Lifeline For Growth

December 2018 | Servcorp

For much of the 20th century, Lebanon enjoyed an almost taken-for-granted cultural and commercial leadership of the Middle East. Today, a raft of ambitious national strategies set out the economic programmes designed to restore that status and finally shake off the legacy of a 15-year Civil War. Economic proposals such as 'Lebanon Can' (from the Association of Lebanese Industrialists), provide a visionary and detailed blueprint which is determined to ensure that the right infrastructure and regulatory reforms are put in place. As well they might: while Lebanon has a highly developed banking and finance sector - in many ways a benchmark across the Middle East - the economy has grown unevenly, leaving in its wake an unemployment rate of 25%, with youth unemployment as high as 34% (figures from World Bank).

Across the numerous strategy documents published, two factors emerge as vital to the economy's growth. Firstly, the re-building and re-positioning of Lebanon as a foremost trading hub. The Port of Beirut - for most of the 20-th century the most vibrant and best-performing port in the Middle East - has seen large percentages of its trade lost to Egypt and the UAE, especially since the blocking of key cross-country 'through-routes' via Syria.

Massive plans are afoot to re-boot the Port - and a string of six, smaller satellite ports - as a natural home to economic free zones, and as a centre not only for commerce, but for the core growth market of Hospitality. Important factors at a time when the export market needs drastic attention - currently, the balance of payments is 89% in favour of imports (World Bank).

The role of the SME

The other area designated as key to economic growth is the SME sector. In the 'Lebanon SME Strategy: a roadmap to 2020', the Ministry of Economy and Trade points out that "SMEs are the key economic engine for growth and job creation". The proposal highlights that Lebanon's SME sector was responsible for sales of US$8.8 billion in 2016, but follows the national trend with a decline in exports from US$4 billion in 2011 to US$2.9 billion in 2016.

Lebanon's SME sector is also massive: a study by the Center for Economic Studies, Fransabank, in 2017 shows that nearly 90% of all Lebanon's businesses are SMEs, responsible for 50% of the nation's employment. The fact is that the development of the SME sector is the most important single factor in kick-starting the renaissance of the Lebanese economy.

What is to be done? Starting with the fundamentals...

So, what are the factors that can empower this progress and accelerate the growth and vitality of the SME sector? The reality is that, as micro, small and medium entities, SMEs typically need to take a 'ground-up' approach and manage aspects such as cash-flow, running costs and licensing and office arrangements - wherever possible, minimizing any hindrances to getting on with the day-to-day job of doing business. So, initiatives that help in these ways can truly empower change and make entrepreneurship - intrinsically connected with risk and cost - as affordable and practical as possible.

One of the proven ways of reducing costs and fast-tracking operational readiness is Flexible Working, which has undoubted commercial benefits. Worldwide, Flexible Working is a key factor supporting numerous national SME initiatives. It's also one of the working practices favoured by a new generation of millennials, start-ups and innovative/creative entrepreneurs. In fact, the vibrant growth of the Flexible Working phenomenon is a headline success story of global business:  by 2017, the number of flexible workspaces internationally had reached 15,500 - a staggering rise from the 2011 figure of just over 1,100. By the end of 2018, the figure looks set to rise to 18,900.