creativity and impact. What better way to communicate the Lebanese know-how across the world and show our country from a different perspective?
If Lebanon can adopt this approach, it will work to build an outward-facing ecosystem that will work as a true launchpad for entrepreneurs.