Can tech start-ups save Lebanon’s foundering economy?

Friday 26/02/2016
Lebanese entrepreneurs from different internet start-up companies work in Beirut’s Hamra district.

Beirut - From the outside it looks like just another trendy Beirut coffee shop but in­side the UK Lebanon Tech Hub, there are neither cof­fee shop punters nor university students. It’s more of tomorrow’s business leaders in a country that can barely provide essential ser­vices such as water, electricity and trash collection, a county ravaged by large-scale corruption with an economy only in name.
It’s hard to imagine that in the midst of this office, Lebanon’s prob­lems could be resolved by a group of 30 or so start-up companies bent on developing an app or a gadget that will make their company a “uni­corn”, reaping millions of dollars and putting Lebanon on the map as a hub for cool ideas and investment and a good starting point for edu­cated youth who want to show the country is still ahead in the region.
Under the initiative, the brain­child of departing UK Ambassador Tom Fletcher, Lebanon’s brightest are sent to the United Kingdom to be mentored and trained on how to attract investment for their projects.
UK investors will be the first to profit from the project, which has sent its first group to London for the programme with hopes of them re­turning to Lebanon with both inves­tors and customers.
Lebanon is bursting with clever young people who can design and build apps and have the business savvy to use the country as a busi­ness hub for the entire Arab penin­sula — despite power cuts, garbage and car bombs.
The idea was inspired by a Leba­nese investor who made a success­ful business from importing genera­tors and their parts from the United Kingdom. His success was noted by Fletcher who saw that, regardless of the problems in Lebanon, the inves­tor had a network in Africa and the Middle East of Lebanese business operators who were ready and wait­ing.
“We noticed that Lebanese in­vestors imported UK goods, like whisky, salmon and cars and then re-exported them… and the biggest importers of UK goods in the region were the Lebanese,” explained Na­dim Zaazaa, who is part of the pro­gramme but also heads up the Leba­non hub.
Zaazaa cited as an example of a locally produced online Lebanese recipe that recently sold to Japanese investors for $13 million.
One project in the programme is a prototype cigarette lighter that helps a person stop smoking; an­other is a financial services search engine aimed at consumers.
“We’re helping Lebanese compa­nies internationalise through Lon­don,” Zaazaa said. “We need to take the best companies from Lebanon. We offer them mentoring and access to the market through introducing them to clients. There’s also a lot of marketing around them.
“At the end of six months, they should start developing business.”
UK companies, Zaazaa explained, are not good at accessing Arab mar­kets. Yet the programme itself might reach those Arab countries ahead of the products that Lebanese start-ups have to offer them. Barely six months after it kicked off, other countries in Africa and in Europe expressed interest in the United Kingdom extending the programme to their areas. The United Arab Emirates and Qatar are believed to be mulling the project to replicate it in the Gulf.
Paul Khawaja, Britain’s commer­cial attache in the British embassy in Beirut, is a keen follower of the programme.
“I’m really encouraged by things so far as now there are another 25 Lebanese firms who are waiting to join the next phase, with $64 mil­lion from the (Lebanese) Central Bank already allocated,” Khawaja said. “And it’s a win-win situation for the UK firms who are using the Lebanese firms as ‘added value’ to what they have now.”
The Central Bank has pumped $64 million into equity-based in­vestments in the start-ups. “What the UK Lebanon Tech Hub did in one year was not expected to be achieved until three years,” Kha­waja noted. “Soon, it will expand to Cyprus as a base.”
The programme is not even ex­clusive to Lebanese citizens. Some foreign companies that set up in Lebanon are taking advantage of the mentoring.
Transterra Media, an online con­tent firm that supplies broadcast news outlets with raw footage, al­though not a benefactor of the Cen­tral Bank equity, is taking advantage of the programme in London.
“Our principal focus in London is on business development for both our publisher (CNN, BBC) and our brand clients,” explained Transterra Chief Executive Officer Jonathan Giesen. “So, we’ll be setting up an of­fice in London to drive business de­velopment and we hope that we can really expand our customer base through a newly launched London operation.”