With its Mediterranean coastal location, dynamic population and historical ties with Phoenician mercantilism, today, startup ventures and SMEs represent an immensely underexploited opportunity for the Lebanese economy to reemerge as a leader on the Middle Eastern business scene.
Currently, unemployment in the nation is 11%, 35% of which is among the youth of the population (1 out of 3) (World Bank 2012). The economy is forecasted to slow down by approximately 2% this year (World Bank 2012), due to political instability, which affects efficiency and plays a special role in this situation, as well the macroeconomic environment. This means there is a need for immediate and effective growth strategies.
Institutional structure and technological innovations are main drivers that will boost Lebanese SMEs, which “constitute over 90% of the country's enterprises but have been so far unable to reach their full business potential due to limited resources.”(The Daily Star, 2012).
According to the Global Competitiveness Index 2012, Lebanon ranks 127th for infrastructure, 119th for innovation, 105th for labor market efficiency, 93rd for technological readiness, 69th for market size and 58th for business sophistication; none of these positions is in line with the true potential of the nation and its assets. If improvements are made, SMEs may be the answer to much-needed job creation, industry innovation, decreased poverty and increased exports. The good news is that entrepreneurship is the core, and the Lebanese absolutely excel at this.
Steps to drive SME/startup growth
Currently, a few key changes could serve as an impetus for progress, for example, assessing the country's strengths and weaknesses, implementing active SME-specific initiatives, accelerating new start-ups and increasing the competitiveness of existing SMEs. Untapped resources which should be cultivated include the women, youth and rural sectors.
At the moment, certain principal factors could make all the difference. Firstly, rules and regulations should be enforced, and the process for starting a business simplified and cost-effective. Secondly, launching cluster initiatives with pooled resources would have an important effect in such a small country, such as introducing tax breaks for SMEs and developing special-benefit certification programs. As for the Lebanese workforce, collaborating with undergraduate students to gain new insight and maintaining pace with competing international skill sets could contribute greatly. Also, a collective source for information on SME programs would go a long way, along with associations with successful industry figures and the business exposure of Lebanese expatriates. Lastly, venture capital and soft loans would encourage the creation of new SMEs in Lebanon and give the economy a much-needed revival.
The country is, however, beginning to build momentum. Servcorp, with its vast international network of 150 locations and cost saving, top-of-the-line office solutions, aims to support SMEs employ the range of benefits of its serviced and virtual office products to unlock their full business potential.
