Pa 00 KQ 86

INCREASING
ENTERPRISE GROWTH
AND JOBS IN LEBANON
OPTIONS TO INCREASE SME GROWTH AND JOBS
1 MAY 2015
This publication was produced for review by the United States Agency for International
Development. It was prepared by Douglas Muir, Janet Gohlke-Rouhayem, and Craig Saltzer of
Chemonics International, Hayley Alexander of Banyan Global, and Henri Stetter of the Pragma
Corporation for the Asia & Middle East Economic Growth Best Practices Program contract no.
AID-OAA-M-12-00008.
INCREASING
ENTERPRISE GROWTH
AND JOBS IN LEBANON
OPTIONS TO INCREASE SME GROWTH AND JOBS
Asia & Middle East Economic Growth Best Practices Program

Contract No. AID-OAA-M-12-00008
The author’s views expressed in this publication do not necessarily reflect the views of the United
States Agency for International Development or the United States Government.
iv INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON
CONTENTS
EXECUTIVE SUMMARY ................................................................................................ 1
SECTION I: INTRODUCTION ......................................................................................... 7
A. Purpose of Assessment............................................................................................... 7
B. Methodology .............................................................................................................. 8
C. Special Considerations ............................................................................................... 9
SECTION II. POLICY AND REGULATORY CONSTRAINTS FOR SME GROWTH
AND INSTITUTIONAL CAPACITY TO ADVOCATE FOR CHANGE ...................... 10
A. Overview of Policy and Regulatory Constraints to SME Development .................. 10
B. Findings: Policy and Regulatory Constraints to SME Growth ................................ 10
C. Findings: Non-Regulatory Barriers to SME Growth ............................................... 12
D. Findings: Institutional Capacity for Advocacy ........................................................ 17
E. General Recommendations to Support Regulatory Reform ..................................... 20
SECTION III. ENHANCING PRIVATE SECTOR GROWTH THROUGH BUSINESS
DEVELOPMENT SERVICES ......................................................................................... 23
A. Overview of Business Development Services in Lebanon ...................................... 23
B. Supply-side Findings: In-Country Capacity to Provide Specialized Technical
Assistance and Business Development Services to Improve Competitiveness ............ 23
C. Demand-side Findings: SME Needs for Business Development Services in High-
Growth Sectors and Value Chains ................................................................................ 29
C1. SME Technical Assistance Needs .......................................................................... 29
C2. SMEs in Sectors with High Growth Potential........................................................ 31
D. General Recommendations for Technical Assistance to Enterprises....................... 34
SECTION IV. TRADE AND EXPORT LINKAGES ...................................................... 37
A. Overview of Trade and Exports in Lebanon ............................................................ 37
B. Findings: Trade and Exports .................................................................................... 38
C. General Recommendations: Trade and Exports ....................................................... 42
SECTION V. ENHANCING PRIVATE SECTOR GROWTH THROUGH
WORKFORCE DEVELOPMENT ................................................................................... 45
A. Overview of Workforce Development in Lebanon.................................................. 45
B. Findings: Workforce Development .......................................................................... 46
C. General Recommendations: Workforce Development to Enhance Private Sector
Growth .......................................................................................................................... 51
INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON v

SECTION VI. SPECIAL ECONOMIC ZONES .............................................................. 56
A. Overview of Special Economic Zones and Industrial Parks in Lebanon ................. 56
B. Findings: Special Economic Zones and Industrial Parks ......................................... 58
C. General Recommendations: Special Economic Zones and Industrial Parks............ 60
Section VII. YOUTH AND GENDER CONSIDERATIONS ......................................... 62
A. Youth Considerations............................................................................................... 62
B. Gender Considerations ............................................................................................. 65
SECTION VIII: PROGRAM RECOMMENDATIONS AND OPTIONS....................... 68
A. Program Recommendation 1: Firm-Level Technical Assistance to Enterprises ..... 69
B. Program Recommendation 2: Export Promotion Assistance ................................... 73
C. Program Recommendation 3: Workforce Development and Job Placement ........... 75
Annex A. References ........................................................................................................ 78

Annex B. List of Interviewees .......................................................................................... 81
Annex C. SME Profile Tiers ............................................................................................. 89
Annex D. Tunisia Business Reform and Competitiveness Program Approach................ 90
Annex E. Overview of Mauritius Business Growth Scheme ............................................ 92
Annex F. Lebanese Import and Export Customs Data Over the Last 5 Years by Sector . 93
Annex G. Qualifications of Business Advisors ................................................................ 95
Annex H: North Lebanon SME Competitiveness and Job Creation Concept Note ......... 96
Annex I. Assessment Scope of Work ............................................................................. 101
vi INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

ACRONYMS
ACC-VET Advisory and Coordinating Committee for Vocational Education
and Training steering committee
ADR Alternative Dispute Resolution
AMEG Asia Middle East Economic Growth Best Practices Program
AOU Arab Open University
AUB American University of Beirut
BEE Business Enabling Environment
BT Baccalaureate Technique
CAD/CAM Computer-aided Design / Computer-aided Manufacture
CCIAT Chamber of Commerce Industry and Agriculture of Tripoli
CIT Centre International Des Sciences Techniques
CNAM Centre régional associé au Conservatoire national des arts et
métiers
DGVTE Directorate General for Vocational and Technical Education
DS Dual System
EBRD European Bank for Reconstruction and Development
EU European Union
ETF European Training Foundation
FDI Foreign Direct Investment
GIZ Gesellschaft für Internationale Zusammenarbeit (German Society
for International Cooperation)
GoL Government of Lebanon
ICSID International Center for the Settlement of Investment Disputes
ICT Information and communications technology
IECD European Institute for Cooperation and Development
IDLO International Development Law Organization
IFC International Finance Corporation
ILO International Labour Organization
IMF International Monetary Fund
IPR Intellectual Property Rights
ITC International Trade Center of the WTO
IQS Indefinite Quantity Services
MEHE (Lebanese) Ministry of Education and Higher Education
MoET (Lebanese) Ministry of Economy and Trade
NEO National Employment Office
NGO Non-governmental Organization
PPD Public-Private Dialogue
PPP Public Private Partnership
SEZ Special Economic Zone
SME Small and Medium Sized Enterprise
TVET Technical / Vocational Education and Training
UNCTAD United Nations Conference on Trade and Development
INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON vii

UNDP United Nations Development Programme
UNIDO United Nations Industrial Development Organization
USAID United States Agency for International Development
VAT Value Added Tax
WFD Workforce Development
WTO World Trade Organization
viii INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

EXECUTIVE SUMMARY
In January 2015, USAID engaged the USAID Asia and the Middle East Economic
Growth Best Practices Project (AMEG) to examine impediments to private sector growth
— particularly the growth of small and medium sized enterprises (SMEs) — and
opportunities for USAID to remove or alleviate these impediments in the future. The
assessment examined enterprise development challenges and opportunities across five
areas to propose recommendations to support:
1. Advocacy for an improved business enabling environment

2. Demand-driven business development services (BDS)
3. Increased trade and export linkages
4. Enhanced workforce development
5. Opportunities for growth in special economic zones.
The assessment examined the needs of SMEs and high-growth lead firms within key
sectors and value chains to identify specific bottlenecks to growth as well as to identify
strategic interventions to support SMEs developing goods and services for which
demonstrated demand and commercial matchmaking opportunities exist. The scope of
work for the assessment can be found in Annex I.
The AMEG assessment was conducted in Lebanon over a period of six weeks in
February and March 2015 by a team made up of experts from Chemonics International,
Banyan Global, and the Pragma Corporation. Desk research was followed by interviews
with more than 200 representatives of chambers of commerce, business associations,
government ministries, donors, universities and vocational training institutes, banks,
incubators, as well as business owners and experts. Included in the total number were 55
interviews with SMEs representing 11 different industries. The assessment team also held
two focus groups with small, medium, and large enterprises to ground truth findings. In
addition, the team hosted a large public event to share findings and build consensus
around next steps for USAID.
Policy and regulatory constraints and advocacy for reform. While at least 11 laws pose
real challenges to the business operating environment and are in need of updates, most
businesses cited non-regulatory issues such as electricity outages, poor internet, poor
transport infrastructure, corruption, and customs delays as their main constraints to
growth. Lebanon remains in a state of political paralysis due to the inability to elect a
President, but the development of a new SME Strategy 2020 by the Ministry of Economy
and Trade (MoET) is helping to reinvigorate dialogue around reforms to support the
business enabling environment. The SME Strategy has identified six areas for reform,
and MoET is assembling committees led by public officials and business leaders to
spearhead them. This structure is a significant step toward a formalized advocacy
process, and presents an opportunity for USAID to support reform by providing selective
advisory and research expertise on an as needed basis. USAID can also work with private
sector advocates to structure compelling platforms for reform.
INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 1

Business development services. Of the 55 SMEs interviewed, the vast majority were
relatively advanced and sophisticated, sometimes world class in their industry/sector, but
were either the only one, or part of a very small group of enterprises active in their sector
or sub-sector in Lebanon. Of the 55 SMEs the assessment team interviewed, at least 20
percent were poised to grow immediately and hire new workers with targeted technical
assistance. These firms needed help identifying and developing strategies to: enter new
export markets; implement new technologies and more efficient production techniques;
and conceptualize, research, and test new products. Many of the firms are in high-growth
sectors and sub-sectors as identified by the assessment team: agro-processing;
pharmaceuticals/medical; light manufacturing; alternative energy and recycling;
information and communications technology and media; and ready-to-wear fashion and
accessories. These businesses need highly individualized and specialized coaching,
mentoring, and technical assistance to grow and hire significant numbers of new
employees. As such, USAID should employ a development approach that works directly
with individual medium to large firms to identify new buyers, develop strategies to enter
new markets, and increase sales and jobs. Target firms will be committed to working with
USAID to achieve growth. Strategies for growth will be developed and driven by the
firms themselves with mentoring and technical assistance provided by a USAID-funded
program to help address bottlenecks in production, overcome constraints to export, and
hire and train additional workers. Firms participating in the program will be expected to
pay for a portion of the technical assistance costs, implement recommendations, and
report progress toward new sales and employee targets.
Enhancing trade and exports. Many firms and business support organizations expressed a
lack of access to information to trade information and the need for help understanding
foreign markets and export requirements. While Lebanon has a well-developed
consulting industry, the assessment team could not find consultants specializing in
trade/export support and facilitation. In addition to assisting individual firms to meet
export requirements, USAID can build on existing USAID best practices and tools to
support high-functioning chambers of commerce and business associations to prepare
their members to export to new markets. For example, a USAID-funded program can
strengthen the capacity of chambers to provide training and online toolkits aimed at
members in sectors with high export potential. It can also co-fund participation of
member firms in trade fairs and facilitate matchmaking with potential buyers. Exporting
involves a wide range of service providers, such as customs brokers, freight forwarders,
distributors, bonded warehouses, and the like. A USAID-funded initiative could also help
chambers connect first-time exporters to service providers who have demonstrated
flexibility and openness to dealing with new market entrants.
Workforce development. The sixth most mentioned constraint for SMEs in a 2009 World
Bank Report was “skills and education of available workers,” with 55 percent of
enterprises listing a general lack of skills, including problem solving, creative thinking,
and management skills, among employees as a serious matter. There are also significant
gaps between the skills that employers demand and those that workers have. Neither
universities nor vocational and technical training institutes are currently providing the
2 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

skill sets demanded by employers. As USAID works with individual firms, it can identify
the skill sets needed to fill immediate job vacancies and work with university and
technical vocational education and training (TVET) career centers, as well as support
more targeted job fairs to identify appropriate candidate pools. A USAID-funded
program could also work with existing training providers and employers as well as
expand the application of Microsoft’s YouthWorks Platform.1 With existing training
providers, the program would be able to design and implement post-employment training
programs that enable new hires with some, but not all of the desired experience, to master
the skills most critical for their new jobs. Building up the Youthworks Platform in
Lebanon the program would be able to further expand outreach efforts to promote youth
skilling and employment to even more diverse and distant beneficiaries and partner
organizations.
Special Economic Zones and Industrial Parks. Special Economic Zones (SEZs) are
special geographical regions, designated by law, where certain laws (typically on
taxation, trade, and certain sorts of regulation) are suspended or amended in order to
allow the rapid growth and development of enterprises. SEZs have been engines of
development and growth in a number of countries across the region. SEZ have attracted
much attention and discussion in Lebanon in recent years, establishing an SEZ is a
complex and lengthy process that may or may not prove unsuccessful in the end. In
addition, prior to any engagement on development of an SEZ in Lebanon, the SEZ law
must be amended. In light of the current political situation, it is unlikely that any
amendments to the law will be passed in the near term. There are a couple of
municipalities which have started the process of creating Industrial Parks. Initiatives in
Saida and Terbol have advanced with the support of local mayors and chambers. USAID
could help support those municipalities and chambers in the planning process.
Youth and gender considerations. In Lebanon 42.4 percent of the population is below the
age of 25. Youth aged 15-24 are currently experiencing a 24 percent unemployment rate.
This rate is even higher in regions outside of Beirut. Lebanese youth are highly educated,
but Lebanon produces far more educated job seekers than the domestic labor market
needs. For more disadvantaged, and less educated Lebanese youth, the presence of
migrant workers depresses wages for low productivity/low skilled jobs. There is no
national strategy being implemented to support youth employment, and youth are at a
disadvantage resulting from the lack of guidance provided on study and career pathways.
Poor opportunities exist for apprenticeship-style practical work within the school context.
USAID can support job fairs, work with firms, universities, and TVET centers to
establish more internships and hands-on learning opportunities for students, and co-
finance post-employment trainings to help recent graduates’ develop relevant skill sets on
the job. In collaboration with Microsoft’s YouthWorks Platform USAID could cost-
effectively expand soft-skill training to NGOs. USAID’s approach should also consider
regional distinctions into consideration when designing programs to affect youth
employment opportunities.
1
Microsoft presently has a version of the YouthWorks Platform operating in Lebanon known by the name
Ta3mal.

Lebanon benefits from a high volume of experienced female entrepreneurs relative to
other MENA countries. With respect to business development and financial services
however, women-owned business in Lebanon are disproportionately less served. There is
a high demand among female business owners for greater access to information and
training on topics such as general business management skills, using financial products
such as SME lending products or equity capital, exporting, accounting and financial
management, and selling to large, multi-national corporations. By taking an active
approach to seeking out female business owners and entrepreneurs, USAID can
positively affect women’s access to untraditional employment and increase opportunities
and chances for success in growing their businesses.
Program recommendations. The AMEG team’s mandate included the development of

specific, actionable recommendations for USAID assistance in Lebanon. Criteria used
for assessing potential assistance included:
 Contribution to sustainable job creation;

 An identified market demand;
 Existence of a capable implementing partner;
 Activity leverages prior or current assistance by the U.S. Government and/or
other donors and/or represents a good opportunity for a Public Private
Partnership;
 Impact extends beyond area of Greater Beirut;
 Activity positively impacts women and/or youth.
The three program recommendations below could be implemented as three separate

activities, but would likely be more effectively implemented as three components in a
larger, five-year, integrated enterprise and workforce development program. This three-
faceted program could leverage lessons learned and identify synergies across components
to have greater impact on enterprise growth and job creation at lower cost. All three
proposed options should focus activities in Beirut, Bekaa Valley, North, and South
Lebanon.
1) Firm-Level Technical Assistance to Enterprises
Objective: Achieve business growth leading to incremental employment, increased

exports, and improved competitiveness through providing targeted technical assistance to
partner enterprises in Beirut, Bekaa Valley, North, and South Lebanon.
Scope of Work: Over the course of a 5-year USAID funded activity, a team of 5-6 local
business advisors with extensive work experience in the private sector will work with
medium to large partner firms (20-100+ employees) to provide coaching and mentoring,
identify new opportunities for growth and job generation, and develop technical
assistance plans to take advantage of those growth opportunities. To be successful, the
approach must remain “by business people for business people.” This means that
technical assistance activities will largely be driven by the firms themselves. Assistance
will be cost-shared and will be implemented via subcontracts with local consulting firms.

In select cases where highly specialized technical assistance is required that cannot be
found in Lebanon, the program will pair international consultants with local
consultants/firms to build capacity. While firms in any sector would be eligible for
assistance, business advisors will begin by seeking out firms in sectors with high-growth
potential such as: agro-processing; pharmaceuticals/medical/health care; light
manufacturing; alternative energy and recycling; information and communications
technology and media; and ready-to-wear fashion and accessories. The assessment team
estimates that with ideal conditions and staff, this type of program could work with 500
enterprises to create more than 10,000 jobs over a five-year period.
2) Export Promotion
Objective. Facilitate SME entry into new regional and international markets and increase
SME export sales by strengthening the export promotion capacity of businesses through
associations and chambers of commerce.
Scope of work. Driven by challenges and issues identified through the development of
firm-level assistance agreements, this program will help partner SMEs to identify and
capitalize on opportunities to export products to new regional and international markets.
Business advisors will work with firms to address specific challenges and opportunities to
export at the firm level. It will also utilize lessons learned through firm-level assistance
and partner with business associations and chambers of commerce to strengthen and
consolidate tools to help SMEs in sectors with high-export potential familiarize
themselves with new markets, identify specific buyers, and develop strategies to export.
This would involve co-sponsoring relevant export trainings and online toolkits, SME
participation in regional and international trade shows, and market studies for sectors
with high export potential. The assessment team estimates that this type of program could
work with three to four chambers and create 780 jobs over a five-year period.
3) Workforce development and job matching
Objective. Foster more demand-driven education and facilitate job matching to ensure
that new jobs created as a result of growth of partner firms can be filled.
Scope of work. The program will work with firms receiving individualized assistance to
identify job vacancies and candidates with appropriate skill sets. The program will also
work with business associations and Chambers to improve job fairs (in-person and
virtual) and sponsor attendance at job fairs for SMEs. The program will work with
university and TVET career centers to help them understand the types of skills in high-
demand, advocate for integration of more practical learning opportunities into curricula,
and to strengthen job-matching programs, tools, and events. In addition, the program will
work with employers and local training providers to develop short-term, post-
employment training programs for new hires with less experience. Additionally, the
program can work through existing training providers to target trainings to mid-career
professionals in need of skills upgrading. The program can also incorporate the Microsoft

YouthWorks Platform2 into each of the various other activities supporting this Objective.
The YouthWorks Platform enhances access to soft-skills training and employment
matching by serving as a one-stop-shop for youth for eLearning, internships, mentoring,
and career guidance. The assessment team estimates that this type of program could help
match 2,250 job seekers with new jobs.
Overall, these three proposed activities are estimated to create a total of 13,230 jobs at a
cost of roughly $2,645 per job.
2
Microsoft has successfully collaborated with USAID to adapt the YouthWorks Platform to support
USAID-funded youth projects in Iraq, Tunisia, and West Bank and Gaza.

SECTION I: INTRODUCTION
The Lebanese economy faces challenges in the areas of competitiveness, diversification,
and modernization, as well as the overall capacity to absorb a large existing pool of
unemployed labor and the continuous addition of young graduates seeking to join the
workforce. Over the next 10 years there will be an average of 19,000 new entrants into
the Lebanese labor market annually. To absorb them, the economy would need to create
more than five times the number of jobs it currently offers, which is estimated at only
3,800 net jobs per year. (Robalino & Sayed, 2012)
Using the proposed Ministry of Economy and Trade (MoET) definition of firms with 10-
100 employees, small and medium enterprises (SMEs) make up more than 93 percent of
registered businesses in Lebanon and employ roughly half of all workers. (Inventis, 2014,
p. 14) Therefore, growth of the SME sector is essential to developing a diversified,
dynamic, innovative, and competitive economy in Lebanon capable of providing the
required quantity and quality of employment opportunities.
MoET’s SME Strategy further makes the case that “Lebanese entrepreneurship can
become an essential lever for economic development and the fight against
unemployment.” As compared to other countries in the region, Lebanese entrepreneurs
are highly educated and employable. Roughly 82 percent of Lebanese entrepreneurship is
driven by the desire to capitalize on opportunities rather than driven by necessity to
generate one’s own employment. And these entrepreneurs are typically successful in
building sustainable, high-growth businesses with high-employment potential. (Inventis,
2014, p. 15) Additionally, a growing group of incubators, accelerators, venture
capitalists, and entrepreneurial support organizations has cropped up to support them.
Recognizing the potential of Lebanon’s SMEs to become critical drivers of job creation
and economic development, MoET developed a series of strategic thrusts and proposed
initiatives under each to address constraints to SME growth. The six thrusts are:
1. Evolving Business Leaders

2. Facilitating the “Right” Funding
3. Improving Access to Markets
4. Enhancing Capabilities and Innovation Capacity
5. Developing a Conducive Business Environment and National Environment
6. Ensuring Coherence and Effective Coordination. (Inventis, 2014, p. 37)
A. Purpose of Assessment
Recognizing the opportunity to support and build upon momentum generated by MoET’s
new SME strategy, in January 2015, USAID engaged the USAID Asia and the Middle
East Economic Growth Best Practices Project (AMEG) to conduct an assessment of the
prospects for enterprise growth and job creation in Lebanon. The assessment examined
enterprise development needs across five areas to report on the current situation of SMEs
in Lebanon as well as propose recommendations to support:

 Advocacy for an improved business enabling environment
 Demand-driven business development services (BDS)
 Increased trade and export linkages
 Enhanced workforce development
 Opportunities for growth in special economic zones.
The assessment examined impediments to private sector growth — particularly the

growth of small and medium sized enterprises — and opportunities for USAID to assist
in removing or alleviating these impediments in the future. The assessment examined the
needs of SMEs and high-growth lead firms within key sectors and value chains to
identify specific bottlenecks to their growth. The assessment also attempted to identify
strategic interventions to support SMEs to produce and market goods and services for
which demonstrated demand exists. Furthermore, the assessment examined the potential
for public-private sector partnerships to leverage resources to contribute to increased
SME productivity, sales, and exports.
B. Methodology
The AMEG assessment was conducted in Lebanon over a period of six weeks in
February and March 2015 by a team made up of experts from Chemonics International,
Banyan Global, and the Pragma Corporation. The team conducted initial desk research –
reviewing relevant national strategies, government and donor reports, statistics, etc. (see
Annex A) – to gather data on key sectors and sub-sectors, identify key public and private
sector interviewees, and understand past and present donor and government programs to
support job generation and economic growth.
The desk research was followed by interviews with more than 200 representatives of
chambers of commerce, business associations, government ministries, donors,
universities and vocational training institutes, banks, incubators, as well as business
owners and experts. The assessment team also hosted two focus groups with small and
medium enterprises to ground-truth findings and a larger public event to share findings
and build consensus regarding next steps. The interviews made it possible to gain an in-
depth understanding of policy and regulatory challenges in Lebanon, high-growth and
emerging sectors and sub-sectors, the Lebanese labor market and skills shortages, and
ongoing efforts by the government, USAID, and other donors to support economic
growth. Interviews were conducted in Beirut, Mount Lebanon, Saida, Tripoli, and the
Bekaa Valley. The team spoke with and visited 55 Lebanese private sector enterprises
across 11 sectors and industries, including:
 Cosmetics
 Energy
 Fashion/garments/footwear
 Food production and processing
 Franchises
 Furniture and home goods

 Information and communications technology (ICT), including media, film, and
advertising
 Industrial manufacturing
 Packaging and plastics
 Tourism and hospitality
 Waste management and recycling.
The assessment team used structured interviews to gauge SME needs, willingness, and
ability to grow with targeted technical assistance. Focus group meetings with SMEs in
Beirut provided an opportunity to understand specific and pressing challenges faced by
business owners, particularly in those sectors with potential for growth and job creation.
A discussion of major types of technical assistance necessary in Lebanon is included in
Section III.
C. Special Considerations
The team was asked to focus recommendations on interventions that would help create
jobs for Lebanese workers in Lebanon. However, the large number of Syrian refugees
living in Lebanon as a result of the conflict presents a significant challenge for the
government that must be addressed. While more recent restrictions limit Syrian refugees’
ability to obtain formal employment in Lebanon, many refugees are engaged informally
or in seasonal, weekly, or daily low-skill, low-wage positions in agriculture, domestic
services, and construction. The team did not specifically examine employment
opportunities for refugees as part of this assessment, but did try to take note of
opportunities in sectors that could impact the availability of new jobs, both high and low-
skilled, for all those residing in Lebanon.
The team also examined the issue of high rates of youth unemployment and potential
interventions to generate additional employment opportunities and match them with
youth with less experience in the workforce. In addition, the team examined barriers to
employment for women and constraints to growth of women-owned enterprises. Section
VII highlights some of the team’s findings around youth and gender constraints and
potential options for addressing them. The team also took these considerations into
account when designing its recommendations for increasing overall enterprise growth and
job creation in Lebanon.

SECTION II. POLICY AND REGULATORY CONSTRAINTS FOR
SME GROWTH AND INSTITUTIONAL CAPACITY TO ADVOCATE
FOR CHANGE
A. Overview of Policy and Regulatory Constraints to SME Development
The policy and regulatory constraints to SMEs in Lebanon are well documented. Whether
they are immoveable at this stage in Lebanon’s development remains a subject of some
debate. Most interviewees who participated in the assessment, in both the public and
private sectors, believe the political paralysis that currently grips the country will not be
resolved in the near term.3 Nonetheless, a few people were at least hopeful that some
regulatory changes continue to be possible. But it is clear such changes are conceivable
only if they are addressed within an individual ministry and with the strong support of
that particular Minister. Broad or systematic regulatory reforms are not believed to be
feasible at this time. For the situation to change, at least two things need to occur: a
president must be selected to help normalize Lebanon’s political structure and a culture
of organized public-private dialogue must develop.
B. Findings: Policy and Regulatory Constraints to SME Growth
The recently completed SME Strategy 2020, produced by the Ministry of Economy and
Trade, offers an overview of the regulatory environment and reform areas critical for
economic growth. Five laws – of the many awaiting passage – are highlighted in the
strategy as particularly important to help move toward a more supportive regulatory
environment for small and medium-sized enterprises:
 The Code of Commerce

 The Insolvency (Bankruptcy) Law
 The Public Procurement Law
 The Domestic and Foreign Investment Law
 The Labor Law. (Inventis, 2014)
In most of these cases, outdated legislation will be replaced. The Code of Commerce,
Bankruptcy, Public Procurement and Labor Laws, for instance, are intended to replace
anachronous laws from Lebanon’s colonial past. The Domestic and Foreign Investment
Law was introduced to address a legislative gap in the ways of doing business during the
21st century, particularly reflecting the advent of globalization.
In addition to the above, there is general consensus about several other laws and reforms
which should also be included among the reform agenda’s early priorities:
3
At this writing (April 2015), the political paralysis is particularly extreme: Lebanon has not had a
President for several months, and each of 24 ministers has de facto veto power over proposed legislation.
While it is not expected that this situation will last for years, even with a President in office it will not be
easy to pass new legislation.

 A Secured Transactions Law
 The Anti-Corruption Strategy
 The National Energy Efficiency Action Plan
 The Competition Law
 Establishment of a Trade Promotion Agency
 The Law for Tax Reduction on Exports (passed but not implemented).
These laws are commonly found in other developed and developing countries, and are
fundamental for Lebanon’s evolution toward a friendlier legal and regulatory
environment. For instance, a secured transactions law is important to further improve the
flow of financing while offering creditors greater protection in the event of debtor
bankruptcy. The Anti-Corruption Strategy presents a way forward to combat the
pervasive graft and corruption amongst Lebanese governmental entities, which now
significantly adds to the cost of doing business. The Competition Law is intended to
establish parameters limiting the monopolistic practices and oligopolistic collusion that
has so greatly concentrated wealth in the country today.
A set of 69 laws, including most of these and several other useful commercial laws, was
prepared for presentation to Parliament several years ago. (UNDP) However, this
package was never advanced. The general consensus is very few of these laws will be
reviewed or passed until a new president is in place. Even then, the “package of 69 laws”
has itself become somewhat controversial and many of the laws are unlikely to move
forward unless they are first reformulated.
Table 1. Legal and Regulatory Reform Priorities for SME Growth and Job Generation
Law Priority Considerations

Level
The Code of Commerce (Commercial 1 Critical to improve legal transparency for commercial
Code)* relationships and contracts. Will improve the investment
climate.
The Insolvency (Bankruptcy) Law* 1 Important to allow companies to liquidate without criminal
proceedings and seek protection during restructuring for
continued economic contribution. Allows for continued use
of productive assets.
The Public Procurement Law* 1 Needed to improve transparency and encourage broader
access to lucrative government contracts, particularly for
SMEs.
The Domestic and Foreign 1 Facilitates secure investment in Lebanese entities thereby
Investment Law* fostering growth. Important to clarify recourse for all
investors especially for FDI.
A Secured Transactions Law* 1 Reduces lending risk by allowing lenders to take a secured
interest in collateral; also, works in parallel with an
effective bankruptcy law for liquidations or restructuring,
and protection of creditor’s rights.
The Anti-Corruption Strategy* 1 An important first step to establish a roadmap to fight
endemic corruption and the cost burden to private
enterprises.
The National Energy Efficiency 1 A roadmap to address the dysfunctional system of energy
Action Plan use, its high cost to business (reducing competitiveness)
and the resulting environmental degradation.
The Competition Law* 1 To foster a level playing field for all enterprises and reduce

the heavy concentration in two-thirds of Lebanese industry
sectors, wherein 70% of all economic activity is controlled
by three firms.
The Labor Law 1 This law needs review but should be directed at reducing
the outdated and restrictive termination regulations, which
act as disincentives to new hires. In tandem with the social
security law amendments, it should also offer a statute of
limitations for company liability to ex-employees and
damages thereof.
The Law for Tax Reduction on 1 One of several important laws to encourage exports, which
Exports (passed but not are a key component to economic growth for the country,
implemented)* especially for companies in the 50+ employees category.
Law to establish an export 2 Another important law to incentivize exports (see above).
development (promotion) agency* While an export development agency is not a panacea for
export development, if well-resourced it offers a starting
point for SMEs without export experience.
Commercial registry regulations* 1 Important to enact in parallel with a secured transactions
Law for lower risk lending.
Collateral Law* 1 Also, important to enact in parallel with a secured
transactions Law for lower risk lending.
Law for foreign trade and licensing* 2 Needs review but should work in harmony with the law to
establish an export development agency and function.
Six Laws pertaining to IPR protection 2 The content of these laws have not been examined and
and registration of marks* will need thorough review and harmonization. However,
the need for IPR protection is clearly a priority, particularly
for the ICT, agro-processing, consumer goods and light
industrial sectors.
Draft Law on public private 2 A vital component to ensure initiatives like the SME
partnership* Strategy 2020 have the legal framework to implement well-
structured PPPs through public-private dialogue.
Amendments to the monetary and 2 Needs review but should be harmonized with secured
credit Act* lending, commercial registry and collateral laws.
Law on contracts lending 2 Needs review but should be harmonized with secured
instruments and financial lending, commercial registry and collateral laws.
instruments*
Electricity Law* 2 Needs review but should work in harmony with the
National Energy Efficiency Action Plan to normalize the
generation and distribution of electrical power reliably and
cost effectively.
Three Laws for social security 2 Should be harmonized with the Labor Law and directed
system amendments and reform* toward reducing the employer paperwork burden,
establishing a statute of limitations on company liability for
ex-employees and eliminating inspector harassment –
while offering protection for pensioners. These actions will
increase incentives to hire people while improving social
protection.
*Included in the list of the 69 laws
C. Findings: Non-Regulatory Barriers to SME Growth
The legislative process in Lebanon has been at a virtual standstill for years. As noted
above, no major commercial laws have been passed since 2006. In addition, few relevant
regulations have been passed or amended, and few Ministries or agencies have undergone
a review and reform of existing policies.
For businesspeople, this has necessitated finding circuitous ways of avoiding obstructive
regulations. The business community has done this very effectively. In fact, most

business owners and managers interviewed downplayed regulatory barriers and asserted
that other factors in the operating environment were typically more problematic as
business impediments. Some of the above operating environment factors can be dealt
with through improved regulations. However, most do not require anything more than
resources and the will to implement existing laws and regulations. As several
interviewees put it [paraphrasing]: We don’t expect regulations to change, we just want
government to get out of the way. Those most commonly cited included the following
issues.
Figure 1. Leading Constraints to Lebanese Enterprises (% of firms identifying
constraint as major or very severe)
Source: World Bank, 2009.
Electricity outages and cost of auxiliary power generation. This is perceived as the most
serious of the top three impediments to SMEs in Lebanon, particularly SMEs involved in
industry and/or manufacturing. The state-run utility Electricite du Liban (EdL) sells line
power at a very low, subsidized price of about $0.07 per kilowatt-hour.4 However,
brownouts and blackouts are common, especially outside of central Beirut, undermining
security of electrical supply in small and medium size industries. Most SMEs compensate
4
It costs EdL about $0.20 per kilowatt-hour to produce the electricity it sells for $0.07. By way of
comparison, line electricity in the United States typically costs between $0.10 and $0.15 per kilowatt-hour.
In most large European countries, prices range between $0.15 and $0.20. A full discussion of EdL’s
problems is beyond the scope of this report, except to note that they are severe, and include problems with
production, distribution, transmission, administration, and finance.

by purchasing diesel generators. Generators are an expensive investment in their own
right and the electrical power from them is also quite costly, between $0.35 and $0.60 per
kilowatt-hour, depending on the size and type of the generator. The use of generator
power varies from place to place, but most of Lebanon’s businesses get at least one-third
of their electricity from privately operated generators. The regular use of generators
forces SMEs to operate under a higher cost structure than foreign competitors.
Photovoltaic solar is gradually being introduced, notably by the EU-funded CEDRO
program, which is piloting green villages and solar array farms. However, as yet, use of
solar and other renewables is not widespread. (UNDP-CEDRO, 2015)
Internet speed, reliability and cost. This is another of the top three most cited
impediments to Lebanese SMEs. Considering Lebanon’s income level and technical
prowess, the lack of fast, reliable and affordable internet service is somewhat surprising,
and it places Lebanon at a significant disadvantage vis-à-vis rivals from competing
countries. Over 90 percent of telecommunications are government controlled and
telecommunications remain a large source of government revenue. Historically, the
government has tended to underinvest in the network, and has not emphasized bandwidth,
reliability, or quality control. The situation impedes all businesses, but particularly those
that rely on social media, e-commerce, and those with heavy bandwidth requirements
and/or needs for high-quality connections.
Transport infrastructure. Export shipments by land are currently impeded. The border to
Israel in the south is closed, while to the east and north the war in Syria makes export into
or through that country very difficult as well.5 Most export shipments have little
alternative other than embarkation from the Port of Beirut. The physical infrastructure of
the Port has been modernized and should be capable of handling all of Lebanon’s import,
export, and transshipment needs. The Port however, appears to be somewhat
understaffed, leading to occasional bottlenecks. More seriously, there are regular
problems with Lebanese Customs, which has a negative reputation for inefficiency and
corruption (see below).
Internally, there have been no functioning rail links in the country since the 1970s.
(Ghazi, 1997) All in-country transportation must thus be handled by truck. Outside of
Beirut and Mount Lebanon, Lebanon’s roads are poorly maintained for a country of its
income level; this is a particular problem in rural regions. Stops by authorities are
frequent, ostensibly for security. All of these cause delays and damage to goods – in
addition to the issue of unofficial payments [bribes] being demanded for continued
passage.
Additionally, Lebanon’s trucking sector is extremely fragmented and badly

undercapitalized. This has led to a situation where margins for the industry are low, yet
5
Although, not quite impossible. At this writing (April 2015), land trade with Syria appears to be
continuing, though at a reduced level. Land trade through Syria, to Jordan or Iraq, does still occasionally
take place, though the dangers are quite high, as are the corresponding costs. Informal interviews with
freight forwarders suggest that land trade with Syria has dropped by about 50% to 75%, while land trade
with Jordan and Iraq has dropped by 90%-95%.

costs to the consumer are high. For instance, moving a single 40-foot container from
Mount Lebanon to the Port – a distance of just 10 miles – can cost over $200.
Customs clearance. Related to the transport problem, but deserving of its own section, is
the often difficult customs clearance process. While the situation at Customs has
generally improved in recent years, in part due to donor interventions and training, many
SMEs still struggle with delays and/or unpredictable actions by Customs officials. For
example, at the beginning of February 2015, Lebanese Customs increased inspections to
100 percent for incoming and outgoing shipments, creating severe backlogs. (Reportedly,
this was done as a means to increase flagging revenues.) If SMEs cannot obtain inputs in
a timely manner, or if customer shipments are delayed, their competitiveness will
naturally be decreased.
Surprisingly, there was by no means a consensus on the general customs issue. One
interviewee stated that they have no problems with Lebanese Customs and are routinely
able to clear incoming and outgoing goods in 24 to 48 hours. This seems to be the
exception, however, as other SME interviewees firmly stated that 8 to 15 days and even
longer is more the norm. The Bertelsmann Stiftung Tranformation Index paints an even
bleaker picture with an average time to export of 22 days and an average time to import
of 30 days. Some companies are able to maintain excellent relations with customs,
routinely benefitting from rapid clearance of goods, while others stand in the queue with
paperwork and inspection delays. Our conclusion is the average duration of delays is
directly related to the relationship a company has with Customs, which may in turn
depend on the size and importance of the company.
High land prices. Lebanon is a very small country in geographic terms. Its population
density is high, ranking 21st of 221 countries and territories, and is effectively even
higher given that most of the population lives either in the greater Beirut area, Mount
Lebanon, or on the narrow coastal plain. (World Bank, 2013) Land is very often sold
without basic infrastructure like water, sewerage, electricity, or internet connectivity.
Even when these problems have been addressed by private land owners, facilities
expansion may not be possible due to limitations stipulating that roughly half the
calculated land area must be left structure-free. The end result is SMEs face very high
costs to acquire land, build on it, and install infrastructure. It is a particular problem for
space-hungry businesses such as industrial production and warehouses. Thus, land in
Lebanon will always be in short supply and expensive. This situation has been made
much worse by a steady flow of capital into land, bidding up land prices and causing
construction booms, particularly in Beirut.6
Corruption cost and time lost. Corruption is a pervasive problem in Lebanon. In the
absence of strong government, corruption is even more rampant and few checks or
balances exist to slow its pervasive reach. The World Bank ranks Lebanon at just 146 out
6
The underlying causes of this are beyond the scope of this report, but include an abundance of capital –
the Lebanese banking system has over $160 billion in deposits – combined with unwillingness on the part
of Lebanese banks to make loans unless backed by land as collateral. Foreign capital also plays a role;
almost all FDI in Lebanon goes towards the purchase of land.

of 202 countries in terms of effective governance, with one reason being the high rate of
corruption. (Transparency-Lebanon.org, 2015) Corruption shows up in the usual places:
regulatory inspections of businesses; customs clearance; administrative procedures and
filings; and judicial processes. In December 2014, the Lebanese Transparency
Association released the results of the 2014 corruption perceptions index. The causes
behind the rampant corruption in Lebanon are said to include: the lack of awareness
about corruption; its causes and consequences; the absence of key anti-corruption
institutions; the weak legal framework; the lack of proper legal implementation
mechanisms; and the post-war structure in Lebanon, which has led to a power-sharing
formula among political and confessional groups resulting in competition for state
resources. One pharmaceutical firm we interviewed said it is not uncommon to be
harassed by inspectors sent to check on their production processes mainly to seek
compliance violations. This in itself is not a problem for them; however, the inspectors
are not knowledgeable and add no value, they only threaten penalties in hopes of personal
enrichment.
High import fees. Lebanon is overwhelmingly an import intensive trader. The high cost
of import fees naturally have a major impact on the cost of goods produced because so
few raw materials are available in country. Import of containerized goods is particularly
expensive. One example for the food industry cited $385 in agent fees and another $735
to the government for port fees to import a 40-foot container. (These costs were in
addition to routine import tariffs.) The combined total of over $1,100 is a significant cost,
especially if the goods are in bulk and of relatively low value. (Teeny & Gedeon, 2015)
Country/region risk and the perception of risk to outside business relations. The risk of
instability to the country and the region is two-pronged. It serves as a strong disincentive
to domestic investment by Lebanese firms afraid their outlay will be pointless.
Meanwhile, foreign customers, investors and partners are frequently reluctant to invest in
Lebanon or trade with Lebanese firms.7 The war in Syria shows no signs of abating.
Additionally, the regular pattern of Israeli incursions weighs heavily on the minds of
Lebanese businesspeople contemplating investments in new buildings and equipment.
This was a recurring theme among private sector firms and a significant impediment to
continued business growth.
Difficulty finding and retaining qualified employees. Despite some successes with career
development centers and job fairs, the vast majority of companies continue to struggle
with the prospect of finding and keeping qualified people. There are several reasons for
this. The most commonly cited is the phenomenon known as exporting of talent. Simply
put, young people with the most ambition and ability are drawn to foreign markets where
salaries are higher and where there are more opportunities for upward and lateral
mobility. Lebanon relies on its current pattern of letting about 32,000 of its citizens go
abroad every year and continues to be the regional Arab leader in terms of both
emigration and skilled emigration. (Atallah, 2015) Another problem, most notably for the
7
In this context, it should be noted that FDI in Lebanon is quite low for a country of its income level –
about $4.5 billion in 2013, with most of that going to direct investment in real estate or construction and
less than 10 percent (<$300 million) going to greenfield investment.

technology industries, is that the universities are unable to keep up with changing trends.
For example, we heard about universities teaching programmers outdated programming
languages that are no longer even used by private companies. This challenge is discussed
in more detail in Section IV.
D. Findings: Institutional Capacity for Advocacy
At some future point, the existing legislative paralysis will be addressed and steps will be
taken to normalize law making in Lebanon. A key component in this process will involve
reworking the way in which government and private industry talk to each other.
There have been instances where the Lebanese government has attempted to set up and
run institutions supportive of private sector development, subsequent to private sector
lobbying. Unfortunately, the implementation is often flawed to the point of being useless
to the vast majority of firms that need the assistance. A case in point is the Investment
Development Authority of Lebanon (IDAL). On paper, IDAL makes perfect sense. Its
mandate includes several components critical to Lebanon’s legal reform objectives: 1)
assistance with operating permits and approvals; 2) tax incentives; and 3) export
promotion. According to the law establishing IDAL, it is empowered to bypass the
bureaucracy of any ministry that handles these activities and offer assistance directly. The
authority to achieve this however, was never specifically granted by the Prime Minister
when IDAL was established, nor by any Prime Minister since. IDAL is able to offer tax
incentives, but assistance with permits or any export development activities is not
happening at this time because IDAL was never explicitly empowered in these roles.
This dysfunctional situation is perpetuated by Lebanon’s political culture. Most

Ministries receive new Ministers on a regular basis, and there is a strong tradition of
discontinuing one’s predecessor’s programs and changing all appointees once a new
Minister enters office. This practice all but ensures lack of continuity in programs from
year to year. Reversing this culture and developing a professional civil service is critical
to the success of advocacy efforts over the long term.
Advocacy in Lebanon is not structured or systematic. It is not even well understood.

When interviewees were asked which organizations are most active in putting forth
private sector advocacy proposals, there was limited understanding regarding what that
would entail. The answers often included references to various government ministries or
the Central Bank proposing reforms. In other words, many interviewees did not grasp that
those governmental bodies should be the recipients of reform proposals as opposed to the
ones delivering the messages.
From the government’s perspective, agencies and officials often stated that the private
sector is not capable of formulating and presenting coherent advocacy proposals with
components such as a problem statement, underlying reasons for the change, a way
forward, and expected impact. There may be some truth to this. On the other hand, the
local talent certainly does exist to build well-constructed lobbying platforms and
proposals. What is lacking is a systematic and inclusive means for advocacy with both
private and public sector representatives regularly engaged in two-way discussions. For

example, the Syndicate of Lebanese Food Industries and the Association of Lebanese
Industries represent two of the most active private sector groups in terms of generating
reform suggestions and presenting them directly to government officials. Yet by their
own admission their lobbying process is ad hoc and not representative of a broad cross
section of viewpoints.
Instead of utilizing systematic advocacy and public-private dialogue (PPD), as described

above, Lebanon has fallen into the all too common trap of relying on influence peddlers
to propose regulatory and legislative changes. This is done via personal connections at
the ministerial and parliamentary levels. Well-connected, usually wealthy business
leaders have access to policy makers; they use this access to promote specific regulatory
changes that benefit their particular business agendas and perhaps those of their
associates. The Syndicate of Food Industries, mentioned above, relies on individual
relationships and social settings – luncheons and other events – to get their point across.
However, when asked if their activities had led to any systemic change in the past several
years, the answer was no. Without a formalized PPD process, this situation is inevitable
as people vie for their own business interests in competition with one another. Even the
most articulate and thoughtful business and NGO interviewees see this as a fact of life at
this stage in Lebanon’s transition to a more stable political state. Altering the culture of
advocacy away from relying on wealth, influence and connections as a means to pressure
policy-makers requires a strong government willing to create PPD structures – and at
least channel the influence peddlers through the established process.
SME 2020 strategy. Holistic regulatory reform benefitting a large cross section of any
country’s economy only occurs when the advocacy process is inclusive. This means there
must be at least one strategic, multi-party advocacy group, well represented by diverse
interests from both the public and private sectors to address regulatory changes within a
broad reform framework. Up until now such a group has not existed in Lebanon. The
advent of SME Strategy 2020 could change this; the Strategy recommends precisely the
sort of public private dialogue tool that should allow broad-based and strategic reforms.
The SME Strategy identifies six strategic thrusts, each representing a reform area to
strengthen the ability of SMEs to develop and grow their businesses. A working group or
committee will be formed around each strategic thrust, made up of relevant actors from
both the public and private sectors, and led by a key public sector official or a private
sector business leader. This structure would be a significant step toward a formalized
advocacy process. The public and transparent nature of the process would also represent a
positive step. Discussion fora like those proposed under the SME 2020 strategy have
been successful in other countries in bringing public policymakers and private sector
business leaders together in regularly scheduled face to face meetings to advance
reforms.8
8
Examples include Armenia, Tanzania, Georgia, and Egypt.

Figure 2. SME Strategy 2020: Six Strategic Thrust Committees and Champions
Source: MoET, 2015.
Private sector chambers, associations, and other advocacy organizations. In terms of

private sector advocacy capacity, the essential elements already exist in Lebanon.
Refreshment in certain skills would be beneficial, especially developing well-constructed
change proposals, as would support for in-depth studies to validate proposed reforms. Of
the 20 private sector chambers, associations, and other organizations interviewed, 15 are
in roles that could involve advocacy on behalf of private sector interests. Seven of the 15
(including the Association of Lebanese Industrialists) view themselves in an advocacy
role and possess at least the basic interest, resources, and influence to lobby on behalf of
their constituents. These seven should be sufficient for a country the size of Lebanon
provided the Strategy 2020 advocacy process is indeed formalized and functioning soon.
Table 2. Chambers and Associations with Advocacy Capacity (In Order of Potential Influence)
The largest and most influential of the Lebanese private sector

Association of Lebanese
associations; it has the advantage of being multi-sector in membership
Industrialists
and includes most of the largest employers.
Perceived as the second most influential private sector institution in
Chamber of Commerce Beirut
terms of advocacy; it has the largest and most diverse membership of
& Mt. Lebanon
any organization in the country.
Invitation only association of CEOs and former CEOs, many of whom
Lebanese Businessmen
are well known, influential and also members of other prominent
Association
associations.
Lebanese Contractors Well-resourced and large association in a capital intensive industry
Syndicate representing about 20% of GDP.
Syndicate of Lebanese Food Under-resourced but an active lobbying association representing a
Industries strategically important assemblage of industry sub-sectors.

Well-connected and diverse membership; they have demonstrated
American Chamber of
success leveraging their relationship with US interests to effect change
Commerce
in Lebanon.
Important industry association that remains active in discussions with
Syndicate of Jewelers
policymakers.
Note: For additional association competencies see section III.B.
Advocacy capacity building should largely be done in parallel with the setup of the
Strategy 2020 structure and working groups, and need not be a major focus of USAID.
More important is to play an active role in the working groups (see recommendations
below) and assist the SME 2020 Secretariat to keep the process moving forward.
E. General Recommendations to Support Regulatory Reform
Support PPD through SME 2020 Strategy. SME Strategy 2020 Board
The question of BDS advocacy capacity in
Representation
Lebanon is less about the existence of  Both public & private sectors
competent players and more about the lack  Chaired by the Prime Minister
of an appropriate communication vehicle.  Members: Minister of Economy and Trade,
Now that the vehicle has at least been Minister of Finance, Minister of Industry,
Minister of Agriculture, IDAL, CCIB, ABL,
designed (SME Strategy 2020), there is a Kafalat, ALI, Berytech, plus 3 others
need to make it happen, which means (nominated but awaiting approval by PM &
donors have a role to play in guiding the MoET Minister)
process forward. Assuming UNDP and Role and Responsibilities

others are able to help the SME 2020  Own the strategy
Strategy gain traction, the early stages will  Provide strategic direction and guidance on
high level initiatives and SME policies
involve forming working groups or  Push for the implementation of initiatives
committees to address the six key strategic  Approve decisions, e.g., launch a new
thrusts of the strategy. Each strategic program
 Coordinate inter-ministerial and agency
thrust will be overseen by a Board efforts, including those from private sector
Member who will have several working and NGOs
groups at his or her disposal. Board  Lobby for funding and resources
members will be prominent public  Follow up progress and monitor performance
of SME strategy and achievement of
officials and private sector leaders to objectives
ensure those with influence and those with
power to effect reforms are properly Frequency of Meetings
 Quarterly
channeled together. Proposed SME
Strategy Board members include top
ministry officials, chamber heads, business association directors, prominent bankers, key
incubator leaders, equity fund heads, and others.
Given USAID’s interest in facilitating policy reforms that directly benefit SME growth
and generate employment, we believe it would be appropriate for USAID to position
itself as a supporter of the structured reform process laid out in the SME Strategy. In
practice, this is best done by providing selective advisory and research expertise on an as
needed basis – articulated through the committee process. Ensuring meetings take place,
offering neutral facilitators for discussions, and making sure thematic experts are
available, as needed, are all important roles. It is recommended the assistance be through

direct implementation support to two of the strategic thrusts: Evolving business leaders
(first bullet) and Improving access to market (third bullet). Both are fundamental to
growing SMEs and building firm level capabilities through consulting services and
technical expertise. The first is centered on developing human capital in SMEs and the
latter addresses expansion of SME access to new markets, including exports.
It will also be prudent to lend in-kind support to the SME Strategy 2020 board’s
secretariat – ensuring timelines are met and meetings are held while carefully monitoring
the early stages of the strategy’s implementation – to add impetus as an influential but
neutral third party to the continuation of the PPD. Such support would not be costly,
especially if USAID’s project office possesses one or two staff members with advocacy
process knowledge and skills. In parallel, a degree of soft pressure applied by USAID’s
leadership, and even at the Ambassadorial level, could prove very effective to maintain
momentum and ensure the newly structured process moves forward. This
recommendation can be implemented even if no improvements in the political situation
are to be seen in the near future. An additional element of support would include
provision of a specialist to offer advocacy process overview training for the secretariat
and working groups. The purpose would be to ensure an understanding of the context and
importance of developing well-structured advocacy platforms (see text box on next page).
Educate private sector advocates to Four-stage Training in Scoping, Analyzing,

structure compelling platforms for reform. and Presenting Advocacy Platforms
It is considered best practice to educate
both sides in their appropriate roles: the 1. issues.
Clear problem description with main sub-
private sector to structure platforms which 2. Prioritized list of recommended options to

clarify why the proposed reforms are address the problem/issues.
3. The likely impact of each recommendation
desirable, how they might be carried out including social, economic, environmental
and what impact they are likely to have, and political considerations.
and the government to hear, comprehend, 4. Sequenced implementation plan with
enough detail enabling policymakers to direct
and find value for constituents in business near-term actions.
lobby proposals. In Lebanon’s case, both
roles are in need of some strengthening,
particularly on the side of the government. Interviewees routinely stated that ministerial
staff and parliamentarians are not attuned to processing even well-articulated messages
for change unless they are able to see a near-term political benefit. While some of this
behavior is correctable with training and capacity building, some involves changing a
deeply ingrained political mindset, a considerably longer term proposition. While direct
government intervention is not likely for USAID Lebanon in the foreseeable future, there
may be instances where supporting the public sector’s ability to accept advocacy
messages, and the private sector to build well-articulated platforms, could reap long term
benefits. Some options for such interventions will be discussed in a forthcoming section.
Address non-regulatory constraints. The high cost of doing business is more often than
not the first impediment to growth noted by SME owners/managers. This is often
followed by two others: difficulty penetrating new markets, especially for export, and
difficulty hiring and retaining qualified employees. The two latter constraints will be

addressed in greater detail in subsequent sections of this report. The following table
highlights potential USAID interventions to address some of the other non-regulatory
impediments to growth and job creation.
Table 3. Illustrative Interventions to Address Non-Regulatory Constraints
Business Possible Local BDS Possible Additional Expected Outcomes

Environment Provided Services USAID Interventions
Impediments
Electricity outages  Energy efficiency  Provision of foreign  Reduced cost base
programs and other cost and Lebanese experts  Higher productivity
reduction techniques in each of these areas  Reduced negative
 Productivity training for firm level assistance environmental
 TA in new technology in parallel with impact
adoption consultant capacity  More reliable
 Photovoltaic solar and building production
other renewable energy
solutions
Poor, costly  Consulting in outside  Local BDS capacity  Improved
internet webpage hosting exists for these productivity for
 Consulting in expanded services, to be office staff
use of cloud services contracted locally as  Improved market
 Training in market part of a technical research capabilities
research techniques assistance program  Enhanced
marketing
Customs clearance  Consulting in supply chain  Provision of foreign  Improved product
management training and and Lebanese experts quality (better
 Consulting in logistics in each of these areas inputs)
planning and distribution in parallel with  Improved delivery
(planning for delays) consultant capacity performance
building  Lower cost structure
Country risk  Organization of B2B  Co-sponsoring of B2B  Improved image in
missions to Lebanon missions to Lebanon export markets,
 Diaspora linkages through chambers and increased export
assistance associations. Provision market penetration
 Industry specific “buy of marketing and
Lebanese” campaigns promotion experts.
Partnerships with
Lebanese diaspora
organizations.
Finding employees  HRM consulting:  Consulting in HRM  Lower recruitment
compensation, staff techniques and tools costs
development (avoiding the with Lebanese  Greater employee
downward low skills consultants retention
spiral), internships & job  Assisting career
fairs in partnership with development centers
associations and with outreach and
universities professionalism
 Co-sponsoring
association job fairs
(face to face and
virtual)
Other high cost  Training in cost reduction  Provision of foreign  Lower cost base
items: transport, techniques and Lebanese experts  Improved
land, corruption,  Productivity training in each of these areas productivity
import fees  Consulting in new for firm level assistance
technology adoption in parallel with
consultant ToT

SECTION III. ENHANCING PRIVATE SECTOR GROWTH
THROUGH BUSINESS DEVELOPMENT SERVICES
A. Overview of Business Development Services in Lebanon
Lebanon’s market for business development services (BDS) is increasingly sophisticated

and supports some 200 Lebanese consulting entities (firms, individual consultants and
trainers). Of these, perhaps 15 are larger firms with more than ten full-time consultants on
staff. The largest of these employs 14 full time people and is presently using five
contracted associates. Most firms, however, are small with one to two full-time
consultants. As expected, the larger the firm, the more diverse the competencies and
expertise. Smaller one and two person firms are generally quite specialized, which is a
positive sign for the consulting market as this indicates some industry maturity. Less
mature consulting markets tend to have a substantial number of small firms and sole
proprietors mainly assisting with business planning and whatever actions result from it.
Part time consulting expertise is also sometimes found in the university system, both by
consulting firms seeking subcontracted associates and SMEs looking for lower cost
alternatives to consulting firms. Universities as additional sources of consulting expertise
will remain important to fill gaps in consulting partner rosters for firm level assistance
programs. For example, the Lebanese American University’s Institute for Family and
Entrepreneurial Business performs research and consulting through the university system
for SMEs directly and in coordination with other entities and firms.
B. Supply-side Findings: In-Country Capacity to Provide Specialized Technical

Assistance and Business Development Services to Improve Competitiveness
Despite some pricing distortions and a relatively New Consulting Industry Association
unknown consulting industry association (see box), a
dynamic BDS industry does exist in Lebanon. A key A Lebanese consulting industry
association, The Society of Management
indicator is the relatively high degree of consulting and Development Consultants, was
specialization and niche services offered, something formed just one year ago. The
which typically only occurs in more mature consulting association’s founders have wisely
elected to reach out to the International
markets. Most private Lebanese consulting and Council of Management Consulting
training firms encountered are specialized to some Institutes (ICMCI), the international
degree, either by service line or industry sector. And association for all consulting
associations. ICMCI not only offers
while not always well-resourced, associations and excellent networking opportunities to
chambers providing these services are, for the most other consulting associations around the
part, active and serious in supporting their world, they also build capacity via
Certified Management Consultant (CMC)
constituencies. programs. Consulting associations with
CMC programs, who train and certify
Private consulting firms. The consulting firms in the their own membership, rapidly upgrade
the professionalism of their industry as a
following table and associations in a subsequent table whole, because being certified is a
represent only a sample of the broader industry. Of the competitive advantage for industry
approximately 200 consulting firms in Lebanon, this practitioners and others soon follow suit.
study interviewed 12, which were selected to ensure

diversity in size (number of employees), activities, and services offered. The Lebanese
consulting industry is varied in its skill sets and sufficient in overall number to address
local market needs. Some specialized foreign expertise will be required to augment
expertise and build local industry capacity, especially in rapidly changing technologies
and sector methodologies.
Table 4. Services and Potential of Private Consulting Firms Sampled
Consulting Services Mix Firm Specifics Tier Implementing Partner

Firm (1 or 2) Candidate?
Inventis Strategy, business planning, Accelerator with 2 Maybe - For advocacy or

Partners launch management, business 2 full time SME financing support, if
set-up, product design & partners/staff. required.
development, marketing &
networking, seed funding.
Beyond O&D, strategy, HRM, Leadership, 15 partners, “plus 1 Yes – For entrepreneurship
Reform & intra-company relations couple of full- support, setting up local
Development (branches), training programs, time staff and economic development
economic development, and interns, majority councils, or for advocacy.
public management and policy are female.”
research.
Endeavor Offers full range of gratis, high Non-profit that 1 Not directly – But willing to
level consulting services. works like a provide support to donor
consulting firm. programs.
El Bacha Feasibility studies, master plans, Sole proprietor 2 Yes - For firm level
impact assessments and with 2 office staff. assistance, especially with
consulting/training. firms that are slightly larger.
Koualty Technical, legal and financial 2 full time staff, 2 Maybe – Specifically for
Associates consulting specializing in the both experienced franchising firms.
franchising industry. consultants.
MAP Supply chain optimization, 2 full time staff 2 Yes – For a variety of
Consulting process re-engineering, ISO, relying heavily assistance approaches.
HRM. now on
subcontracts.
Management Quality management, org 14 full time staff 1 Yes – For broad start to
Solutions restructuring, strategy, HR, and 5 contracted finish SME consulting.
Experts planning, IT security, cost associates. 98%
reduction, outsourcing, value revenues from
chains. outside the
country.
MCA People Extensive HR consultancy 4 full time and 4 2 Yes – For HR, organizational
Solutions services, customer service and outsourced development, and marketing.
team building workshops, effective professionals.
communications, sales success, Quoted junior
marketing, business planning, and daily rate of $250
organizational development. - $800 / day.
ISO Liban ISO quality standards 4 full time and 2 Yes – For ISO-related
implementation and management several support.
consulting and training, food outsourced
safety training, business process consultants.
reengineering, management Quoted rates of
diagnostics, and HR. $350 - $800 /
day.
TAG Feasibility studies, market 8 full time 1 Yes – For a broad range of
Consultants research, business and strategic consultants. services.
plans, organizational restructuring, Quoted rates of
HR, financial forecasting, quality $300-$950 / day.
management, accounting, audit.
T&A Quality management, food safety, 2 full time 2 Yes - For specialized quality

Consulting business process improvement, consultants. systems and related
engineering (pipe technology). Fees vary. business process
improvements.
Likwid Web design, mobile apps, 12 full time 1 Yes – For specialized
Marketing advertising, media booking, social consultants. marketing and promotion.
media, branding, graphic design. Quoted of $250 -
$450 / day.
Note: Tier 1: tend to be larger, sophisticated, typically higher priced, well resourced
Tier 2: smaller, specialized, often sole proprietorship or small partnership, can be lower cost
Business associations and chambers of commerce. As one would expect, there are many
services performed by chambers and associations. The Chamber of Commerce for Beirut
and Mount Lebanon, for instance, provides practical, fee-based assistance for paid
members on local certifications, administrative inspections, export processing, border
passes (trade fair participation), labor law, structuring legal contracts and English
training. They also hire local consulting and training firms to offer seminars in
management, exhibition participation, food safety, and other topics. These are offered at
reduced rates for firms without large training budgets, and the seminars are generally well
attended. The training seminars tend to be useful, if not generic, and they are an
important complement to the more tailored services provided by the Lebanese consulting
firms. The seminars also benefit the development of the BDS/consulting services market
by presenting an opportunity for consultants to demonstrate their value to SME managers
who may never have considered the use of consulting services.
The Beirut Chamber also fulfils some needs for data by helping address the vacuum of
official economic and business information in Lebanon. The Chamber oversees the
Center for Economic Research as well as the Center for Enterprise Development. The
Chamber has also become involved in an important workforce development component
by helping universities design programs of greater relevance to the rapidly evolving ICT,
banking, and insurance sectors (a study is now underway). In addition, the Beirut
Chamber acts as an intermediary for Kafalat and other subsidized loan programs. One
such program links innovative start-ups with financing of up to $20,000 at an interest rate
of just 1 percent. The Chamber however, has had some difficulties in the past in
attracting credit-worthy applicants. The Chamber is also examining the possibility of
facilitating credit guarantees for exporters in agro-business and industry to expand and
enter new markets. This last one is of interest to this assessment as it addresses firms
poised for business growth rather than start-ups.
The nascent Society of Management Development Consultants, if it further develops and

matures, represents an important potential BDS partner for USAID in a new firm level
SME support program. They acknowledge a gap in services to Lebanese SMEs exists –
due to the consulting industry’s pursuit of more lucrative foreign based assignments –
and propose to establish a discounted services task force with resources set-aside for
Lebanese SMEs. This is the sort of program that will help sustain and grow the
availability of BDS for Lebanese SMEs.
The assessment team met with more than twenty associations, chambers, incubators, and
other support organizations. Collectively they represent a fully functioning and capable

group, and one that is able to represent the interests of the private sector once the political
paralysis subsides. As with most emerging and maturing civil societies, Lebanon’s
chambers, associations and other supporting institutions exist in sufficient numbers and
strengths to assist with: sector specific promotion and image building, informing
members of industry trends, publishing statistics, engaging in capacity building, and of
course, lobbying on behalf of members’ interests. A few of the BDS institutions in the
following table undertake all of these activities but most engage in only a few of them.
Table 5. Associations, Chambers of Commerce, and other BDS Providers
Association, Services Mix for Members Capacities Implementing Partner

Chamber, or Candidate?
Other Provider
Lebanese Knowledge and best Strong leadership, full time Yes – For franchising focused
Franchise practices sharing, starting administrative unit. No grant assistance. They are also
Association the franchising process, food experience. willing to expand into donor
safety training, B2B. work.
Chamber of Assistance border and Board with 24 members, 100 Maybe - The chamber is well
Commerce transportation certificates, employees, and 15,000 resourced but stretched thin
Beirut & Mt. financing, public tenders, members. They are influential with donor and other
Lebanon export assistance, training, and well-resourced with programs. Reputation with
publications, exhibitions, considerable grant experience SMEs is mixed in terms of
arbitration, advocacy. from donors, especially the relevance vs. actual needs
EU.
Beirut Creative ICT creative content 1 full time Director (EU Maybe - They have the vision
Cluster development, B2B, career funded) no other staff, not and interest to work with
fairs, internships, participant sustainable without EU USAID. Good experience in
training in UK with parallel support. Received over $100K the workforce development
firms, marketing, supply in member in-kind arena for ICT / creative
chain, innovation. contributions. Grant SMEs. Most members are
experience with the British very small.
Council.
Chamber of Provides services to 17,000 Facilities and services include Yes - Could potentially
Commerce member companies, of a food quality testing and coordinate with the Chamber
Industry and which 5,000 have a research facility; transaction to establish a Trade Support
Agriculture of permanent status. Serves department that issues Center within the Chamber to
Tripoli (CCIAT) enterprises in the regions of certificates of origin and other be staffed by Chamber staff.
Tripoli, Akkar, Batroun, required attestations; bar- See Annex H for concept.
Koura, Zgharta, Dannieh, coding; a web portal for
Becharre and the towns and standards and norms required
villages surrounding them. in foreign markets; and a
network of contacts with trade
offices in Consulates and
Embassies and foreign
Chambers.
Junior Basic training, advisory, 230 members, and 3 active Maybe/No. Yes as a
Chamber of networking, community, Beirut chapters. Not well coordinating partner to reach
Commerce international links, targeting resourced and activities are out to youth, as necessary.
young entrepreneurs. on a volunteer basis. Little They do not have the capacity
capacity without funding and to act as a full-fledged
coordinating partners. implementing grant recipient.
Rene Moawad Incubator development, 14 employees, 90% funding Maybe - While they do have
Foundation gender programs, micro from donors, well-equipped capacity, they are stretched.
credit, business planning, facilities, full time admin staff. Any agreement would need
coaching, cold chain Experienced as a USAID and clearly defined indicators and
financing, eco-tourism, EU funds recipient. Programs targets. They would also need
irrigation, food processing, running in multiple regions. to assign staff who have
green villages. 100% dedicated time.
Lebanese Basic networking. 180 members, 7 Board No - Activity has been

League for members. Have been largely virtually non-existent recently.
Women in inactive for several years.
Business
BeryTech Incubator offering grants for 15 full-time employees, 90 Yes - A strong local
woman-owned start-ups, members in three main development organization
B2B matching, coaching, regions. Good revenue and with excellent capacity. Only
legal services, informal strong outreach and possible negative is the
advocacy. experience working with donor narrow focus on ICT.
grants.
American B2B linkages with US firms, 200 paying members, 17 Maybe/No - If US based B2B
Chamber of networking among Lebanese member board, 2 full time is required, has the ability to
Commerce firms, informal advocacy. staff. Has collaborated with reach out and make contacts.
USAID and NGOs on trade Do not have the capacity for
issues. No direct grant direct grants.
experience. Strong member
outreach.
Lebanese Promotion, marketing, export 2 employees. Small but Maybe - If a basic B2B
International linkages, B2B matching. decent offices, no meeting networking partner is needed,
Businessman’s space other than President’s especially with diaspora, this
Association office. Everything revolves organization has strong
Network around the energetic efforts of linkages. They lack the
the President to network and capacity for grant accounting
garner support of diaspora. but USAID could co-fund
events.
Euro Lebanese Quasi-governmental Nice facilities and access to Maybe - Funding this
Center for enterprise support unit university infrastructure. institution is not likely an
Industrial offering QM to market Testing and R&D labs on option for USAID. However,
Modernization access, R&D services to premises. EU funding is coordination with them as a
(ELCIM) & bridge gap between waning and they are lacking source of companies for
Center for academia and private sector. funds. Are not sustainable assistance may be possible.
Innovation and without continued support.
Technology
(CIT)
Chamber of Completing a master plan for Relies on registration fees Maybe - If the industrial park
Commerce an industrial zone with from members and some fees is able to attract investors and
Industry and developmental (non-profit) diverted from Beirut Chamber. show signs of life, it could be
Agribusiness - objectives for 100-200 President is very well an excellent vehicle to deliver
Saida SMEs. resourced and likely covers services through.
any shortfalls.
Lebanese Advocacy, legal drafting, Unclear source of funding, Maybe/No - If the program
Businessmen high-level advocacy. though seem to have becomes involved in
Association adequate resources. advocacy, they are a group
who should be channeled into
the PPD process. They do not
require funding and many are
oligarchs.
Chamber of Cluster formation, labs for About 20 employees, charges Yes - Their range of services
Commerce of micro-biotic testing (USAID- fees for services but operating and dedication to local
Industry and assisted), training center with at a $50,000 annual loss. development is clear. They
Agriculture many programs: Microsoft, Have worked with USAID and also have donor coordination,
Zahle and English language, ISO, CPE. European donors. Strong grant experience and reach.
Beqaa outreach.
Federation of Represent and support the No full-time staff. Has 8 Maybe/No – If tourism is
Crafts hand crafts industry by paying members who keep targeted, could be a trade
negotiating space at trade the association going. About show partner. Do not have
shows, study tours, 300 non-paying members capacity for grants currently.
networking. The crafts overall.
industry does not support
huge employment but it is an
important piece of the overall
tourism picture.

Syndicate of Association representing 2 part-time, 2 full-time staff, 12 Maybe/No - Possible to
Lebanese Food food processors whose main board members, 140 regular coordinate with them to reach
Industries function is lobbying (EU members who represent the food processing industry.
issues, trade, regulations). about 90% of processed food Not an appropriate target for
exports and 70% of total grant funding. Requested
output. Revenue comes from several years of “seed
member dues and donations. funding.”
No grant experience.
Syndicate of Networking, informing about 2 full time and 2 part time Maybe - Willing and capable
Jewelers exhibitions, gem testing, staff. Members represent 80% candidate to coordinate with
advocacy. Envisions of gross industry revenues. other donors though they
establishing a vocational Revenues come from member have no grant experience.
training center to get young dues ($200/year) but majority Would only be possible if they
women into the jewelry Good outreach, no grant strengthened their
industry. experience. administrative capacities/unit.
Lebanese Maintain database of About 15 full-time staff. No - The numbers in this
Contractors statistics, find construction Industry includes about 450 industry are impressive but
Syndicate opportunities for members, contractors who are all their worker base is almost
lobby, and act as members. exclusively Syrian.
administrative liaison with
inspectors.
Hospitality A for-profit firm acting in 30 full time employees, Maybe - Well-qualified for-
Services many respects like an NGO. revenue generation from profit BDS partner with
Major tourism event event corporate sponsors and excellent capacity to deliver
organizer, host industry advertising in their three event organizing services.
round tables. publications. Capable of managing donor
funding under contracts.
Predominance of foreign
labor makes this industry
potentially problematic for job
creation.
Society of New organization with few Part-time President and Vice Maybe - Association could
Management services currently offered. President. Are co-located in help line up qualified
Development Intend to offer discounted Beirut Chamber so premises consultants. At this stage in
Consultants consulting to SMEs. are low cost and largely its development it does not
shared. 40 members, and have the outreach or
aspire to 200 in one year. administrative capacity to be
a partner. However, it does
possess the ambition to
develop and offer needed
services to SMEs and should
be monitored.
Consultation Research firm doing About 10 full time staff, Well No - If regulatory reforms
and Research economic, labor and market qualified economists and become a priority for USAID,
Institute studies. researchers on staff. Hired by it is well suited to undertake
donors, government and the policy research. Does not
private sector. Well-known currently provide firm level
and respected owner. assistance with the exception
of research for very large
private sector entities.
Microsoft Ta3mal is part of Microsoft’s At this time Microsoft’s Yes – USAID and Microsoft
Ta3mal Citizenship program in the Citizenship program has are successfully partnering in
(YouthWorks) Middle East and Africa activated the Platform. There promoting the utilization of the
Platform working to promote youth is a local NGO promoting the Ta3mal platform in Iraq,
skilling and employment use of the platform but their Tunisia and West Bank/Gaza.
support ends in 2015. Microsoft provides free
access to the platform but
needs USAID’s programs to
promote and support
utilization by Lebanese
institutions and NGOs.

Challenges. Past donor interventions involving BDS in Lebanon have left their mark,
some positively but too often in a way that has distorted the market for consulting
services. For example, the European Union (EU) funded Euro-Lebanese Centre for
Industrial Modernisation (ELCIM) did good work with about 400 enterprises, but also
heavily subsidized consulting assignments leading to demand-side distortion. ECLIM’s
client SMEs were typically paying just 20 percent for services received. The result, on the
demand side, is a reduced number of SMEs now willing to pay even competitive prices
for consulting or hired expertise. (Abi Zeid, 2015)
The demand side distortion creates other problems as well. One of the consulting firms
interviewed explained they had completed 16 ISO certifications with SMEs through the
ELCIM program, each one having paid for the services received. However, some SMEs
received free certification services under the EU Support to the Quality Unit of the
Ministry of Economy and Trade Programme (Qualeb), and according to the interviewee,
many of those never became certified. (Abi Zeid, 2015) This is a situation that has
repeated itself in many countries, and by many donors, yet it continues. SME
beneficiaries must demonstrate commitment and pay for services of value; if not, the
services provided will more often than not be in vain.
Consulting firms involved in this and other donor-funded programs that were paid
inflated rates out of sync with local market rates have done their best to maintain these
rates despite the fact that few local SMEs can afford them.9 The end result is many
Lebanese consulting firms spend much of their time consulting as subcontractors to larger
international firms (e.g. Booz Allen Hamilton and KPMG) on assignments in Gulf States
and in north and central Africa. The Society of Management and Development
Consultants claims only about 10-30 percent of Lebanese consulting industry revenues
are generated in Lebanon with the remainder coming from work billed out of the country.
The portion billed back in Lebanon is viewed as leftover utilization and at rates the firms
consider well below their worth. (El Hajj, 2015)
C. Demand-side Findings: SME Needs for Business Development Services in

High-Growth Sectors and Value Chains
Lebanon is unusual in the fact that a very large number of companies are relatively
advanced and sophisticated, sometimes world class in their industry/sector but are either
the only one, or part of a very small group of enterprises active in their sector in Lebanon.
Lebanon is estimated to have about 150 homegrown brands with a regional and/or
international presence. (Lebanese Franchise Association, 2015)
C1. SME Technical Assistance Needs
9
Rates quoted by several consultants and firms fell in the range of $800 - $1,500 per day for senior
consultants working outside the country and anywhere from $450 - $1,200 per day for senior people
working inside the country. Junior consultant rates ranged from $250 - $500 for work in Lebanon. These
billing rates may be inflated and represent rates only occasionally received (at the higher end).

Through in-depth discussions and site visits to 55 small and medium enterprises in
Lebanon, the assessment team identified the following areas in which SMEs are in need
of individualized technical assistance.
Cost reduction strategies, lean manufacturing and improvements to production. The

high-cost operating environment in Lebanon is the most frequently cited impediment to
business growth. Despite this, most SMEs interviewed believed they had already
exhausted all avenues for cost cutting. The long-term damage is continually strained cash
flow, reduced competitiveness, inability to invest in technology, and lack of resources to
grow and indeed hire more people. Experienced sector specialists however, would likely
be able to identify additional cost reduction areas or even products with the price
elasticity to increase sales prices that are often completely overlooked by SME managers.
Market research and marketing and branding strategies, including social media,
labeling, and packaging to enter regional and international markets. Several business
owners and experts, including the head of BLC Bank emphasized the need for specialized
assistance to help SMEs identify and enter new international markets successfully. This
could involve assistance with market research, segmentation, and new market entry
strategies as well as pilot testing strategies in select markets. Branding assistance may
then be an important next step for those companies with the consistent quality and the
financial resources to sustain a brand image. The resulting ability to differentiate
themselves from competitors elevates such companies to entirely new strata with
enhanced pricing flexibility and clearly communicated competitive advantages.
B2B linkages with new international markets and buyers. Key to gaining entry to those
new markets is securing specific buyers and understanding their product specifications.
This could involve assisting SMEs to develop strategies and materials for attendance at
regional and international trade shows or facilitating B2B networking events to link
Lebanese businesses with buyers overseas. In cases where large client firms could be
empowered to hire significant levels of new employees, direct B2B linkage prospecting
may be warranted.
Product improvements and research & development. Also important for entering new
markets is the SME’s ability to introduce innovative products that offer competitive
advantages and capture consumers’ attention. A footwear manufacturer discussed the
need to develop improved soles and incorporate new technical textiles or fabrics to
enhance the performance of his shoes. Interviews with SMEs involved in food processing
indicated that they would be interested in developing better packaging that would lead to
better tasting products and longer shelf life. SMEs could also look at extending product
lines to similar products with growing demand. For example, a peanut butter
manufacturer could look at introducing additional nut butters such as sunflower or
almond butter. These would be a first for Lebanon.
Supply chain management and logistics. To meet larger orders from new buyers overseas,
Lebanese SMEs will need to secure high quality inputs at more competitive prices on-
time and without interruption. Supply chain management will be crucial to lower input

costs, improve quality, enhance image, and shorten production cycles. In a country such
as Lebanon where transportation infrastructure is poor and obstructions abound (e.g.
customs delays slowing incoming and outgoing shipments), it is crucial to effectively
manage relationships in supply and distribution chains. This may mean helping SMEs
evaluate their supply chain and/or install basic supply chain management systems. These
systems will enable an SME, for instance, to forecast its needs for inputs while factoring
processing and transit times (including customs delays) to achieve on-time deliveries.
Information technology, including e-commerce and website development. Point of sales

systems would help Lebanese SMEs improve the availability of data on inventory, alert
producers to the need to replenish items at retail outlets, and decrease the possibility of
“stock outs” and lost sales opportunities. Stock control systems would also help SMEs
better manage stock aging by stockkeeping units, and help them understand which
stockkeeping units sell better and faster, and at which locations. The program could also
help Lebanese firms structure customer loyalty or rewards programs to enhance
"presence of mind" of their brands, leading to additional sales.
Human resources, management, and leadership. SMEs in Lebanon are primarily family-
owned and family-run businesses. They tend to have more informal management
structures and processes for making and implementing decisions, and often lack formal
business training and good governance practices. Once companies begin to grow,
managers need training and a foundation to understand the skills required to successfully
manage staff as well as the business. They must learn how to demonstrate the kind of
leadership that engenders respect and inspires subordinates to succeed in line with clear
objectives. Human resources management can also be an important tool for managers to
improve morale and employee performance, and prevent turnover of highly-qualified
employees to companies with perceived better working environments and pay scales.10
Improving bank finance for growing SMEs. Lebanon’s banking system remains
conservative, highly risk averse, and reluctant to accept alternatives to traditional real
estate collateral. The advent of SME guaranteed loan programs, such as Kafalat, are
easing the growth financing burden but demand for finance using alternatives to
traditional real estate collateral still well outstrips supply. (Abi Habib, 2015) Many SMEs
also have no concept of how to prepare the kinds of documentation banks require. (Lama,
2015) (Azour, 2015) On the demand side, SMEs can use help in presenting applications
for financing including realistic sales and cash flow projections, accurate financial
statements, and compelling business plans. On the supply side, banks can use assistance
to develop new products and services geared to meeting the needs of growing SMEs with
limited collateral, such as purchase order finance, factoring, and reverse factoring.
C2. SMEs in Sectors with High Growth Potential
It should come as no surprise that the agro-industrial sector is a major contributor to the
Lebanese economy. Agro-food exports increased by 36 percent from 2012 to 2013. This
10
It should be noted that these weaknesses are in line with the business development weaknesses noted for
Lebanon in the 2014 – 2015 Global Competitiveness Report of the World Economic Forum.

is in part due to the Syrian crisis and Lebanon’s ability to export to traditional Syrian
export markets such as Iraq, Egypt, and Jordan. Another notable trend is Lebanon’s
increase in exports to the African market. (IDAL, 2010) Tourism and hospitality is also a
critical sector, although conflicts in the region have resulted in declines in the industry
over the last few years. Still, tourism contributes more than 25 percent of GDP and 24
percent of total employment. (IDAL, 2014)
Table 6. Contribution of Sectors to GDP, Employment, and Growth (Sorted by value added to GDP)
Value Added Growth

As % Number of % of total
Millions rate 2004-
of GDP workers workers
USD 2011
Construction and real estate 3,500 8.80% 130,000 10.20% 150%
Banking and financial services 2,900 7.30% 30,000 2.40% 122%
Agriculture and food processing 2,700 6.80% 110,000 8.60% 178%
Education 2,420 6.10% 82,000 6.40% 64%
Tourism and hospitality 2,200 5.50% 90,000 7.10% 124%
ICT and media 1,500 3.80% 45,000 3.50% 64%
Transport and logistics 1,300 3.30% 58,000 4.50% 88%
Health care 1,100 2.80% 40,000 3.10% 63%
Consultancy / professional services 1,050 2.60% 35,000 2.70% 64%
Energy and water 1,000 2.50% 37,000 2.90% 31%
Fashion and accessories 850 2.10% 25,000 2.00% 150%
Green industries and waste
400 1.00% 16,000 1.30% 90%
recycling
Total 20,920 52.30% 698,000 54.70% 99%
Source: Central Administration of Statistics, 2011.
In addition to these two key sectors, the assessment team looked at several other sectors
with growth potential. While SMEs with high-growth potential crossed a wide variety of
sectors, we found some sectors with greater potential for growth given opportunities for
expansion to international markets, resources available in the country, and/or the quality
of production already demonstrated by SMEs in Lebanon.
Pharmaceutical/medical. On the manufacturing side, this is still a small sector, with an

estimated 20 manufacturers producing about 900 prescription and over the counter
products. (Ministry of Health) This is, however, a fast growing industry with several
dynamic enterprises acting on opportunities in international markets, and starting their
own advanced labs in genomics and new technologies. These pharmaceutical
manufacturers are exporting a growing number of products to new markets, primarily in
Africa and the MENA region.
Given the potential for expansion of SMEs in this sector, we estimate that several
hundred jobs could be created in the span of 1-3 years in the pharmaceutical sector alone.
Several new manufacturing plants are currently under construction or renovation for
state-of-the-art medical products such as ocular lenses, contact lenses, catheters, and
medical implants. Additionally, several new, modern mid-size hospitals and medical

facilities are expected to open in the course of the next few years, such as the 200-bed,
$70 million MEDRAR medical center in Choukine. (MEDRAR, 2015)
Information and communications technology. The ICT sector is growing in Lebanon,

employing anywhere from 12,000 – 20,000 employees (depending on how the value
chain is defined). (BankMed, 2014) Included in the assessment team’s definition of the
ICT value chain are pure ICT products, media, telecommunications, computer
consultancy, information services, printing, 3-D printing, motion pictures, and software
publishing. Production and post-production services have emerged as profitable
industries, and Lebanese companies are able to export high-quality content creation at
reasonable prices to the Gulf region, European markets, and some African countries. ICT
start-ups are considered attractive investments for local and regional venture capital funds
since the capital required to start an ICT company is relatively small, and Lebanese
entrepreneurs are considered to be reliable, innovative, well-connected, and imbued with
good business sense. The majority of Lebanese software firms are concentrated in the
Beirut and Mount Lebanon area. Tripoli in North Lebanon is starting to develop an
appealing environment for technology companies where just three percent of software
firms country-wide are currently located. Several well-known IT companies and call
centers have established offices outside Beirut to develop and create jobs in the regions.
Green/alternative industries. The “green” sector is small, and the total number of people
employed is difficult to estimate. The sector covers recycling, waste management, and
alternative energy. Most of the firms in this sector have stayed in Lebanon and have not
expanded outside of the country, as they are not yet ready to grow quickly and create
jobs. However, due to market demand, this is going to be a very fast growing sector in the
course of the next five years, and a lot of focused, specialized technical expertise will be
needed. Exponential growth in this sector is anticipated.
Fashion/garments. Lebanon mainly exports women’s wear, which has increased by an

average annual rate of 7.5 percent over the period of 2009-2012, reaching a total value of
$40.8 million in 2013. The sector is mostly represented by two categories of fashion
brands: high fashion brands like Elie Saab, Reem Acra, and Zuhair Murad (encompassing
about 10-15 enterprises); and “bridge” brands, sitting between moderately-priced ready-
to-wear and expensive high fashion (approximately 20-25 firms). Roughly 90 percent, of
fashion and accessories firms are based in Beirut. This sector has growth potential, given
the quality, reputation, and sophistication of existing brands, but Lebanon’s fashion
infrastructure does not yet support the production needed for ready-to-wear, to which
consumers are trending. Designers generally go to Europe to manufacture their ready-to-
wear lines, and only come back to Lebanon to make one-of-a-kind couture gowns. The
machines, factories, and spaces necessary to create ready-to-wear do not yet exist in
Lebanon. (d'Arc Taylor, 2013) With strategic investments, proper financing, and
workforce training however, some newer Lebanese designers could be prompted to move
production of their ready-to-wear lines back home.
Manufacturing/light manufacturing. The manufacturing sector is estimated to employ

approximately 130,000 people in Lebanon. Of the 740 members of the Lebanese

Association of Industrialists, 260 of them Local Economic Councils
have more than 10 employees. (Gemayel,
The consulting firm, Beyond Reform and
2015) Potential in this sector is to have Development, is using a practical approach to
manufacturers expand local operations, as regional economic development under a UNDP
well as to open showrooms program designed to work in partnership with
municipalities to support SMEs. The program touts
internationally, because of their proven is ability to “turn municipalities into incubators” by
expertise in their specific sub-sectors. creating Local Economic Councils with 6 to 8 local
Most of them have established businesspeople who hold business concept
competitions in the community. Selected awardees
international quality standards, supported are offered consulting and mentoring support plus
by official certifications. The Lebanese assistance with financing options and linkages
Association of Industrialists is a very thereto. Their programs have resulted in 15 new
business ventures to date, many in the agro-
professional, world class association processing sector. A variation on this with a focus
which is very active in helping its on business expansion ideas for ongoing
members improve their products, their businesses – also by way of competitions with
entries submitted to councils created in new
quality standards and their offers. regions – would likely yield rapid employment
growth, especially if employment generation
D. General Recommendations for through business expansion is an explicit selection
Technical Assistance to Enterprises criterion.
Of the 55 SMEs interviewed, 20 percent were found to be prime candidates for

immediate support. This means that these firms are capable of rapid growth, have clearly
defined needs, and are willing to receive technical assistance. Approximately half of the
remaining 44 firms were also plausible candidates for technical assistance support, but
either their potential for growth could not be verified during the course of the assessment
or more time was needed to fully flesh out their specific BDS needs. In speaking with
these SMEs about their needs and looking at existing BDS providers in Lebanon, we
recommend the following as elements of future BDS support programs.
Focus on needs at the sub-sector and firm level. The assessment team found that firms
with the most potential for growth in Lebanon were highly sophisticated, often cutting
edge, and on the premium end of their market. In addition, many of these firms were the
only ones of their type in their sector or industry. Given this and the need to rapidly
create new jobs in Lebanon, an approach that tailors technical assistance to specific firms
and helps them overcome specific bottlenecks to growth may be the most effective.
While elements of USAID’s value chain approach will be critical to fostering SME
growth – such as a focus on end markets – an approach that does not limit
implementation to a few pre-determined value chains, but rather that maintains a flexible
approach to addressing specific constraints of SMEs in a variety of value chains will
likely be more effective at capitalizing on opportunities to generate sales and employment
in Lebanon. Many of the experts we spoke with, including the director of Kafalat, also
emphasized that technical assistance must be tailored to address firms’ constraints to
reaching identified buyers in new markets. The Lebanese Association of Industrialists
expressed real interest in a program that focused on specific firm-level needs, as both the
large and small enterprises in its association could benefit.
Engage and build on capacity of local consulting firms and organizations. The Lebanese
consulting industry is well equipped to handle a majority of Lebanese SMEs’ assistance

needs. If there is a gap in BDS expertise in Lebanon, it mainly involves specialized, firm-
specific services. There was also a general complaint that previous programs relied on too
many foreign experts and not enough on local consulting expertise. This not only drives
up program costs but is also unnecessary considering the consulting talent pool available
in Lebanon. Any foreign experts used should be highly specialized and up-to-date in their
respective fields. They should also be willing to work with and build the capacity of local
experts.
The market distortion caused by previous donor programs in Lebanon – resulting in

higher than natural local consulting rates – will present challenges to USAID when
seeking qualified consultants to work under the constraints of USAID rate scales. This
may be mitigated, however, by presenting several tangible and intangible benefits that
Lebanese consultants will receive from USAID program participation. These include:
 A reliable platform for consulting work over a five year time horizon
 The ability to bring and propose their own client assignments
 Market development – an excellent means to obtain new, long-term clients who
may never have used consulting services (in the absence of the USAID program)
 Capacity building of their junior and mid-level staff with on-the-job experience
 Capacity building of their mid-level and senior staff working alongside
international experts
 The fact their competitors will be benefitting from the program.
Focus on high-growth sub-sectors and firms for job creation. While micro and small
enterprises (firms with 10 or fewer employees) make up 90 percent of firms in Lebanon,
they have far fewer resources and less capacity to make drastic contributions in terms of
hiring new staff. Practical experience from similar projects in Mauritius, Tunisia, and
Egypt have shown that medium to large enterprises are better positioned to finance
capital acquisitions or innovations or enter new markets, allowing rapid job creation. In
addition, the “value chain spillover effect” (on suppliers, contractors, other companies
active in the same value chain) tends to be greater with larger SMEs. Given that the basic
cost of technical assistance remains the same whether a company has 2 or 200
employees, working with a larger SME able to increase its workforce by 10 percent with
technical assistance makes the cost per job much less than when working with smaller
firms. The “sweet spot” in Lebanon is likely to be with firms that have between 20 and
100 employees.
Ensure SMEs have “skin in the game.” Lebanon is a country with considerable economic
activity and maturity, and companies with growth tendencies can and should be prepared
to pay for valuable services. Many medium-sized companies in Lebanon said they are
willing to hire consultants as long as their outputs contribute to the bottom line relatively
quickly. As such, SMEs should be required to pay for a portion of the costs of technical
assistance, according to their size, sales, and type of assistance required. Program co-
payments should be structured in a manner to phase out with continued use. Each SME
should sign a “partnership agreement” prior to receiving technical assistance that outlines
1) What assistance they will receive from the program; 2) Their cash and/or in-kind

contributions to the program; 3) Staff member(s) assigned to oversee and guarantee
implementation of recommendations; 4) Commitment to creating a pre-determined
number of jobs (ranges can be used); and 5) Commitment to tracking and reporting on
program indicators including sales, jobs created, firm investment, etc. This would ensure
SMEs participating in the program are committed to implementing program
recommendations.
Engage associations, chambers, and universities. Associations and chambers can act as
catalysts to bring stakeholders together during the early and mid-stages of the program.
They should be the primary liaison institutions for outreach efforts to target SMEs as
possible beneficiaries of assistance. Associations and chambers can host, co-sponsor and
promote training programs, as well as assist in offering sector and non-sector specific
technical assistance. They will also serve as advocacy partners in coordination with the
SME Strategy 2020 working group efforts. Universities can host, co-sponsor, and
promote training programs. They can also serve as sources for consulting, training and
technical assistance expertise. As described in Section IV, they can be very valuable
members of alliances to improve career development centers, job fairs and matching
events, and continuing professional education programs for managers.

SECTION IV. TRADE AND EXPORT LINKAGES
A. Overview of Trade and Exports in Lebanon
Exports have played a surprisingly small role in Lebanon’s economic success. Lebanon’s
GDP is about $45 billion. As of 2013, formal exports were about $3.5 billion, less than 8
percent of GDP, and one of the lowest figures in the region. Imports, on the other hand,
were about $21 billion. Lebanon imports much more than it exports. And this has been
true for many years; Lebanon has been running a trade deficit every year since the end of
the civil war. Lebanon’s largest exports in dollar terms are gold, jewels, and jewelry,
followed by food and beverages, mineral fuels and oils, electrical machinery, equipment,
and parts, boilers, machinery and mechanical appliances, and copper. (MoET, 2013) Its
major export markets are Syria, South Africa, Saudi Arabia, the UAE, and Iraq.11 (MoET,
2013) (See Annex F for import and export data by sector.)
In terms of geography, it is centrally located within the region and has an excellent port.
The large banking sector means the country is relatively awash in credit (although
exporters do not always have the access to finance that they need, a point which is
elaborated upon below). The country has a skilled, multilingual, and sophisticated
workforce that is well adapted to cross-border trade. Lebanon has a positive image or
brand in several sectors, including fashion, jewelry, and a number of different food
products.
Nevertheless, the challenges to exporters, particularly manufacturing exporters, are quite

severe. There is very little effective policy support for exporters. Lebanon is very unusual
in that it lacks an export promotion agency, and there is no coherent government policy to
encourage exports.12 Some Ministries do pursue export promotion activities, but on an ad
hoc basis. There is little advocacy for export policies, and what little does exist is not
coordinated across industries. For example, Lebanon struggles to be competitive in
manufacturing, in part because neighboring countries such as Turkey and Jordan have
significantly lower manufacturing costs but also because the Turkish and Jordanian
governments have coherent policies in place to encourage and support exports.
Two recent developments have added further challenges. First, the war in Syria has cut
Lebanon off from most trade by land. While a few trucks do still manage to pass into and
even through Syria, formal trade across the Syrian border has dropped by about 60
percent since 2010, while transit trade via Syria (to Iraq, Jordan and beyond) has fallen
by over 90 percent.13 (Siryani, 2015) The Syrian war has also destroyed the market for
many Lebanese goods in Syria, which up until 2011 had been Lebanon’s third largest
11
South Africa – along with Belgium, Switzerland, and India – are largely taking re-exports in the precious
metal and jewelry trade.
12
Lebanon appears to be the only country in the region without one. A “Lebex” promotion agency has been
proposed on at least two occasions, but has never been enacted. IDAL has a small internal division that is
dedicated to export promotion, but it does not appear to be very active or effective.
13
Since this assessment was completed, Jordan has closed its border with Syria, and any transit of goods
from Lebanon via land has ceased.

trading partner. Second, the Lebanese pound has risen against most major international
currencies. This has made Lebanon’s imports cheaper, but its exports have become more
expensive, and thus less competitive internationally.
B. Findings: Trade and Exports
Lack of access to trade information. Lebanese businesspeople have relatively limited

access to information about exports. There is no government website that provides useful
information about where or how to export goods and not all of the Chambers of
Commerce are currently providing export-related courses or training.14 While Lebanon
has a well-developed consulting industry, the assessment team could not find consultants
specializing in trade/export support and facilitation. Only a few large businesses (such as
the pharmaceutical industry) appear to be doing market research for exports. In other
countries at Lebanon’s level of income, Export Trading Companies (ETCs) and Export
Management Companies (EMCs) exist to fill this gap; however, Lebanon seems to have
only a few ETCs and no EMCs at all.
Currency pegged to the Dollar hurts competitiveness. The Lebanese pound is informally
but very firmly pegged to the dollar, and has been since 1994.15 The peg has survived
multiple wars and invasions, significant swings in the value of the dollar, and at least one
speculative attack. It is widely considered to be a key element of Lebanon’s economic
stability, and a clear majority of Lebanese are in favor of continuing the peg indefinitely.
Certainly the peg brings real and significant benefits. Lebanon is a heavily dollarized
economy; if the currency were not pegged, exchange rate fluctuations would add an
alarming new element of uncertainty to all business transactions. The peg also facilitates
trade with other dollarized economies, most notably the GCC. The peg is perceived as
giving Lebanon a relatively “hard” or attractive currency – something of a self-fulfilling
prophecy, but nonetheless one with real economic effect. Despite the country’s high debt
burden and low credit rating, both foreigners and Lebanese are comfortable buying
pound-denominated Lebanese T-bills; after all, the Lebanese government has never
defaulted on a bond payment, and the peg means that they will not devalue their way out
of their obligations. The peg has probably helped the Central Bank keep inflation under
control, and has certainly played a major role in the perception of Lebanon as a stable
economy. That said, the peg has drawbacks as well. Pegging the pound to the dollar
means that Lebanon’s currency rises and falls for reasons that are completely out of the
government’s control, and that have nothing to do with the pound’s actual attractiveness
or lack thereof. When the dollar falls, the pound falls, and Lebanon’s imports become
more expensive. And when the dollar rises – as it has in 2014 and early 2015 – Lebanon’s
exports become less competitive. If the dollar continues to stay strong, it will produce
significant economic pressure on the country’s export sectors.
14
This is in sharp contrast to many developing countries in Africa and (particularly) Asia, where trainings
in such matters as export finance or freight forwarding are part of every large Chamber’s curriculum.
15
The peg is not formal, and very small swings – usually of less than 0.2% -- do occasionally occur. Since
2010, the pound has consistently traded in a narrow range of 1500 to 1510 to the dollar.

Lebanese Diaspora is untapped. Tens of thousands of Lebanese work abroad and send
remittances home. For 2014, remittances totaled $8.9 billion, up from $7.86 billion in
2013. 16 (Cuevas-Mohr, 2015) In other words, remittances were roughly double the
amount of formal exports. From a purely macroeconomic point of view, remittances help
close the trade deficit and bring large amounts of hard currency back into the country.
There are of course very significant negative social effects, which are beyond the scope
of this report.
Lebanon also has a very large diaspora of Lebanese and emigrant Lebanese living
abroad.17 The Diaspora is a significant element in Lebanon’s success as a banking center.
The Diaspora as a whole tends to show a noteworthy attachment to Lebanese banks, and
it is estimated that it accounts for between a third and a half of all deposits in the banking
system. The global recession of 2008-9 actually led to rapid economic growth in
Lebanon, in large part because the diaspora moved billions of deposits into Lebanese
banks in a “flight to quality.” As a result, Lebanon became awash in cheap credit, leading
to investment and construction booms. Members of the Diaspora also come back to visit
Lebanon regularly, generating significant tourism revenue. Additionally, the Diaspora
provides an important network of contacts and information for Lebanese wishing to do
business abroad. This is particularly noteworthy in Africa, where the Lebanese Diaspora
is often quite influential in business and finance.
However, this group appears to be an untapped resource for Lebanon in at least two
respects. First, they are a relatively small source of foreign direct investment (FDI). As
one interviewee put it, “They’re happy to put money in Lebanese banks, but never to put
money in Lebanese businesses.” Second, the diaspora would appear to represent a large
unexploited market for Lebanese exports, especially food, clothing, jewelry, media, and
fashions. Relatively few Lebanese businesses seem to be marketing directly to the
Diaspora, and many of those that do seem to treat it as an afterthought.
Lebanon’s export industries tend to be undercapitalized. While the gold, gem, jewelry,
and pharmaceutical sectors have easy access to capital, most exporters, especially in
manufacturing sectors, struggle to find operating capital and have difficulty persuading
banks to finance new investments. Several forms of trade finance are underdeveloped or
entirely absent. While every bank in Lebanon is ready to write and receive letters of
credit (LOCs) for imports and exports, not one Lebanese bank has a specialized export
finance department. Purchase of accounts receivables (factoring) or trade receivables
(forfaiting) are products not widely offered, and there is no system of trade credit
insurance. Various forms of supply chain finance, such as purchase order finance, do
exist, but they seem to be quite rare and do not usually follow the supply chain beyond
the borders of Lebanon. Lebanon also has no Export Credit Agency (ECA).18 Finance
16
The World Bank attributes part of the increase in remittances to the rise of remittances from the Syrian
diaspora to Syrians residing in Lebanon.
17
The exact numbers are very unclear, but there are certainly more people of Lebanese descent living
outside of Lebanon than inside it. There are several million in Brazil, roughly a million apiece in Argentina
and Mexico, and several hundred thousand each in the United States, Venezuela, Australia, and France.
18
ECAs can be either governmental bodies, private institutions, or mixed public-private entities. Most
wealthy and middle income countries have an ECA or equivalent, and they are common across the MENA

leasing (which is particularly useful for truckers and for exporters who need to purchase
vehicles or containers) does exist, but it is rare, and is not directed towards exporters.
Trade and exports are hindered by a struggling transportation sector and slow customs
clearance. Lebanon traditionally had a large trucking fleet which moved goods from its
ports to Syria, Jordan, Iraq, and beyond. The Iraq War and the Syrian Civil War both had
dramatic negative impacts on Lebanon’s trucking industry, as these regional conflicts
have significantly diminished demand. Currently, the trucking sector is badly
undercapitalized and is shrinking. At least one large operator has simply gone out of
business, selling off its fleet and closing its doors. Today most trucks are owned either by
independent operators or by small (<10 trucks) fleets. The number of trucks on the road
has declined by at least a third, and the average age of a trailer in Lebanon has risen from
7.5 years in 2000 to 20 years old today. (Siryani, 2015) Older trucks are heavier, break
down more often, and need more fuel, making them less competitive. Since most of the
trucking fleet is fully depreciated, and the market for trucking services is still shrinking,
banks have not been enthusiastic about lending towards the purchase of new trucks. This
means that, even if the Syrian crisis resolves in the near future, Lebanon’s trucking
industry will need significant investment in order to recover.
Lebanon had a rail system dating back to Ottoman times, which included a coastal line
extending the length of the country, a second line up the Bekaa Valley, and a spur across
the Anti-Lebanon Mountains to Damascus. The rail system was severely damaged by the
civil war and has not functioned at all since the 1980s. It is unclear whether it would be
possible to revive the rail system; certainly it would require a very large investment along
with a massive commitment of political will. Neither of these seems remotely likely at
this time.19
There is one civilian airport in the country: Rafik Hariri International Airport, 10 km
from downtown Beirut. Rafik Hariri airport is primarily a passenger airport but does
handle modest amounts of cargo; it is serviced regularly by three cargo airlines including
Turkish Airlines Cargo, Ethiopian Airlines Cargo, and Cargolux. A fourth cargo service,
the Beirut-based TMA Cargo, ceased operations at the end of 2014.
Lebanon has a large, modern container port in Beirut, a smaller container port in Tripoli,
and several smaller non-containerized ports (Tyre, Sidon) and oil jetties. The Port of
Beirut is one of the largest and busiest ports on the Eastern Mediterranean. Since the end
of the Civil War, the port has gone through two major upgrading and expansion
programs, including the rehabilitation of existing port facilities and the construction of a
new container terminal. Today it stretches for 3.6 kilometers (2.3 miles) along Beirut’s
waterfront and has a capacity of approximately 1.5 million twenty-foot equivalent units
region. Sometimes this is a separate institution, like Turkey’s Export Credit Bank; sometimes it’s a part of a
larger institution, like Jordan’s Export Credit Guarantee Department, which is a division within Jordan’s
Loan Guarantee Corporation.
19
A group of businessmen led by Mr. Elias Maalouf has declared an intention to reopen the rail line
between Byblos and Batroun as a commuter service, but nothing has come of it yet. The EU’s European
Investment Bank is funding a feasibility study into re-opening the Beirut-Tripoli line, the results of which
should be published in 2016.

(TEU) per year. This is well beyond Lebanon’s current needs, but the Port of Beirut is
also an important center for transshipment. In 2014, it imported approximately 675,000
TEUs for local consumption, exported about 120,000 TEUs, and transshipped about
650,000. It is expected that in 2015 transshipment will surpass imports, and by the end of
2016 it is expected to surpass imports and exports combined.20
While the port is modern and efficient, port fees are high by regional standards. Many
importers and exporters encounter issues with customs and with health and other
regulatory authorities. The Customs Law has not been updated since 1992 and is no
longer consistent with modern best practices; for instance, it does not provide for pre-
clearance (a practice that has become much more common in the last 20 years), nor does
it allow the electronic exchange of documents.21 The World Bank rates Lebanon 97th out
of 189 economies in the world in terms of “Ease of Trading across Borders.” Most of the
reason for this low rating comes from the paperwork and time involved in dealing with
Customs.
Foreign direct investment is low. Formal FDI in Lebanon is about $2.5 billion and
falling. In a middle income country with a $45 billion GDP, this is remarkably low.
Greenfield FDI is even lower: as of 2013, it was estimated at less than $300 million.
(IDAL, 2013) In other words, foreigners are very happy to deposit money in Lebanese
banks, or to buy Lebanese government
Limited Potential for Job Growth in Jewelry
debt, but they show little interest in direct
investment in Lebanon. The bulk of FDI Gold and jewelry businesses mainly import
in Lebanon appears to be coming from the precious metals and stones and turn them into
jewelry, along with parallel but separate lines in
GCC and to be directed towards the real working gold and setting gemstones. Although this
estate and construction sectors. One is a high value-added sector, the multiplier effect
interviewee described FDI as “Gulf appears to be low. Most of the businesses
involved are small (often a single family); the
investors raising luxury apartment Lebanese Syndicate of Jewelers, for instance, has
buildings in Achrafieh for other Gulf over 400 members, of which almost all have
investors to buy luxury apartments in.” between 5 and 10 employees. (Moughanni, 2015)
While the amounts of money involved can be quite
This may actually be a reasonably concise large, few of these businesses are likely to add
description. large numbers of jobs. There are several reasons
for this. The industry involves a set of highly skilled
crafts that require years of training, so there is a
Unlike most countries in the region, reluctance to train craftsmen who are not family or
Lebanon shows little interest in long-term associates. Also, the industry is highly
encouraging further FDI. This is unusual reputational; large sums of money are often
committed or exchanged on a handshake. These
– most countries seek to increase FDI as factors mitigate against expanding and formalizing
much as possible – but under Lebanon’s small family businesses in the precious metal and
jewelry sectors.
20
Beirut transships cargos to a variety of Eastern Mediterranean, Red Sea, and even Black Sea ports. (The
Turkish government discourages transshipment at the Port of Istanbul because it does not want the extra
traffic in the narrow Bosporus, so Beirut has been able to compete for the Black Sea market.)
Unfortunately, while transshipments can be quite profitable to the port, they do not provide significant
knock-on benefits to Lebanon beyond a slight decrease in shipping charges thanks to increased
competition.
21
It should be noted that pre-arrival clearance could be undertaken without a change to the existing
Customs law. Some discussion of this can be found in ESCWA’s 2013 report, Business Regulatory
Reforms: Recommendations for Lebanon (Jamal Ibrahim Haidar), page 9.

circumstances, it actually makes a certain sense. FDI could double and then double again,
and it would still be tiny compared to the country’s immense banking sector.
Furthermore, as long as FDI is concentrated in construction and real estate, more FDI
would tend to raise Lebanon’s already high land costs, possibly contributing to a real
estate bubble.
There is little momentum for Lebanon to join the WTO. Lebanon is not a WTO member.
This is unusual for a country at Lebanon’s income level, and doubly so for a country that
is so well integrated into the international trading system. Lebanon applied for
membership in 1998, and began the accession process in 2006, but it has proceeded very
slowly and has been effectively stalled for the last several years. The original reason for
delaying accession was that Lebanon had been devastated by the civil war and needed
time to recover before joining an open trading system. This is certainly no longer the
case. Lebanon has probably been “ready” in the sense of being able to deal with (and
profit from) WTO membership since at least the turn of the century. Nevertheless,
Lebanon is still not a member, and almost certainly will not be any time soon.
There are several reasons for this. First and foremost, WTO membership requires the
passage of several fairly technical laws, along with accompanying regulations. In
Lebanon’s case, it was agreed that a package of 19 laws needed to be passed. Eleven of
the 19 were passed by 2006, but none have been passed since. Indeed, as noted elsewhere
in this report, Lebanon has passed almost no commercial legislation of any sort since
2006. Second, WTO accession seems to be suspect in some quarters by being associated
with the “illegitimate” administration of former Prime Minister Fouad Siniora. And third,
a number of powerful actors within Lebanon do not support WTO membership. The
pharmaceutical industry, for instance, is concerned about the possible impact of TRIPS.
Agricultural producers enjoy the protection of high tariffs on imported agricultural goods.
On the other side, there is no organized group within Lebanon that offers more than
lukewarm support for WTO accession.
Relationship between export and job growth in Lebanon is a complex one. On one hand,
exports face many challenges, and the country’s single largest export sector (precious
metals, gems, and jewelry) is not a strong candidate for job growth (see box). On the
other hand, the relatively small size of Lebanon’s internal market means that any firm
that grows past a certain point will inevitably have to look abroad. Thus, while exports
are not likely to be a primary driver of job growth in Lebanon, any job growth strategy
will have to at least be aware of the importance of export markets.
C. General Recommendations: Trade and Exports
Support chambers and industry associations to deliver standards trainings to

constituents. Export standards to the EU and US are not widely known by SMEs or
Chambers. The assessment team recommends that donors work with chambers and
industry organizations to deliver instruction and training, particularly in agriculture, to
assist local enterprises to meet international standards. The EU-funded Qualeb project is
already working along these lines, but there is clearly room for more than one donor here.
To give a single example, there is certainly a need to upgrade Lebanon’s existing quality

labs, particularly for agricultural exports, including both additional equipment and
additional training.
Support trade missions to target markets. Trade missions are a popular tool for export
promotion projects around the world. Although they are sometimes misused, they can be
quite powerful when undertaken properly. A well-developed set of best practices exists.
One practice is not to use trade missions to introduce new exporters, but rather to give
businesses that already have experience in exporting the opportunity to meet potential
customers, learn about the business environment, and investigate opportunities in target
markets. Trade missions are not a simple or cheap intervention, especially if they are
undertaken repeatedly. However, they are an intervention that can lead quite directly to
dramatically increased exports, and thus to job creation.
Conduct Lebanese export market studies. Provide for a set of targeted market studies
examining the prospects for particular Lebanese export products in given foreign
markets. Interviews showed that although Lebanese businesspeople are quite
sophisticated, they face a daunting lack of information about export markets. “I would be
happy to try to sell my product in Turkey,” said one, “except that I know nothing about
the market for my product in Turkey, nor where I might go to find out.” Market studies
are a commonly used tool around the world, and there are entire consulting industries
devoted to them, along with a generally recognized set of standards and best practices.
Market studies are a moderately costly but relatively straightforward intervention. Like
trade missions, they can lead quite directly to increased exports, and thus to job creation.
Provide export training courses. Potential exporters are often deterred by the various
types of specialized knowledge needed to market, sell and transfer goods abroad. In other
countries, courses on export marketing, export finance, and the mechanics of exporting
(i.e., how to use a freight forwarder, how to pack various sorts of goods for export, how a
bill of lading works, how to order and use a Letter of Credit) have shown good results.
The Chambers (especially the Bekaa Chamber) are already accustomed to offering
training courses to their members, so it would be fairly simple to add export training
courses. Various courses of this sort already exist in many places around the world,
complete with curricula and materials. This is a relatively simple and low-cost
intervention, and one that is likely to lead directly to increased exports and thus to job
creation.
Connect exporters to service providers. Exporting involves a wide range of service

providers, such as customs brokers, freight forwarders, distributors, bonded warehouses,
and the like. A relatively simple and low-cost intervention would involve connecting
first-time exporters with service providers who have demonstrated flexibility and
openness to dealing with new market entrants. This has been done successfully by
USAID projects in a number of different countries including Uganda, Senegal and
Moldova.
Following-up on the First Sale. Most export promotion programs focus on preparing
exporters to enter a new market and execute their first sale. Then, upon that sale,

technical assistance ends. However, without further prodding and guidance, many fail to
adequately follow-up their first sale in a new market and eventually pull out after making
costly mistakes. Experience shows that if a program guides exporters through their
learning curve (which may last a year or longer), the assistance can achieve can result in
higher exports than similar resources spent on training another unprepared producer.
Expand and augment existing online export toolkits. Export toolkits are found in many
countries around the world. A partial version of this already exists in Lebanon at the
IFC's online SME Toolkit site.22 However, the IFC version is very limited and does not
provide much in way of forms, links, or training. A more appropriate model for Lebanon
might be the much larger and more successful AGOA Export Toolkit.23 There are
multiple models to choose from. A wide range of information can be provided easily,
including country-specific information such as country standards, import regulations,
major importers, etc. This would be a quick, simple and low-cost intervention.
Support banks and lenders to expand export finance offerings. Most of Lebanon's banks
are not strongly engaged with exports, and do not offer products designed to help
exporters produce and sell their goods. Many of these financial products are well
developed in other places around the world, so that transplanting them to Lebanon would
be fairly straightforward. For example, export factoring and forfaiting both have large
international associations, and many banks currently present in Lebanon offer these exact
products elsewhere in the world. This would be a fairly simple and low-cost intervention,
though it might require some technical assistance and some time for banks to adjust to
marketing new products to SMEs. By way of comparison, a USAID initiative to
introduce export factoring in Armenia in 2008-2009 resulted in approximately $10
million of additional exports over a period of 18 months.
22
http://lebanon.smetoolkit.org/lebanon/en
23
http://agoa.info/toolkit.html

SECTION V. ENHANCING PRIVATE SECTOR GROWTH
THROUGH WORKFORCE DEVELOPMENT
A. Overview of Workforce Development in Lebanon
In an effort to gain a broad and in-depth understanding of the Lebanese labor market, the
assessment team conducted extensive research, literature reviews, and interviews with
local actors, including micro, small, medium, and large enterprises, public and private
universities, government agencies charged with workforce development issues, and
public and private TVET institutions. The interviews provided the assessment team with
a chance to fact-check and confirm the findings of previous workforce development
reports in Lebanon, such as USAID’s Workforce Development Assessment, and
investigate whether consensus exists among actors of various sizes and sectors on
workforce development. Specific topics of review in this section are: skills shortages
faced by local companies, labor market oriented training programs, and placement
strategies.
Lebanese workforce. Lebanon boasts educational attainment and literacy rates amongst
the highest in the Middle East, and the quality of its educational institutions is quite high
by regional standards. While estimates of unemployment rates in Lebanon vary widely,
one number that is not disputed is the youth unemployment rate of approximately 34
percent, a number that will likely grow. According to various estimates, between 19,000
and 23,000 people will enter Lebanon’s workforce each year over the next decade.24
(Atallah, 2015) Young people, and especially young women, are joining a particularly
difficult labor market, with most new jobs being created in lower-productivity services.
Informal wage workers and the self-employed make up around 50 percent of
employment. (FHI 360, 2014) The return on educational investment in Lebanon is low,
considering an average starting salary of $1,200 per month for academics. On average,
families spend close to $1,800/year on education, or 13 percent of family expenditures.
Services hold the biggest share of employment, followed by trade and manufacturing.
Women are predominantly employed as professionals, service/retail workers, and in
elementary occupations, while men lead in senior official roles and in craft and trade
professions. Syrian workers are increasingly prevalent in Lebanon, especially in low
and unskilled occupations in agriculture and construction and now in hospitality and
other services. (FHI 360, 2014)
The results of all of the above dynamics are high levels of skilled emigration, a low
female participation rate, and unemployment rates that are higher for those with higher
levels of education, for women, and for youth. Unemployment is also higher in the North
24
In addition to graduates and students of universities and TVET establishments, school dropouts from
intermediate and secondary education as well as baccalaureate degree holders are considered to be potential
new entrants to the labor market. The total number of new entrants to the labor market from schools as
baccalaureate degree holders who do not pursue their studies in addition to intermediary and secondary
education drop outs is estimated at 17,600.

and may be increasing nationally, particularly in areas with large numbers of Syrian
refugees. (FHI 360, 2014)
Workforce development in Lebanon. The educational structure in Lebanon is divided into

basic education, vocational and technical education, and higher education. There are
59,000 students registered in 430 vocational schools. Roughly 192,138 students were
enrolled in 41 universities and institutes of higher education during the 2010-2011 school
year, with 32,603 graduating. (NCLW, 2014) During 2013, Lebanon’s drop-out rate
reached 15.64 percent at the secondary education level. (UNESCO Institute for Statistics,
2013) Roughly 23.7 percent of students at the secondary level were enrolled in TVET.
(UNESCO Institute of Statistics, 2013)
Upon finishing school, entrance into the labor market is not easy – whether youth have
graduated from high school, vocational school, college, or with a post-graduate degree,
the average time for finding a job is seven months. Only half of those with minimal
education had permanent jobs in comparison to 74 percent of the university degree-
holding youth in Lebanon. Limited career guidance often means that even those students
who graduate tend to enter fields for which they are unsuited. The ratio of the number of
graduates with degrees in social sciences, business, law and humanities compared to that
of graduates with degrees in sciences and engineering is around 2:1. (Yaacoub & Badre,
2012) Most university programs tend to follow the French model. This means that course
work is usually highly theoretical, and employers note that few graduates have practical
experience with work. Focus group discussions revealed that once companies find
suitable candidates, in-house trainings are sometimes offered to make new recruits
familiar with company specifics. Unfortunately, these in-house trainings rarely get into
the technical depth often needed by new employees.
B. Findings: Workforce Development
Continuing professional education programs are not consistently provided. Currently,

there are few examples of successful continuing professional education (CPE) programs
in Lebanon. Among smaller companies a perception exists that upgrading employee skills
is unwise, especially at the managerial level, because it leads to their departure for higher
paying jobs. Unfortunately, this perception, whether true or not, simply serves to
perpetuate inadequately managed, under-performing companies. Additionally, because
these services are not in demand, they are not in ready supply either.
One CPE program, run by the Lebanese American University (LAU) in Bekaa in
partnership with the Chamber of Commerce for Industry and Agriculture, is successful
because it is responsive to the needs of local business owners. Programs are designed to
fit well with business owners’ difficult schedules. Courses are typically run four weeks at
a time but just two days per week including one weekend day. The program offers a wide
array of courses from quality management, marketing, and HRM to English and public
speaking. Last year 140 local professionals/managers completed the program.
Unfortunately, this is one of the only such CPE programs found that impart managerial
skills in short, intensive (1-6 week) training programs. Masters programs do exist, such as
the 18 month MBA offered by AUB.

General skills mismatch exists. The sixth most mentioned constraint for SMEs in a 2009
World Bank Report was “skills and education of available workers,” with more than half
(55 percent) of enterprises listing a general lack of skills among employees as a serious
matter. The most difficult positions to fill are skilled technicians, engineers, and
managers. (World Bank, 2009) There are also significant gaps between the skills that
employers demand and those that workers have. In the case of managerial positions, the
main gaps are related to skills to operate computers and other office equipment, the
ability to work independently, and the lack of a foreign language. For the non‐
managerial positions, main gaps include: ability to work on a team, foreign language
skills, professional communication skills, and problem solving skills. (Robalino &
Sayed, 2012) In sum, neither universities nor vocational and technical training institutes
are currently providing the skill sets demanded by employers. Yet the demand is
growing for well-trained specialists and middle management. Education and training
therefore play a key role in the Lebanon’s economic development.
Figure 1. Skills Employers Want versus Skills Managers Actually Have
Source: World Bank, 2009.
Skills mismatch in higher education. The higher education system in Lebanon is not, in
general, responding to domestic employer needs, but rather to social norms that place
value on certain professions, regardless of local demand. Broadly speaking, Lebanon’s
labor market suffers from an overabundance of workers at the high and low ends of the
skills spectrum and a “missing middle.” The mismatch between the orientation and
output of education and training institutions and the demands of the labor market
aggravates the country’s already poorly functioning labor market dynamics.

Table 7. Degree of Relation of Alumni's Job to their Major Field of Study
Degree Very Somewhat Not at all

related related related
Education 100 0 0
Humanities and the arts 59 24 18
Social sciences, business, and law 42 41 18
Science 70 18 12
Engineering, manufacturing, and construction 52 38 10
Agriculture 0 100 0
Services 43 43 14
Health and welfare 50 29 21
All majors 51 34 15
Source: Kawar & Tzannatos, 2013.
Outside of the few certified and licensed occupations (i.e. doctors, lawyers, practicing
engineers, etc.), the correspondence between the educational fields people choose and
the jobs they perform after graduation is quite weak (see Table 7).
Skills mismatch in vocational education. Public, private, and NGO-sponsored technical

vocational education and training (TVET) providers have also not responded to the needs
of the local labor market. Coursework is outdated by 30 years, as in most cases the
Ministry of Higher Education (MEHE) has been very slow to revise or introduce new
curricula. In fact only a handful of revisions have taken place since the end of the
Lebanese Civil War.
Furthermore, vocational training tends to be overly theoretical. Manufacturers that

operate expensive or complex machines often complain about the low quality of TVET,
stating that the lack of practical competencies of graduates is crucial when it comes to the
use of high-end technology. Unexperienced graduates can break machinery and/or
interrupt production processes, offering a major disincentive to hiring students without
practical work experience. (FHI 360, 2014) It is in this, and other examples that
demonstrate a lack of market linkages and responsiveness to market trends on behalf of
TVET organizations.
The Torino Process, launched in 2010 as a bi-annual review of TVET worldwide, noted
that the lack of a clear vision or specific strategy for TVET and the Lebanese economy in
general, the poor performance of teaching staff, and weakness of public TVET
institutions are the three main challenges to TVET education in Lebanon. (ETF, 2015) It
states further that TVET curricula needs updating and that an improved business sector
contribution would lead to more relevant training programs and greater competitiveness
in the labor market, especially in the rapidly-evolving sectors.
Successful vocational training approaches in Lebanon. International Center for

Technical Sciences (CIT) in Dora Square is a well-respected private TVET institute in
Lebanon providing training in business computing, accounting, hotel management, and
interior architecture. The tuition fees of $2,500 are much higher than the $300 cost of
public TVET schools. However, CIT Dora workshops and trainings are better equipped,
and more oriented towards the local labor market as well as student preferences and

needs. CIT Dora offers programs in the evening, allowing students to pursue jobs during
the day. Consequently, the hiring rate of graduates is high.
NGOs and donors have gotten involved and have been successful in the field of
vocational training as well, especially when they have partnered with the private sector.
In the field of electrotechnics, the European Institute for Cooperation and Development
(IECD) added value to existing curricula by inserting practicums for students during their
3-year training period. So far, 700 students have enrolled in the program, and a major
private sector collaborator, Mitsulift, is paying tuition fees for 12 of its employees to
become more highly skilled.
A similar close collaboration is happening with the Dual System. Introduced by GIZ, the
Dual System is a unique combination of classical school training and traineeship in a
company. Simultaneously, students are learning the theoretical essentials and on-the-job
skills over the course of three years. During the first year, students spend all five days a
week in one of the now 33 technical institutes. After the first nine months, the school will
guarantee a practicum for the student in one of approximately 800 training companies. In
the second and third years, students continue theoretical training in school, but only on a
part-time basis. The rest of coursework is conducted on the job with training companies,
offering the chance to experience first-hand the tasks and environments of future
workplaces. According to focus groups, the Dual Program is appreciated by business
representatives, who consider it a good method of creating a labor force with skills
applicable to private sector demand.
Additionally, there are a number of NGO initiatives (e.g. Makhzoumi foundation, Safadi
foundation, Injaz, etc.) that offer short-term trainings in technical and soft skills.
However, their placement offices are often understaffed and overburdened with the load
of resumes they receive from job seekers. The varieties of workplace-oriented trainings
leads to some duplication of services and neither the organizations nor potential students
have a clear overview of who is providing what training. As a result, “the impact of these
initiatives is unclear owing to their fragmentation and the absence of clear policy
direction.” (ETF, 2015)
Career counseling services. With few exceptions, higher education and TVET
institutions provide little career counseling guidance and job placement support. While
the MEHE maintains a department of orientation and guidance, it employs only ninety
teachers, who are on temporary leave from their teaching duties, to provide counseling
and advisory services to 1,281 schools across the country. (ETF, 2015) To help ease this
shortage of career counseling support, IECD has supported its affiliated TVET
institutions in establishing career guidance desks. TVET school personnel have received
training on career counseling, establishing links with the private sector and placement of
interns and graduates. The success of this measure will only become clear in the future.
Some Lebanese universities and TVET providers do operate job placement and career
counseling offices. However, their quality varies from institution to institution. Whereas
large, well-reputed universities, such as AUB, Université Saint-Joseph, and Lebanese

American University employ several staff members who link students with job vacancies
in the private sector, most TVET schools and smaller universities do not have personnel
supporting job placement outcomes.25
Labor market needs are not readily communicated. There are no structured and
consolidated mechanisms in place to identify skills needs and to match skills supply.
There is no labor market information system nor are labor force surveys completed
regularly. While the Chamber of Commerce of Beirut and Zahle performs specific
surveys at the central and national level, there are limited mechanisms in place to feed
this information on into the education and training system. Most of the surveys and
analyses that do exist are performed with the financial support of donors, particularly the
International Labor Organization, however a labor market needs analysis has not been
completed since 2004.
The National Employment Office (NEO), under responsibility of the Ministry of Labor,
was created to conduct research to inform employment policies to improve the
employability and skill level of new entrants to the labor force through accelerated
vocational training. NEO also aims to reduce unemployment rates by linking job seekers
with job opportunities through the Employment Bureau and to build the capacities of
people with disabilities to increase their employability. Unfortunately, the NEO does not
have either the resources or the institutional capacity to complete its overambitious
mandate. The NEO has a stagnant annual budget of $1.3 million, and is seriously
understaffed (it had 29 employees in 2014). (Abi Fadel, 2015)
Furthermore, limited dialogue with social partners and the business sector in particular
remains a key problem in defining and implementing effective measures to address skills
development and skills mismatch. There is increased awareness of the importance of
cooperation between business and education, but there has been little progress so far in
developing a clear policy framework for the concrete and structured involvement of
business representatives in educational governance. The majority of companies
interviewed are not in active cooperation with the academia.
Job fairs are not optimized for effectiveness. Most universities in Lebanon host job fairs.
The most popular university job fair in Lebanon is AUB’s Annual Job Fair. In 2012, 146
firms reserved stands for the event, and over 270 students/alumni found job outcomes as
a direct result. While 270 job matches is a success, the daily cost of a stand varied
between $500 and $6,000 per day, which was cost-prohibitive for many SMEs.
Furthermore, no data was collected on the number of attendees. Without collecting this
data, it is impossible to measure whether 20 percent or 1 percent of attendees found jobs,
and moreover, no way to measure the overall effectiveness of each job fair implemented.
Similarly, privately organized job fairs, like the annual FORWARD Recruitment Forum
do not monitor actual job matches.
25
It is important to note that job placements rates at AUB, Université Saint-Joseph, and the Lebanese
American University are not known at this time.

E-recruiting is growing but not necessarily creating jobs. E-recruiting is growing quickly
in Lebanon, but is not necessary resulting in major job growth. Traditional forms of
recruiting required more of an investment in time. E-recruiting has opened up job-seeking
to passive job seekers – individuals who already have a job but would apply for what
appears to be a better one that is advertised on the internet.
Of all the jobs currently posted on bayt.com – one of the main important job seeking
platforms in Lebanon – 133 companies are currently hiring for 336 vacancies in Lebanon.
39 percent of the companies looking to hire employees in Lebanon are in the size range
of 10-49 employees. This group is also hiring the largest number of employees (128 out
of the 336 vacancies, or 38 percent). Fewer firms in the 50-99 employee or 100-499
employee size range seem to be hiring people. In the 500+ employee size range, a smaller
number of larger firms seem to be hiring a proportionally larger number of people (29
percent of all vacancies, the second highest after the 10-49 size range). This provides
some further validation that the 10-49 employee sized firms show the most potential for
engagement in terms of the number of potential firms seeking to grow relative to the
others.
The top six employers are coming from the retail/wholesale (14.8 percent), employment
placement/HR (14.2 percent), ICT/telecom/computer hardware/e-commerce (8.3
percent), medical/pharmaceutical/healthcare (6.5 percent), and agriculture/forestry (3.5
percent) and catering/food services/restaurants (3.5 percent) sectors.
C. General Recommendations: Workforce Development to Enhance Private Sector

Growth
In order for workforce development support to be effective, any future programs should
employ multiple, integrated interventions that utilize practical training, e-recruiting, job
fairs, and other tools to ensure that as many sectors, locations, employers, and job seekers
can be beneficiaries.
Support local efforts to upgrade the TVET system. In the last few years, local efforts to
improve the TVET system have gained steam. In 2014, the Advisory and Coordinating
Committee for Vocational Education and Training steering committee (ACC-VET) was
created, with the intent to facilitate public-private sector dialogue around needs for
vocational education and training. The committee aims to:
 Provide support and assist in policy advisory services and systems to develop
vocational education training;
 Assist and support governing bodies in setting priorities, as well as planning and
implementation of activities such as curriculum development, examinations,
occupational and job analyses, teacher and instructor qualifications;
 Assist in identifying human resource development needs and labor force
demands;
 Facilitate the design and implementation of public relations campaigns in order to
inform youth and parents to increase trainee recruitment;

 Facilitate instructor in-service education through arranging exchanges and
exposure to actual workshop and work environments, new technologies, and
professional developments.
Additionally the Ministry of Education and Higher Education recently announced the
Strategic Multi-Annual Action Plan for vocational and technical education in Lebanon of
2011-2014. The plan centered around four building blocks:
 Review and modernization of VTE’s structure and administration;

 Strengthening the partnership and cooperation with social partners and other
stakeholders and enhance the image of VTE,
 Revision, updating and improvement of the vocational specializations (including
their geographical distribution) and curricula, and
 Ensure and increase human and financial resources.
Despite these local efforts, the TVET system is struggling to keep pace with changing
times and needs to come to grip with the new realities by reforming its governance
framework, improving teaching and learning conditions, updating curricula and
enhancing public perception of TVET education. It is our recommendation that USAID
provide support to these, and other local efforts to improve sustainable, home-grown
vocational education improvements in Lebanon.
Work with private sector training providers. It is recommended that USAID seek future
cooperation with private training providers as they have shown to be more flexible and
capable of forging sustainable cooperation with international agencies than public sector-
funded providers. Public sector institute funding must be channeled through a
government budgeting process, and donors cannot advise as to the allocation of
donations. Due to these, and other factors, the bureaucratic hurdles prevent public-sector
institutions from acting nimbly, reforming quickly, and responding to market trends. The
following providers have potential to support a USAID-funded initiative and have the
availability of resources to offer trainings.
Table 8. Overview of Additional Potential Training Providers
Training provider Training Subjects Duration

Al Kafaat  Hospitality and Catering Programs range from several
Foundation  Automotive Repair and Garage months for technical training to
Management several years for university
 Electrical Installation degrees
 Appliance and HVAC Repair
 Computer Maintenance and Repair
 Fashion and Jewelry
 Hair Styling and Aesthetics
 Graphic Design and Printing
 Accounting and Financial Management
 Nursing
Makhzoumi26  Business and Enterprise Skills Up to 2 months, part time
26
Graduation certificates issued by the Makhzoumi Foundation are eligible for legalization by MEHE

 Personal Development and Soft Skills
 English
 Digital Literacy and IT Skills
Don Bosco  Solar PhotoVoltaic (PV) Systems Between 3-9 months
 Electropneumatics
 Surfcam Training Courses:
Mill and Lathe CNC, CAD, CAM
 Automation Courses for PLC/HMI
 Air conditioning and refrigeration
 Executive Secretary & Accounting Assistant
 Solar Thermal Systems
 Car Mechanics
YMCA  Agricultural Mechanics Short-term afternoon courses
 New Agricultural Techniques
 Cottage Industry Food Processing
 Office Administration
 Welding
 Plumbing
 Electrical house wiring
 Pastry Chef
 Aluminum maintenance
Safadi Foundation  IT Short term
(region Tripoli  English
only)  Plumbing
 Welding
CNAM  BT+ Electrotechnic 1 year evening courses
(elevator maintenance)
Support the implementation of regionally and technically-focused job fairs. Job fairs in
Lebanon, with few exceptions, have been large, catch-all, and geographically centered in
the Beirut region. Furthermore, data collection has been sparse, and measurement on
effectiveness has been all but nonexistent. The assessment team recommends that USAID
support the implementation of additional job fairs through local organizations that are
nuanced and tailored to optimize effectiveness. Job fairs shall:
 Include cost-shares from the private sector
 Be implemented in up to four different regions (Bekaa, Beirut/Mount Lebanon,
North Lebanon, South Lebanon) up to four times annually
 Have different job sector/responsibility foci
 Be measured, analyzing the costs per job matched, success rate for job seekers,
and success rate for employers, so that future fairs can be optimized and
improved.
Cost-share post-employment training. Work-based learning approaches require an up-

front and ongoing investment of resources by employers. They also require that
employers take some risk in bringing undertrained and/or inexperienced personnel into
the firm. Employers repeatedly mentioned that they usually do not undertake post-
employment training as they are concerned that other firms will lure away their newly
skilled workers before they can fully recover their investment. However, a major
advantage of work-based learning strategies is that employers have trained workers with

the specific skills they need, which can help the employer increase productivity and
improve the quality of their products.
A donor-funded project could operate as workforce intermediary between the supply and
demand sides of the labor market, serving as integrators and facilitators for an effective
industry engagement in short term training programs. The project could work with
businesses that are ready to hire more employees but would not be able to make this
investment without assistance. Additionally, a project can facilitate recruitment and
training of personnel to ensure that newly hired or promoted staff have the attitude and
skills required to be a productive members of the staff. The project could offer to co-
finance 3-6 month trainings in soft skills or basic technical skills in order to compel
employers to hire candidates that mostly meet their criteria, but who may not be a 100
percent fit. For example, candidates identified from a career fair who show strong
potential, but who may lack directly relevant work experience may be more marketable to
interested SMEs if supported through this approach. The project should cooperate with
businesses that:
 Consider job creation to increase their productivity, competitiveness, and ability
to do business in Lebanon and abroad;
 Make a commitment to provide significant co-investment in training for the
duration of the grant.
Support existing university/TVET career centers job-matching programs. There is a

growing awareness for the need of early vocational and career counseling at TVET
institutions/universities and sound job placement centers operated by qualified staff. Yet
existing placement offices are mostly understaffed and people are not qualified to provide
client-oriented counseling and liaise with Lebanese industries. Meetings with university
career counselors indicated that students have little to no information about labor market
needs or career options either when choosing a university during secondary school, or
once at university, when choosing a major. Based on the identified key sectors/industries
in this report, the project may do some research to determine which TVET institutions
and universities offer educational programs and topics that are in line with the
occupational profiles of cooperating companies. Subsequently an analysis should take
place about which of those educational institutions already operate job placement desks
and how successful they are in placing students.
Collaborate with Microsoft’s Citizenship program to expand the Ta3mal (YouthWorks)

Platform. Microsoft and USAID have a common interest in eliminating extreme poverty,
promoting economic growth, and helping individuals and communities across the globe
reach their full potential by leveraging information and communications technology
(ICT). Microsoft is partnering with USAID youth projects in Iraq, Tunisia and Palestine
to promote youth skilling and employment by ensuring that its selected implementing
partners, grantees, sub-grantees, project managers or fund recipients will be able to freely
utilize the YouthWorks Platform which brings together eLearning, internships,
mentoring, and career guidance to increase the qualifications of users seeking

employment. Collaboration with Microsoft also ensures that all qualified NGO
implementing partners, of USAID Lebanon using the YouthWorks Platform would have
full access to other benefits from Microsoft Citizenship including other programs and free
Microsoft software. At this time the Ta3mal Platform is up and accessible. The NGO
responsible for its promotion and supporting Youth NGOs and learning institutions is has
not been effective. Microsoft is in need of support and NGOs to take on the promotion
and beneficiary support. The success of USAID-Microsoft partnerships in other
countries has resulted in significant scaling up of impact given the flexibility of the
Platform’s ICT base.

SECTION VI. SPECIAL ECONOMIC ZONES
A. Overview of Special Economic Zones and Industrial Parks in Lebanon
The assessment team assessed the current and potential effectiveness of Special
Economic Zones and Industrial Parks in Lebanon, their future feasibility in the Lebanese
context, their ongoing and potential impact on SME growth and competitiveness, and the
role that USAID may play through future programming in their growth and development.
Special economic zones. Special Economic Zones (SEZs) are special geographical
regions, designated by law, where certain laws (typically on taxation, trade, and certain
sorts of regulation) are suspended or amended in order to allow the rapid growth and
development of enterprises. Typically an entire SEZ is overseen or managed by a single
entity, which may be either public or private. SEZs have been engines of development
and growth in a number of countries across the region. The most prominent example
worldwide is China, which has built several massive SEZs, most famously the Shenzhen
Economic Zone in Guangzhou, adjacent to Hong Kong. The most prominent regional
example is Turkey, which has created numerous SEZs over the last 25 years, leading to
the creation of hundreds of thousands of jobs and billions of dollars of exports.
Lebanon’s neighbor, Jordan, also has several successful SEZs.
There are several types of SEZs. The chart below gives some of the more common sorts,
along with a brief description. Most of these have been proposed for Lebanon at one time
or another. Lebanon’s only current SEZ (the Tripoli Economic Zone, or TSEZ) is a fairly
typical Export Promotion Zone; it was created by law in 2008, but has not yet begun
operations.
Table 9. Types of Special Economic Zones
Type Objective Size Typical Typical Markets

Location Activities
FZ/FEZ (Free Integrated Usually large, > Anywhere Multi-use Internal,
Zone / Free Development 500 Hectares domestic,
Economic Zone export
FTZ (Free Support Trade Usually small, Port of entry Entrepots, Domestic, re-
Trade Zone) <50 Hectares (port or airport) transshipment, export
other trade
related activities
EPZ (Export Export Any size Anywhere, Manufacturing, Mostly export
Promotion Manufacturing usually near processing
Zone) port
Urban General Any Size Urban area Light Mostly domestic
Enterprise Enterprise manufacturing,
Zone Development warehouses,
startups
When undertaken properly, SEZs are a potentially useful tool that can lead to job
creation, increased tax revenue, and environmental benefits. However, SEZs are not a
cure-all. Some, like Shenzhen and the larger Turkish SEZ, are great successes; but many
others never got going, are poorly run, or end up exploited by investors who took tax and
regulatory breaks without producing substantial employment or export earnings. Africa

and India have dozens of failed SEZs, and even China has produced several
disappointments. Worldwide, the record of SEZs can fairly be described as “mixed.”
Tripoli Special Economic Zone. In 2008, the Lebanese Parliament passed the Tripoli
Special Economic Zone (TSEZ) Law No. 18, establishing Lebanon’s first SEZ on a 50
hectare site adjacent to the Port of Tripoli. The Law allows the creation of an SEZ and
exempts firms doing business there from certain Lebanese laws and regulations. In 2011,
USAID contracted Sibley and Associates to research and write a report on the Tripoli
SEZ. (Sibley and Associates, 2011) Soon thereafter, discussion began on appointing a
Board (formally known as the TSEZ Authority) to oversee the implementation of the
Law and the development of the Zone. These discussions went on for almost three years,
and included at least one unsuccessful attempt to appoint a Board. Agreement was finally
reached in April 2015 and a Board was named and appointed. The Board will have a
range of authorities, including the ability to hire employees, find and evaluate a developer
for the TSEZ, draft a master plan, and enter into contracts with a developer and other
entities. As of this writing, the new Board has not convened. No other actions have been
taken to implement the law.
Industrial Parks: The Turkish Experience
Key Facts about Industrial Parks. Industrial parks have been an important part of
Industrial parks are similar to SEZs Turkey’s economic development plan since the
1990s. Turkey has three types of “special economic
except that they do not involve a zones,” of which “Organized Industrial Zones” – more
special law. The term is often used commonly known as industrial parks – are the most
loosely – journalists and even common. There are about 120 OIZs across Turkey,
involving more than 40,000 firms and employing
businessmen may refer to “industrial nearly 1 million people. Turkish Law sets OIZs up as
parks” when what they really mean is non-profit legal entities operating at either the
just a real estate development that is provincial or municipal level, and overseen by an
27 “entrepreneurs committee” comprising local
zoned for industrial use. The United stakeholders, both public and private. OIZs provide
Nations Industrial Development access to high-quality land, superior infrastructure,
Organization (UNIDO) defines an and pre-screened compliance with environmental and
other regulations. Infrastructure connections, permits,
industrial park as “a tract of land and licenses can all be obtained much more quickly
developed and subdivided into plots in an OIZ than elsewhere. Turkey’s system of
according to a comprehensive plan with industrial parks is considered such a success that
several neighboring countries have either attempted
or without built-up (advance) factories, to copy it (e.g. Jordan, Georgia) or have simply asked
sometimes with common facilities and the Turks to come in and help them set up industrial
sometimes without them, for the use of parks of their own (e.g. Egypt, Ukraine). Turkey and
Israel have also cooperated on joint industrial parks
a group of industrialists.” A number of (many following the so-called “Tefen Model”) within
European countries have large and both countries.
productive Industrial Park systems,
including Hungary, the Czech Republic, and Turkey (see box). The Turkish model relies
on local committees that are de facto public/private partnerships; the Hungarian model,
by way of contrast, draws more support from a powerful association of the industrial
parks. The key points, however, are that an industrial park system should provide
investors with easy access to land that has clear title, access to infrastructure, and
permitting that is either streamlined, pre-approved, or both. Although it is not part of the
27
This seems to be a particular issue in Lebanon, where the term “industrial park” is thrown around quite
freely.

formal definition, the normal practice is that an industrial park should be “plug and play”,
with zoning, permitting and utility issues are resolved in advance. This usually requires
that the park be organized by a single developer. Industrial parks usually emphasize
manufacturing, though other types exist.
Like SEZs, industrial parks are a regularly recurring topic in Lebanese media and policy
discussions. Two large industrial parks are currently under consideration in Lebanon: one
each in Saida and in Terbol. A smaller one is under consideration in Batroun.
B. Findings: Special Economic Zones and Industrial Parks
Lebanese businesspeople and policy makers have become intrigued by the notion of
SEZs and industrial parks. The reasons for this are not difficult to understand. Land in
Lebanon is extremely expensive, businesses often face challenging infrastructure
problems, and industrial businesses are often located near or in residential and retail
areas. Many Lebanese are aware that neighboring countries such as Jordan and Turkey
have enjoyed success with SEZs. As a result, discussions of SEZs and proposals for new
industrial parks appear regularly in Lebanese media. There are a few things to keep in
mind with regards to SEZs and IZs in Lebanon:
Setting up SEZs and IZs is a difficult, often unsuccessful process. While enticing, SEZs
and IZs can be implemented incorrectly, and can even have opposite, unintended results.
For example, Morocco had an elaborate and complex system of “special investment
zones” which included industrial parks. However, the legal framework was drafted in
such a way that multiple agencies and branches of government had conflicting
responsibilities for the administration of the parks. The result was that the parks were
actually less attractive to investors than ordinary construction land. In the middle 2000s,
after years of amending the law and fruitless attempts to re-arrange the system, Morocco
finally scrapped the whole legal framework and designed a new system. The lesson here
is that an industrial park system needs to be carefully designed and drafted, with willing
cooperation from multiple government actors, or it will not be effective and may end up
making matters worse.
Developing SEZs and IZs (especially SEZs) takes time. In the case of the Tripoli Special
Economic Zone, it has taken seven years to move from a law to the appointment of a
Board. Optimistically, it will probably take at least another five years before the SEZ is
ready for business. In theory it could take much less time; SEZs in neighboring countries
have gone from initial Board appointment to opening their doors in less than half that
time. In this case, though, given the number of actors involved, and the GoL’s track
record in resolving complex and politically sensitive issues, five years seems optimistic –
and it also seems entirely conceivable that the TSEZ will never happen.
Tripoli SEZ’s experience is likely indicative of future struggles. The long delay in
appointing a Board is symptomatic of the issues that will probably make development of
the Tripoli SEZ (and any future SEZs) very difficult. It is very difficult for the
Government of Lebanon (GoL) to take decisive actions. If the GoL only needed to take
the single action of appointing the Board, then there would be no more problems.

Unfortunately, several other state actions will be required before the SEZ can open for
business. These include (but are not limited to):
 Amending the TSEZ Law No. 18 as discussed above.

 Reissuing Lands Decree No. 1791, which has expired, to include permission to
grant a 30 year lease to the SEZ developer.
 Engaging in diplomatic discussions with trade partners. Some WTO and GAFTA
members do not extend free trade to goods produced in SEZs. This could
potentially deter firms from locating in the SEZ until this issue is resolved, so this
issue needs to be resolved before the TSEZ opens for business.
This of course does not include the many actions that must be taken by individual
government agencies in order to allow development to move forward. As with other large
developments, the SEZ will need an environmental impact review; will require the
development of a master plan which must be reviewed by the relevant authorities, so that
road and utility links can be set up; will need permits for a wide range of activities; and
so forth. All of these will require intensive and often coordinated activity by a range of
government actors.
Prior to any engagement on development of the Tripoli SEZ, the law must be amended.
Unfortunately, the developers of the Tripoli SEZ Law overlooked several important
issues, which require amendment before any meaningful steps can occur. These issues
include:
 The TSEZ Law has minimum capital requirement (MCR) of $300,000. This is not
consistent with international best practices, and will put the TSEZ out of reach for
most SMEs.
 The TSEZ Law does not provide a clear mechanism to give TSEZ products a
national certificate of origin.
 The TSEZ Law is silent on the treatment of local versus foreign content of goods
produced in the SEZ. Either the TSEZ Law, or Customs Decree No. 2220, needs
to be amended to include an explicit clause exempting the value of local content
of goods in the TSEZ from paying import duties when sold inside Lebanon.
Either the Law or the Decree should include clear procedures to trace foreign
content in TSEZ-produced goods.
 The Law does not make it clear that the Board has power to utilize TSEZ land in
any manner deemed appropriate to stimulate investment.
 The Law does not provide for any mechanism to coordinate (or compel)
assistance with the many other government ministries and agencies whose
cooperation will be required.
 The Law allows firms to set wages and overtime at will, notwithstanding
Lebanon’s existing labor law. This probably violates Lebanon’s ILO
commitments.
Limited land supply in Lebanon. An additional complication for industrial parks is that
there are very few large, continuous tracts of undeveloped land in Lebanon’s coastal plain

or in the Bekaa Valley. Most flat land in Lebanon is already being used, whether for
agriculture, industry, or housing. The few large tracts still available usually belong either
to a municipality, to the GoL, or to a religious group.
C. General Recommendations: Special Economic Zones and Industrial Parks
Generally speaking, Special Economic Zones and Industrial Parks are not attractive
targets for immediate USAID assistance from a job creation lens. Based on the challenges
outlined above, it is not recommended that USAID begin supporting Special Economic
Zones or Industrial Parks in Lebanon in the short-term. USAID can support chambers and
other private sector organizations as they plan, prepare, and start making steps towards
their development, but until legislative gridlock at the central level is eased, major efforts
will yield minimal results.
While investments in SEZs and IZs may support economic growth, they do not show great
potential to create jobs. The 2011 USAID feasibility study projected that the TSEZ
would eventually create 3,220 jobs by direct employment inside TSEZ, and another 1,935
indirect jobs outside of it, along with a number of construction jobs ranging from 30 to
245 per year. However, this process would be gradual; direct jobs would be created at a
rate of about 200 jobs per year, with the figure of 3,000 not reached until around Year
15.28 (Sibley and Associates, 2011, pp. 5-1) The cost per job would also be quite high, as
the initial outlay by the government (or donors, if donors choose to assist) would be in
the range of $15 million in the first three years. Likewise, IZs are unlikely to be
significant engines of job creation. In 2012, Booz Allen Hamilton conducted a study of
several potential industrial zones across southern Lebanon. It estimated that the largest
zone would create 2,220 direct jobs over 20 years with a total rise in employment
(including indirect and construction jobs) of 4,504. (Booz Allen Hamilton, 2012) While
these numbers are not negligible, the long term scales and uncertainties involved do not
make these zones an attractive target for donor investment. Therefore, if USAID’s main
goal is job creation, there are cheaper options which result in more impact.
Assist private sector participants to properly plan industrial parks. If the legislative
environment shows serious signs of positive change, co-financing the development of an
industrial park with shared administrative services, supported by technical expertise,
might be considered. When the assessment team met with the President of the Saida
Chamber of Commerce, and then in discussions with the Mayor of Terbol in the Bekaa, it
became clear that industrial parks are a useful commodity to spur local economic
development. Land with electricity, water, sewerage and communications infrastructure
is cost prohibitive for most SMEs to acquire, and remains one of the most significant
impediments to development and growth. Both the Saida Chamber and the Mayor of
Terbol possess a development vision for their proposed industrial parks. They each
28
The majority of jobs created are defined as “Skilled” (defined as welders, machinists, carpenters, and the
like) with about 75 percent of projected jobs falling in this category. The other 25 percent would be
“Unskilled,” “Technical,” and “Managerial” jobs. Article 33 of the TSEZ law states that Lebanese workers
must make up at least 50 percent of employees in the TSEZ, which suggests that up to half of these jobs
could go to non-Lebanese.

foresee offering facilities and land below commercial market rates that benefit the local
municipality with new revenues and taxes, but more importantly, address regional
employment generation and its social benefits. USAID could support private sector actors
involved in planning the development of IZs through assisting in regulatory reform
efforts, drafting specialized regulations to accommodate these zones, and ensuring that
international best practices are considered in their development.
The Saida Chamber of Commerce, is Criteria for Successful Industrial Parks

focusing its efforts primarily on the USAID can help private sector actors in dialogue
creation of an industrial park. They around industrial parks to answer key questions and
propose to open the facility with a non- considerations:
 Are SMEs in the region concentrated in several
profit orientation – juxtaposed against sectors and are any non-actionable impediments
a local incubator by a commercial inherent to them (e.g. key export markets closed
property developer commanding due to political reasons)?
premium fees for occupancy. The  Do the SMEs likely to inhabit the industrial parks
possess competitive advantages over those of
Chamber is working with the local others, either Lebanese or competing countries?
municipality and the Ministry of  Do the industrial park’s organizers have a plan to
Finance to find financing for a piece of establish strong collaborative relations with
growth financing institutions for affordable SME
property, which has already been lending instruments?
identified. They will equip it with all  Are matching funds available from local public
necessary, up-to-date infrastructure and private sector interests to demonstrate
commitment?
then rent it to start-ups as well as  Does the park have a public private partnership
growing businesses at below model with a Board consisting of public and
commercial rates. They also plan to private sector members (private sector majority)?
 Does the municipality have a strong track record
offer on-site consulting services and of working with the private sector / local chamber
technical assistance to help grow the toward development objectives?
companies.  Has a thorough feasibility study been completed
by a neutral third party?
Another interesting candidate is the

Terbol industrial park which is being developed by the local municipality, on municipal
land, and which has already advanced to the point where it is laying out a master plan for
the park. The fact that this is being done without input or assistance from the GoL or any
donor suggests that the municipality is serious and motivated. Problems may still arise,
and the obstacles listed above will still have to be overcome. However, the Terbol park
warrants watching, and might perhaps be an interesting activity for USAID engagement
at some future date.

SECTION VII. YOUTH AND GENDER CONSIDERATIONS
A. Youth Considerations
Lebanese youth are a critical target group for USAID/Lebanon in the context of SME
competitiveness both as active job seekers available for hire by SME firms, as well as
potential entrepreneurs and SME owners. Underpinning USAID’s Youth in Development
Policy, is a philosophy that “young people must be given the skills, resources and
opportunities to succeed through quality education and the promise of good jobs. If so,
they can be proponents of prosperous economies. If not, there is another, less hopeful
vision: where a large part of the population is unemployed, frustrated, and volatile.”
(USAID, 2012) This sentiment is echoed by former Lebanese Prime Minister, Najib
Mikati, who recognizes that “one of the major challenges facing the Lebanese economy is
the creation of jobs for the youth, and namely for the graduates. Making use of the skills,
expertise and talents in Lebanon is an absolute necessity in order to reach high and
sustainable growth rates to improve the productivity, reduce the migration and reinforce
coexistence and civil peace.”
In Lebanon 42.4 percent of the population is aged 24 or below, and youth aged 15-24 are
currently experiencing a 24 percent unemployment rate. (CIA, 2015) (Atallah, 2015) The
high youth unemployment rate can be partially explained by the following conditions:
 On average Lebanese youth are relatively high skilled, yet the economy remains
locked in a low productivity and low-wage equilibrium due to macroeconomic
uncertainty. As a result, Lebanon produces more educated job seekers than the
domestic labor market can currently absorb and educated youth feel they have
little opportunity of entering the job market under conditions that are satisfactory
to them. (Atallah, 2015)
 For more disadvantaged, and less educated Lebanese youth, the presence of
migrant workers depresses wages for low-productivity/low skilled jobs, makes
non-Lebanese workers more attractive compared to Lebanese nationals, and
results in unwillingness among employers to pay higher wages or train new
employees. (Atallah, 2015)
 There is no national strategy being implemented to support youth employment,

and youth are at a disadvantage resulting from the lack of guidance provided on
study and career pathways. Poor opportunities exist for internships or
apprenticeship-style practical work within the school context, and low teaching
quality and the wasta29 system also have also an impact. (ETF, 2015)
USAID/Lebanon has the potential to positively affect youth unemployment in two

primary ways: job creation through investment in growth industries, and fostering
29
Wasta is an Arabic word that loosely translates into nepotism or “who you know.” It refers to using one’s
connections and/or influence to get things done, including getting hired for or promoted in a job.

entrepreneurship. USAID has already begun to support youth entrepreneurship activities
through the MENA Investment initiative, which provides support to early stage
businesses that are often managed by and/or hire young entrepreneurs. MENA II’s focus
on innovation and entrepreneurship will offer youth and recent graduates additional
opportunities to establish their business and become self-employed. In the next phase of
USAID programming, USAID/Lebanon should focus on fostering growth industries in
the private sector that have the greatest potential for job growth in Lebanon. Strategic
investments and deployment of firm-level advisory services, particularly at the premium
end of markets, are expected to result in business growth leading to skilled job creation.
A heightened focus on creating employment opportunities within established firms poised
for growth is likely to result in an increase in job opportunities for recent graduates in
some industries, while also serving as a pull factor for highly skilled Lebanese emigrants
wishing to return to Lebanon.
Youth in the workforce. Our assessment team discussed issues related to youth in the
context of how well youth are positioned to respond directly to private sector demand for
skills in SMEs and lead firms. Our preliminary research revealed that Lebanese
employers are the most vocal in the Arab region with regards to complaints about skill
shortages among the youth. (Atallah, 2015) These complaints appear tenuous when
considering that:
 Skilled Lebanese citizens are an abundant factor of production to the point that
they constitute a significant export “commodity:” Skilled emigration in Lebanon
is among the highest in the world.
 Despite the fact that young and well-educated Lebanese emigrate and
employment in Lebanon is dominated by older and less-educated cohorts, the
profile of the labor market is an educated one. One in five Lebanese men has a
university qualification. The corresponding figure for women is even higher with
more than two of five working women possessing a university qualification.
Female employment in Lebanon is dominated by young women because older
women are generally not in the labor force. (Atallah, 2015)
Accordingly the issue of youth employability in Lebanon is not solely a supply-side

issue. Lebanon is in no short supply of young and (over) qualified/educated job seekers,
however some educated Lebanese youth may not be equipped with the necessary on-the-
job skills for certain jobs, or lack the experience needed to make them attractive to
employers. Perhaps more appropriately, Lebanese employers use the term “lack of skills”
to mean lack of experience. (Atallah, 2015) This issue is not unique to Lebanon. Globally
youth often face greater labor market barriers than adults due to their lack of prior job
experience and lack of links to professional networks and contacts. (USAID, 2012)
To address this issue, the Government of Lebanon launched a pilot program with the
World Bank, entitled New Entrants to Work (NEW) program, aiming at improving the
employability of young Lebanese first-time job seekers. The Ministry of Labor is the
implementing agency, in coordination with the National Employment Office. “The NEW

program will offer Lebanese first-time job seekers who enroll in the program an
integrated program of 50-hours of life skills training, counseling, and placement services
combined with a 2-year on-the-job training (OJT) in a private sector firm. Employers
hiring NEW participants will receive a wage subsidy for a period of 12 months and will
also be reimbursed for the NSSF-contribution of participants for a period of up to 24
months; the NSSF-reimbursement will be paid in full in the first year and decrease in the
second year. The target group consists of first-time job seekers with no prior work
experience between the ages of 18-30. Fifty percent or more of the participants will be
women. (World Bank, 2012)
Issues around the lack of relevant skills can also be partly explained by socioeconomic
inequalities and cultural perceptions of respectable professions:
 Lebanese youths from poorer backgrounds have a lower completion rate of

primary education, less access to private schools that produce higher quality
education, much lower learning outcomes, and lower rates of university
enrollment than students from more advantageous socioeconomic backgrounds.
As a result, substantial differences exist in education outcomes between rich and
poor families that relate to regional disparities. These inequalities are accentuated
by public education spending rates that are much lower than those of private
spending. (Atallah, 2015)
 Lebanese parents, along with parents in many other Arab nations, seem to want
their children to become lawyers, doctors, or engineers. Lebanese parents and
peers often consider it embarrassing and even shameful if their children pursue
lesser or different degrees. As a result, the country produces far more of these
professionals that it can absorb. (FHI 360, 2014)
Regions outside of Beirut are more disproportionately affected by youth unemployment.

In particular, North Lebanon is a region of the country that is currently facing significant
social, economic and political challenges and unemployment is on the rise, particularly
among young people estimated at up to 25 percent; drop-out rates in the poorer areas are
estimated at up to 50 percent. (Tripoli Chamber of Commerce, 2012)
The duration of unemployment also varies across regions. In a 2009 survey of graduates
from the four major universities in Lebanon, namely the Lebanese University (LU),
American University of Beirut (AUB), Université Saint-Joseph de Beyrouth (USJ) and
Beirut Arab University (BAU), responses revealed that those living in Beirut found jobs
quicker than their counterparts in peripheral areas such as the Bekaa (4.8 months for
people looking for their first job in Beirut contrasted with 9.7 months for the same
demographic seeking their first employment in the Bekaa). While the average time for
finding a job was seven months, some declared they were facing difficulties finding their
first-time employment having to endure as long as 17.7 months of job hunting. (AUB,
2009) USAID’s approach should take these regional distinctions into consideration when
designing targeted programs to affect youth employment opportunities.

Outside of the two primary objectives of job creation through investment in growth
industries, and fostering entrepreneurship, other recommendations to support enhanced
youth employability are:
 Establishing career guidance offices in public and private universities and
vocational schools
 Encouraging companies to adopt more internships and training opportunities for
students and graduates;
 Establishing mentorship programs and/or alumni networks between former
graduates and students seeking jobs; and
 Linking youth to training programs that correspond to public and private market
needs.
 Promoting Microsoft’s Ta3mal (YouthWorks) Platform as a possible component
of the above mentioned efforts as well as other USAID and donor youth activities.
B. Gender Considerations
By taking an active approach to seeking out female business owners and entrepreneurs,
USAID/Lebanon can positively affect women’s access to untraditional employment and
increase opportunities and chances for success in growing their businesses.
Women in the workforce. While Lebanese society considers itself developed — in terms
of women’s status and rights — compared to other societies, challenges faced by female
entrepreneurs are largely related to cultural or social issues. Women have difficulties
balancing work and personal life, which dissuades many. “Women don’t know that they
can have a husband, a baby, and can continue to work. They think they are bad wives.”
(Saouma, 2015) A closer look at the characteristics of unemployed people shows that
women are most likely not to look for jobs despite the fact that they are really available to
work if a job is offered. (CAS, 2009) Roughly 77 percent of Lebanese women of working
age are not economically active (unemployed and not looking for a job) compared to 27
percent for men, according to a survey issued by the Central Administration of Statistics
in 2009. (Saouma P. , 2014) Women’s activity reaches its peak before the age of 35, and
men remain active even after official retirement age. During their active years, women
dominate traditionally female programs such as education, nursing, and social work.
Even though the number of working women in Lebanon is less than that of men, 26
percent of working women have specialized careers, such as medicine and engineering, in
comparison to 8 percent of men.
There is a large gender pay gap in many sectors in Lebanon. In the industrial sector this
gap hits 23 percent, while it is 21 percent in the agricultural sector, 10 percent in the trade
sector, and nearly 38 percent in the transport sector and the postal and
telecommunications services sector. According to the Survey of the Household Living
Conditions 2007, which was issued by the Central Administration of Statistics, the gender
pay gap in all sectors is 6 percent. (Saouma P. , 2014) These statistics may partially
explain why emigration among women almost tripled from previous levels between 1995
and 2005; women, just like men, seek better employment opportunities. (AUB, 2009) The
recent trend amongst women has been to seek better salaries and more lucrative

employment packages even if it means emigrating. In a 2009 survey of graduates from
the four major universities in Lebanon, responses revealed that the percentage of women,
working abroad (45 percent of respondents) has increased by almost threefold in the past
seven years. (AUB, 2009)
Women-owned enterprises. Lebanon benefits from a high volume of experienced female

entrepreneurs relative to other MENA countries. According to an IFC survey, women in
Lebanon and Bahrain are the most experienced business owners in the MENA region.
“On average, the women in Lebanon have owned their businesses for 10.6 years, in
Bahrain for 10.2, in Tunisia for 8.6, in Jordan for 6.1, and in the UAE for 5.9 years.”
(IFC, 2011)
With respect to business development services, including financial services, women-

owned business in Lebanon are disproportionately less served. Across MENA, a 2011
IFC study showed that women-owned SMEs grow more slowly than their male-owned
counterparts and that one of the key factors for this was access to finance. (Vital Voices
Global Partnership; MENA Business Women's Network, 2012) Gender-specific
challenges such as lack of collateral and less control over assets are concerns frequently
cited as key contributors to this issue. In Lebanon, only 3 percent of bank loans go to
female entrepreneurs. (IFC, 2013) According to a representative from the Lebanese
League of Women in Business, women typically run small and informal firms and either
lack awareness of or feel apprehensive toward obtaining sources of financing outside of
their family or other private sources of funding. (Al Zein & Saab, 2015) Most female
business owners meet their capital needs through private sources, such as personal
savings, family, and friends. Few rely on financial institutions or outside investors for
business needs. (Vital Voices Global Partnership; MENA Business Women's Network,
2012)
Some banks’ initiatives in Lebanon have been designed to specifically target women. For
example, the WE initiative at BLC Bank has implemented programs to curb lending bias
towards women. “In addition to instituting a collateral-free loan that looks at a woman’s
capacity to repay rather than her assets, BLC has also implemented policies to educate
their employees to stop stereotyping women and belittling their capacity to run
businesses.” (IFC, 2013) International organizations such as Vital Voices are also directly
targeting female entrepreneurs with grant funds and mentorship to help them develop and
grow their businesses.
Gender barriers differ from community to community, but generally speaking, Lebanon
affords women greater freedoms than other MENA countries, and female entrepreneurs
have a variety of resources and business support services to draw on. As noted by one
female entrepreneur, “Despite the barriers, if a woman has the will and ability to break
through social stigmas — of varying intensity — she has the potential for success in
Lebanon.” (IFC, 2013) USAID/Lebanon should leverage the success of several well
established initiatives targeting women and work in collaboration with them. In
particular, there is a high demand among female business owners for greater access to
information and training on topics such as general business management skills, using

financial products such as SME lending products or equity capital, exporting, accounting
and financial management, and selling to large, multi-national corporations. (Vital Voices
Global Partnership; MENA Business Women's Network, 2012)
As detailed in the following section, USAID/Lebanon should leverage the success of

several well established initiatives targeting women and work in collaboration with them.
In particular, there is a high demand among female business owners for greater access to
information and training on topics such as general business management skills,
appropriate financial products, accounting and financial management, and exporting.

SECTION VIII: PROGRAM RECOMMENDATIONS AND OPTIONS
The AMEG team’s mandate included the development of specific, actionable
recommendations for USAID assistance in Lebanon. Criteria used for assessing potential
assistance included:
 Contribution to sustainable job creation;

 An identified market demand;
 Existence of a capable implementing partner;
 Activity leverages prior or current assistance by the U.S. Government and/or
other donors and/or represents a good opportunity for a Public Private
Partnership;
 Impact extends beyond Beirut;
 Activity positively impacts women and/or youth.
Based on the findings and recommendations in each of the five areas examined, the team
developed recommendations for future interventions to support economic growth and job
creation in Lebanon. Each option is focused on fostering growth of SMEs and supporting
their needs for high quality employees.
Firm-Level
Assistance
to SMEs
SME Growth
and
Employment
Generation
Workforce
Develop- Export
ment and Promotion
Job Assistance
Placement
While these programmatic options could be viewed each as separate programs, they are
highly inter-dependent and would no doubt be more effectively implemented as
components of a larger program.

A. Program Recommendation 1: Firm-Level Technical Assistance to Enterprises
Objective: Achieve business growth leading to incremental employment, increased

exports, and improved competitiveness through providing targeted technical assistance to
partner enterprises in Beirut, Bekaa Valley, North, and South Lebanon.
Scope of Work: Over the course of a 5-year USAID funded activity, a team of local
business advisors with extensive work experience in the private sector (see Annex G for
qualifications and attributes of business advisors) will work with medium to large partner
firms (20-100+ employees) to provide coaching and mentoring, identify new
opportunities for growth and job generation, facilitate buyer-seller relationships, and
develop Client Growth Plans. Technical assistance activities will largely be driven by the
firms themselves and will solve specific problems that stand most in the way of meeting
specific buyers’ (with first and last names) requirements. To be successful, the approach
must remain “by business people for business people.” This means that solutions,
technical assistance, and training provided to partner firms will not be “pre-packaged,”
but will be targeted and tailored to address each firm’s critical constraints to growth. The
core goal of the assistance will be business growth leading to employment creation. The
diagram below summarizes the assistance process.
To determine whether firms are suitable Firm-level Technical Assistance Process

partner enterprises of the program,
program business advisors will use a set Business Advisor
of pre-defined criteria to estimate the
return on USAID’s investment in terms
of increased sales and jobs. Illustrative
criteria include: Identify firms willing to
Identify qualified buyers
and their specific needs
change to meet buyer
for quality, pricing,
demand
design, etc.
1. Owner and management
mindsets – openness, flexibility,
vision, enthusiasm Link firm with buyer,
2. Potential to hire additional agree on product
requirements
employees within one year
3. Export/sales growth potential
4. Firm level competitive Create Client Growth
Plan with firm to specifiy
advantages how to meet buyer
demand
5. Gender and youth impact – new
employment and upgraded
Supply technical
employment assistance to modify
products and/or
6. Degree to which existing sector improve/increase
production
impediments are actionable –
without regulatory changes.
Track and monitor job
and sales growth

The business advisors will engage in a rapid Reaching Women-Owned Enterprises
process for engaging with local firms. In past
examples of successful firm level assistance in In order to reach larger numbers of
women-owned firms with growth potential,
Tunisia, firms have applied for assistance via a 1- the program can link its business advisors
page request form, the project has contacted to associations and/or programs for
applicants within 24 hours, and conducted site women-owned entrepreneurs, such as
the League of Women in Business, and
visits within one week. This rapid application and work with them to develop specialized
vetting process would likely be even quicker in outreach strategies and materials. The
Lebanon – a country smaller, denser, and with program can also work with financial
services providers such as BLC Bank and
better infrastructure than Tunisia. Business Kafalat to identify women-owned
advisors will work with each firm to address their businesses receiving their services or to
self-identified needs, and also determine whether link women-owned businesses receiving
program assistance with new lines of
additional, innovative support may be necessary credit. Business advisors can also pay
to achieve maximum growth potential for each special attention to potential partner firms
partner enterprise, leading to more jobs. in sectors with high levels of women in
the workforce, such as agro-processing,
garments, and tourism.
Upon finding and assessing suitable partners, the
business advisors will formalize assistance with partner enterprises through Client
Growth Plans, which will clearly state:
1. Technical assistance to be provided to the SME by the program and rationale

2. Local and/or international consultant profile
3. Partner SME investment in cash and in-kind
4. Partner SME staff assigned to oversee implementation of recommendations
5. Timeline
6. Commitment on the part of the SME to report against measurable and quantifiable
monthly goals and targets for:
a. Increased sales
b. Increased employment.
The agreements will be signed by each partner enterprise, the activity manager, and the
service provider / consultant hired to provide technical assistance. Over the first year of
the program, approximately 20-30 partner enterprises can be engaged through such
agreements. For each subsequent year, 100-120 firms will be engaged. Technical
assistance will be provided, and the business advisors will provide continuous follow-up,
ensuring that technical assistance is properly utilized, partner enterprise needs are met,
and that resulting business growth occurs in a proper, effective, and measurable way.
Target Beneficiaries. The Central Administration of Statistics most recent 2004 census
estimated that there were 1,629 registered SMEs with between 20 and 100 employees and
another 230 firms with more than 100 employees. (CAS, 2004) Assuming that 25-50
percent of these firms would be poised for growth and interested in partnering with the
program, there are likely 500 SME candidates with which a USAID-funded program
could work. This is further corroborated by Endeavor, the internationally renowned,
socially motivated financier of high potential companies in emerging markets, who found
and screened a total of 360 companies potentially of a suitable profile for their services

(leaning toward companies at the larger end of the scale); and by a large Lebanese
consulting firm who believes there are about 250 Lebanese SMEs willing to pay
unsubsidized prices for consulting services.
As shown in section III, specific sectors and sub- Areas of Assistance for SMEs
sectors in Lebanon have been found to have high-
• New Technology Adoption
growth potential. While business advisors may look (Specialized expertise targeted to
to those sectors to identify new SME partners, varying sectors’ needs for new
technical assistance will not be limited to any set of technology)
• Lean and Efficient Manufacturing
sectors or sub-sectors. The activity business • Branding
advisors will be able to work with any firm which • Product Design/ Research and
meets the standards set in the criteria developed by Development
• International market data and
the program for identifying partner enterprises. The linkages (Identify specific buyers,
program will provided targeted technical assistance product specifications, and
exclusively to enterprises which are officially compliance with trade standards;
better market segmentation to
registered, but will be willing to provide targeted assess characteristics of demand
assistance to unregistered firms looking to register in different target markets)
officially with the Lebanese government.
Officially, this will also create job growth.
Team structure. The team will be made up of a chief of party, 5 to 6 local business
advisors, monitoring and evaluation specialist, and operations team, supported by large
numbers of short-term local and international technical experts with high-level,
specialized expertise in areas relevant to partner firms. All technical experts should have
significant experience in the private sector working in or running global companies, or
advising SMEs, as through incubators, accelerators, or strategy consulting firms. Local
consulting firms as well as individual consultants can be engaged through flexible
Indefinite Quantity Services (IQS)-type agreements that would allow the program to
compete out requests for services and take advantage of local expertise on an as-needed
basis. The most advisable firm candidates are listed in Table 4 in Section III.
While emphasis will be placed on utilizing Lebanon’s vast pool of local consulting talent,
in select cases the program will need to recruit international experts with highly-
specialized experience in niche areas. These international advisors should be teamed with
local consulting firms or consultants to help build local consulting capacity. This type of
twinning of local and international expertise during SME support interventions will
attract more Lebanese consultants to participate as well as leave sustainable capacity in
place.
Following experiences on the Business Reform and Competitiveness program (See

Annex D for more details) in Tunisia, Lebanese consultants and firms could be pre-
qualified based on their area of expertise and depth of experience. Consultants may enter
or leave the qualified list at any time during the program’s duration and beneficiaries will
participate in the selection process for their individual work orders. To ensure a continual
flow of beneficiary clients to the Program, prequalified consultants could submit projects
for consideration in addition to responding to requests for proposals for work orders. Pre-

established consulting rate categories would be created for transparency and to avoid
disinterested consultants embarking on lengthy negotiations.
Work orders for consulting services under the larger IQS should be structured to provide
embedded advisors for several weeks, with periodic follow-up. This is very important to
ensure SMEs, particularly the smaller ones, work on and fully absorb what they are being
asked to do. Consultants merely guide the process, the beneficiary firms need to be
making the changes happen.
Cost share. Partner firms participating in the program will be expected to contribute to
the costs of technical assistance on a sliding scale depending on their technical assistance
needs, size, etc. Co-payments for services should be substantial enough to ensure a strong
commitment to implement recommendations. The subsidies should be structured in a
manner to phase out with continued use. For example, during the first year, an SME may
be expected to contribute 20 to 50 percent of the costs of technical assistance. In later
years, that contribution may be 50 up to 90 percent of technical assistance costs.
To help fund the costs of technical assistance and support sustainability of the assistance
program, USAID could investigate with Kafalat, the MENA Investment Initiative
(implemented by Berytech), or others the potential of structuring a fund to finance
technical assistance. Structured similar to the World Bank’s SME revolving fund in
Mauritius (see Annex E), this fund will increase the sustainability of assistance after the
program ends by fostering a mechanism to support future technical assistance by local
consulting firms. If established as part of MENA II, it may also help USAID recover a
portion of all funds disbursed to Lebanese partner enterprises for technical assistance.
Funds spent on technical assistance would be paid back by each partner SME, based on a
royalty calculated on the incremental business growth of each enterprise, for each
successive year. This is a substantially more complex approach, since a lot of ground
work has to be done and a lot of preparations completed. This can only be implemented if
the following elements are in place:
 A local, Lebanese financial partner is on board.

 This partner will be directly responsible for disbursement of all funds and
ultimately for all annual financial follow up reports and recovery efforts.
 This local partner will eventually be able to take over the project upon its
completion.
 A detailed operation manual is developed, stating the responsibilities of each
party.
 A long term sustainability and “handover” plan is drafted with the local, Lebanese
financial partner (Repayment from partner enterprises can take as long as 4 to 6
years, and it is therefore crucial to have a handover plan to a local partner.)
 Budgets are set and funds allocated for the full life of the project.
Anticipated Indicators and Results. Some illustrative indicators attributable to this type of
firm-level assistance program include:

 Number of new jobs generated
 Cost per job
 Increases in sales
 Increases in exports
 New dollars in salaries injected into the economy per USG dollar invested
 New capital investments by participating firms
 Dollars leveraged from private sector and other non-USG sources to support
enterprise development
 Number of private sector firms that have improved management practices as a
result of USG assistance
 Number of firms receiving USG assistance to invest in improved technologies
 Number of days of USG funded technical assistance in private sector productive
capacity provided to counterparts or stakeholders.
While the assessment team could not estimate increased sales or exports with any
accuracy due to limited information about the firms, below is a rough estimate of the
possible number of jobs that could be created by this type of SME assistance program.
While experience in Tunisia working with large firms has typically created an average of
20-25 jobs per partner enterprise, there are fewer large firms with which to work in
Lebanon and firms are typically smaller. As such, 10-15 jobs per firm in Lebanon may be
a safer estimate. A team of 5-6 local business advisors can work with 20-30 enterprises in
its first year, and 100-120 enterprises in each subsequent year of operation. High and
low-end estimates of partner enterprises and jobs created using solely a firm-level
approach are detailed below.
Table 10. Estimated Number of Jobs to be created by Firm-Level Assistance
Year Number of Number Year Number of Number

SMEs of Jobs SMEs of Jobs
Low-end estimate High-end estimate

Year 1 20 200 Year 1 30 600
Year 2 100 1000 Year 2 120 2400
Year 3 100 1000 Year 3 120 2400
Year 4 100 1000 Year 4 120 2400
Year 5 100 1000 Year 5 120 2400
Total 4,200 Total 10,200
B. Program Recommendation 2: Export Promotion Assistance
Objective. Facilitate SME entry into new regional and international markets and increase
SME export sales by strengthening the export promotion capacity of business
associations and chambers of commerce.
Scope of work. Driven by challenges and issues identified through the development of
firm-level assistance agreements, this program will help partner SMEs to identify and

capitalize on opportunities to export products to new regional and international markets.
Business advisors will work with firms to address specific challenges and opportunities to
export at the firm level. It will also utilize lessons learned through firm-level assistance
and partner with business associations and chambers of commerce to strengthen and
consolidate tools to help SMEs in sectors with high-export potential familiarize
themselves with new markets, identify specific buyers, and develop strategies to export.
As a first activity, the program with work with high-functioning chambers of commerce
such as the Tripoli Chamber of Commerce, Chamber of Commerce of Industry and
Agriculture Zahle and Beqaa, and the Chamber of Commerce of Beirut and Mt. Lebanon
to either establish or strengthen export promotion units within the Chambers. One or two
program export specialists could work with staff assigned to the export promotion unit to
develop an action plan based on members’ needs, as seen during the course of assistance
at the individual firm level. As it works with individual firms to address bottlenecks and
challenges to identifying and exporting to new regional and international markets, the
program will capture lessons learned that may be relevant for other SMEs in high-growth
sectors. For example, for the large percentage of members involved in agro processing,
the program could help the Chambers’ export promotion units to develop export manuals
for Lebanese exporters highlighting the legal steps to export, trade standards, sanitary and
phyto-sanitary guidelines, and labeling requirements for the US and key regional and
European markets. The program could also co-sponsor relevant export trainings in these
and other subjects for Chamber members and facilitate the creation of online toolkits
where members can readily access this information.
The program can also work with Chambers, business associations, and the League of
Women in Business and their members to co-sponsor attendance at regional and
international trade shows, prioritizing women-owned businesses whenever possible.
Program export specialists would work with Chambers and partner SMEs to identify the
two to three top trade shows to attend, and work with SMEs to develop materials and
strategies for maximizing sales at these trade shows.
In addition, the program can work with Chambers to identify market studies that would
benefit a large number of their members in sectors with high export potential. These
market studies would help SMEs in these sectors better understand consumer
segmentation and preferences in new markets and inform marketing strategies including
segmentation, pricing, packaging, product placement, etc.
Target beneficiaries. While all members of Chambers could potentially benefit from the
export promotion unit and tools developed, trainings, toolkits, studies, and other activities
will largely be targeted at SMEs in sectors with high export potential, such as agro
processing, manufacturing, fashion/garments/accessories, and ICT.
Cost share. Chambers would be required to provide cash and/or in-kind contributions to
support the establishment of export promotion units. For example, the Chamber may need
to hire a new staff member to head up this unit, or assign dedicated time of existing staff
members to establish and manage the unit. Chambers would also be expected to host

trainings, but they could potentially charge members an additional fee for their
participation in training or purchase of hard copies of export toolkits. SMEs would also
be expected to co-finance their participation in trade shows. For example, they may
finance the development and printing of materials, while the program and the Chamber
could contribute to financing their trip.
Anticipated indicators and results. Some illustrative indicators attributable to this type of
firm-level assistance program include:
 Dollar value of exports of program-assisted firms

 Number of men/women trained
 Number of new markets entered by program-assisted firms
 Number of firms receiving USG capacity building assistance to export (e.g. trade
shows, buyer/seller match making programs, market analysis and information,
trade finance assistance, and guidance on how to comply with foreign country
customs regulations and procedures)
While potential export sales could not be estimated with additional information, the team
estimates that roughly 780 new jobs will result from export promotion activities.
C. Program Recommendation 3: Workforce Development and Job Placement
Objective. Foster curriculum and training relevant to the workplace and facilitate job
matching to ensure new jobs created as a result of growth of partner SMEs and other
firms can be filled.
Scope of work. The program will work with both SMEs receiving firm-level assistance,
as well as larger firms to identify job vacancies and candidates with appropriate skill sets.
To do this the program will support targeted job fairs through existing training providers
in Beirut, Bekaa Valley, North, and South Lebanon. The program will work with
business associations and Chambers to sponsor attendance for SMEs. Job fairs will be
more targeted to get only firms with real vacancies in the room, and to match them with
candidates with relevant skill sets. The program can likely sponsor several of these in
each region, up to three or four per year.
The program will also work with university and TVET career centers to strengthen job-
matching programs. A program workforce development specialist will help build
relationships between local businesses and these centers to help schools understand the
types of skills in high-demand and to help staff at those centers to advocate for vocational
relevance in coursework. Key to the activity’s implementation is the comprehensive
training of existing placement officers in:
 Delivery of social marketing;

 Networking with employers and the creation and maintenance of a database of
vacancies, occupational outcomes, projected employer demands, and wage levels;
 Organizing information sharing sessions with industries;

 Career counseling services for students.
Career center staff would be supported by project staff (1-2 days per week) in the
respective educational institution for:
 Development of relationships with the private sector;
 Registration of job seekers;
 Cataloguing of job vacancies in key economic sectors;
 Providing job preparation services for job seekers;
 Follow-up services for successfully placed graduates.
The goal will be to help those centers to become “go-to” locations for businesses looking
to fill positions. The program can also help career centers develop searchable, online
resume databases, networking events with students, and “interview days” whereby
businesses can interview many students in the course of one day.
Microsoft Ta3mal Platform:
Recognizing that recent graduates identified USAID Experience in Iraq
through job fairs or career centers may not have
all of the skills desired, the program can work “Historically, filling jobs has not been a
transparent process in Iraq. The portal
through existing training providers to develop 3- provides a centralized location for publicizing
month, post-employment training programs. available jobs to meet the demands for
These training programs could be offered on- those positions …The level of enthusiasm
generated by the project over the last six
site during or after work hours, or off-site on the months was somewhat unexpected…over
weekends to address specific firms’ needs. This 20,000 job seekers registered on the site,
is particularly important to address the issue of over 3500 of whom have found jobs
…Without Microsoft’s permission to use the
unemployment among educated youth who have portal, it would have been difficult to achieve
some skills, but lack experience. For example, a the kind of results achieved by the project.’’
manufacturing firm with a call center may want
Sarah-Ann Lynch
to train students in customer service and product Former USAID Mission Director, Iraq
troubleshooting. Additionally, the program can
work through existing training providers to
target trainings to mid-career professionals in need of skills upgrading. For example,
programs could be developed to prepare newly promoted staff for management positions
through job shadowing and training.
With the approval of Lebanon’s Ministry of Labor, Microsoft recently launched its
Ta3mal (YouthWorks) platform in Lebanon. Ta3mal provides youth in the Middle East
and North Africa with access to online job postings, career counseling, and training. In
partnership with USAID, Microsoft’s Ta3mal platform utilization can be expanded to
help youth, employers, university and vocational training centers, and others in Lebanon.
Ta3mal could be a highly cost-effective tool for university career centers and vocational
training centers to match their students with jobs. USAID can encourage its partners in all
programmatic areas to avail themselves of the Ta3mal YouthWorks Platform as a
component of their project implementation activities. Additionally, by acting as a virtual
career fair, Ta3mal could help employers fill jobs with qualified youth. Ta3mal can even
help provide employees with pre- and/or post-employment training to prepare them for
new jobs. By providing a full-time outreach coordinator and web administrator to train

potential employers and partners in how to use the Impact of Microsoft YouthWorks
platform and support its maintenance, USAID can Platform to Date Worldwide
help Microsoft immediately roll-out the platform to  Operating in 13 Countries;
additional employers and partners and match more  13 million youth reached;
youth with jobs. Additional resource investment in  135,000 jobs posted in past year
the support of either the Ta3mal investment or  $289 million co-invested by
donors and partners
partner utilization would allow additional activities
to be built off of the Portal, such as new training
programs.
Target beneficiaries. Beneficiaries will include current students and recent graduates.
Cost share. Firms will be expected to pay for their employees’ participation in post-
employment trainings. SMEs will also be expected to pay between 30 and 50 percent of
the costs to host recruiting and networking events, such as job fairs. Training providers
and career centers will be expected to assign staff to work with the program and to
provide space for trainings developed with program support. SMEs receiving firm-level
assistance will be required to estimate the number of new jobs created as a result of
program assistance.
Anticipated indicators and results. Illustrative indicators for this program include:
 Number of men/women trained

 Number of persons receiving new or better employment (including better self-
employment) as a result of participation in USG-funded workforce development
project
 Cost per job placement
 Average salary of new hires
 Number of days of USG funded technical assistance in workforce development
provided to counterparts or stakeholders.
The assessment team estimates that roughly 2,250 job seekers can be recruited through
the job fairs supported by the program at a net cost of less than $500,000.
Overall, these three proposed activities above could potentially create a total of 13,230
jobs at a cost of roughly $2,645 per job. While the cost per job is significantly higher than
the cost per job seen on USAID Tunisia BRCP program, it reflects the fact that there are
far fewer medium and large enterprises in Lebanon with which the program can work and
that the average monthly salary in Lebanon is almost double that in Tunisia ($2,167 in
Lebanon as compared with $ 1,242 in Tunisia). (Salary Explorer, 2015)

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ANNEX B. LIST OF INTERVIEWEES
Private Sector Firms
 Agriculture/Food Products
o Al Rifai (nuts), Maysoun Al Rifai (Managing Partner), Moussa Al Rifai
(Managing partner)
o ATYAB s.a.r.l, Tony Maroun (Owner)
o DEKERCO, Mr. Serge Dekermendjian (Representative)
o Second House Products, Joyce and Francois Rizk (General Manager)
o Widriss Holding SAL, Mr. Rabah Idriss (Head of Beirut Office)
o Crown Flour Mills, Paul Mansour(Managing partner) & Eng. Christiane
Jbeily (Head of Quality & Customer Service)
o Fattal Holding, Talal Hakim (Operation manager)
 Clean Technology
o Eco Friendly Sarl, Patrick Ardahalian (General Manager)
o Panoramic Solar, Sami Madi and Fadi Madi (General Manager)
o Cedar Environmental, Ziad Abichaker (Founder)
o Open Link/ Energy Efficiency Group, Ronald Diab (Managing Director)
 Light Manufacturing, Paper, Plastic, Wood, Furniture, Paint

o Power Steel, Mrs. Hilda Khoury (Representative) & Mr. Elias Bou
Maroun (Representative)
o INDEVCO Group, Naamat G.Frem (Former Chairman)
o PINOs Sarl, Pino Massaad (Representative)
o Carlama, Daniel Abboud (General Manager)
o Colortek (Division of Kassaa Group), David Tham (Business Developer)
o Ayoub Industries, Marco Ayoub (Owner)
o Amaco Group, Ali M. El-Abdallah (Managing Director)
 Fashion/Jewelry
o Chrystelle Atallah, Chrystelle Atallah (Owner)
o Flat Fashion, Gaby Charbachy (Owner)
o Rectangle Jaune,Charles Arbid ( Owner) Joe Daher (General Manager)
o TenTen, Hrair Hakimian (Owner)
o Pellini, Dany Boutros (Owner)
o AB Moughanni, Antoine Moughanni (Owner),
o Arakelian, Patrick Arakalian (Managing partner, GM)
 Health/Pharmaceuticals/Cosmetics
o Serum Products S.A.R.L, Mounir Tabbara (Owner)
o Malia Group, Mr. Jacques Sarraf (Chairman)
o Pharmaline, Carol Abi Karam (General Manager)
o Beesline, Mohamad Arayssi (Managing Partner, GM)& Tarek Renno
(Marketing Manager)

o Benta SAL, Bernard Tannoury (Chairman & CEO) & Moussa
(Pharmacist, Plant Director)
 Hospitality
o Hospitality Services, Ms. Joumana Dammous (Event Organization and
Publication Manager)
o iManage Outsourced Hospitality Services L.L.C./ Kebabji, Edmond
Massaad (Managing Director)
o Royal Gourmet, Karim Arakji (Owner)
o Ant Ventures/Silverspoon, Roy Maroun (Franchising manager)
o Food and Catering Processing Company (Second Cup), Issam Rahal
(Owner)
o Fig Holding SAL (Mayrig, Batchig), Leslie Menassa (HR Manger), Aline
Kamakian (managing partner)
o Ghia Holding, Fady Itani (Head of Franchise Department) & Jean-Claude
Ghosn (Chairman of the Board/CEO)
 ICT/
o National Instruments, Ms. Rima Lakkis (Human Resources)
o Diginest, Ronnie Richa (Managing Director)
 Other (Advertising, Freight Forwarding, Engineering/Contracting)

o Shift Production, Mr. Antonio Tarabay (General Manager)
o Quant Analyst, Albert E.Nasr (Managing partner)
o Abniah SARL, Maroun Helou (General Manager)
o Gezairi Transport, Fouad Bawarshi (Deputy CEO)
o Matec/Cortbawi, Elias Nasr (Representative)
Associations/Chambers of Commerce
 Syndicate of Agrifood Traders in Lebanon:

o Arslan Sinno (President), Isam Ajouz (Executive Manager)
 Syndicate of Lebanese Food Industrialists
o Munir Bsat (President)
 Lebanese Businessmen Association
o Dr. Fouad Zmokhol (President)
 Lebanese International Businessmen Association Network
o Mr. Robert J. Jreissati (Founder and President)
 Lebanese League for Women in Business (LLWB)
o Mrs. Asmahan Al Zein (Acting President), Hannan Saab (Former
President)
 Lebanese Management Association
o Dr. Mohy Ghannoum (President)
 Lebanese Contractors Syndicate
o Mr. Fouad Jamil Khazen (President)
 Lebanese Franchise Association

o Charles Arbid (President), Raja Habre (Executive Director), Yahya Kassaa
(Secretary General), Narjess Wehbe (Public Relations Officer), Talal
Hijazi (Advisor to the Board)
 Lebanese Shipping Agents Syndicate & Syndicate of International Freight
Forwarders
o Mr. Samir Siryani (President)
 Lebanese Jewelers Syndicate
o Vasken Hadidian (President)
 Syndicate of Craftsmen
o Kevork Khajerian (Board member), Mohamed Moallem (President)
 Association for Lebanese Software Industry
o Fares Kobeissi (President)
 Association of Lebanese Industrialists
o Dr. Fadi Gemayel (President---also President of Syndicate of Owners of
Paper and Packaging Industries), Saaed Oueini (General Manager), Daniel
Abboud (Board Member)
 Beirut Creative Cluster
o Salim Tannous (Manager)
 American Lebanese Chamber of Commerce (AmCham Lebanon)
o Salim Zeeni (President), Paola Chakhtoura (Director)
 Chamber of Commerce and Industry of Beirut and Mount Lebanon
o Nabil Fahed (Vice Chairman), Rabih Sabra (Director General), Roger
Khayat (Economic Advisor), Hana Haidar (Human Resources)
 General Union of Arab Chambers of Commerce Industry & Agriculture
o Adnan Kassar (President), Carine Azkoul (Relationship Manager), Imad
Amin Shehab (Secretary General)
 Junior Chamber International
o Nadyne Ghanoum (National President)
 Federation of Chambers of Commerce, Industry and Agriculture
o Irène Ballouz (Deputy Director)
Business Support Services/Consulting Firms
 Euro-Lebanese Centre for Industrial Modernisation (ELCIM) & Centre for

Innovation and Technology Innovation Voucher Project
o Nagi Abizeid (Director)
o Fady Fayad (Senior Business Advisor)
 Economic and Social Fund for Development (ESFD)
o Haitham Omar (Managing Director), Racha Chahine (?), Patrick Atme
(Team Leader- Business Support)
 AltCity
o David Munir Nabti (Founder)
 Berytech
o Nicolas Rouhana (Executive Director)
 Lebanese Industrial Research Achievments (LIRA) program
o Mr. Said Khalil Hamade (General Coordinator)

 Bader Young Entrepreneurs Program
o Mr. Fadi Bizri (Managing Director)
 Endeavor
o Tarek Sadi (Managing Director)
 Beyond Reform and Development
o Nadine Asmar (Partner), Gilbert Doumit (Managing Partner)
 Lebanese Center for Policy Studies (LCPS)
o Sami Atallah (Executive Director)
 Inventis
o Jihad Azour (Managing Director), Chady Zein (Co-founder)
 El Bacha Consulting and Development
o Andraos El Bacha (Managing Partner)
 Consultation and Research Institute (CRI)
o Dr. Kamal Hamdan (CEO), Redha Hamdan (Senior Statistician), Lea Bou
Khater (Social and Economic Development)
 Business Unlimited & Association of Consultants
o Salim Hajjie (Regional Director), Samar Fares Kfoury (Sr. Management
Consultant)
 Mefosa Consulting
o Atef Idriss (Owner)
 Likwid Consulting
o Rabih Kisserwani (Owner)
 T&A Consulting
o Georges Atallah and Simon Tager (Owner)
 Talal Abu-Ghazaleh (TAG)
o Waref M. Kumayha (Executive Director)
 i-Manage LLC
o Wadih Malkoun (Business Development)
 Kouatly & Associates (also Franchise Engineers)
o Yasser Kouatly (Partner)
 Management Solutions Experts (MSE)
o Imad Moujaes (General Manager), Fadi Boutros (Associate)
 MAP Consulting
o Ghassan Naaman (Managing Director)
 E Square S.A.L
o Tania Eid (President)
 Phoenix Consulting
o Zahi Mimassi (Managing Director), Yannis Kourelias (Managing
Consultant)
Banks/MFIs
 Bank Audi S.A.L.

o Bechara Nader (Head of SME Lending)
 BLC Bank (BLC Invest)

o Fouad Rahme (General Manager)
 BLC Bank
o Benoit Eid (Head of Small Business), Karyl Akilian Momdjian (Head of
Brand Management--"WE" team), Carine Fersan Choueiry (Brand
Manager WE Initiative & Enterprise Banking)
 Al Majmou’a
o Dr. Youssef Fawwaz (Executive Director), Alia Farhat (Business
Development Manager)
 Vitas
o Ziad Halaby (General Manager)
 Emkan
o Dr. Mayada Baydas (Executive General Manager)
 Al-Bilad Islamic Bank for Investment & Finance
o Hani S. Houssami (General Manager)
Donors/INGOs
 Institut Européen de Coopération et de Développement (Seeds of Hope)

o Delphine Compain (?), Gabriel Teissier(?), David El Chabab (Program
Manager)
 IFC
o Thomas Jacobs (Senior Country Officer), Carol Khouzami (Mediation and
Bankruptcy Project Manager)
 World Bank
o Eric Le Borgne (Lead Country Economist for Lebanon and Jordan), Peter
Mousley(Program Director), Lea Hakim (Macroeconomics & Fiscal
Management Global Practice), Wissam Harake (Macroeconomics & Fiscal
Management Global Practice)
 International Labor Organization (ILO)
o Mary Kawar (Director), Patrick Daru (Regional Coordinator for youth
employment),Rayann Koudaih (Project Coordinator),Lama Oueijan
(Senior Employers Specialist),Annabella Skof (BDS expert), Rawan
Yasmin(Enterprise Development Officer)
 United Nations Industrial Development Organization (UNIDO)
o Cristiano Pasini (Representative and Director), Soha Atallah (National
Project Coordinator), Nada Barakat Daou (National Project Coordinator)
 USAID, Lebanon Industry Value Chain Development Project (LIVCD)
o Jane Gleason (COP), Mr. Nasser Lama (Technical Director for
Agribusiness), Nadine Chemali (Technical Director : Marketing &
Exports), Amer Jabarin (DCOP)
 European Union (EEAS-BEIRUT)
o Virginie Cossoul (Trade Attache) , Alexis Loeber (Head of Cooperation
Section)
 Injaz
o Fayza Saad Mehanna (Executive Director)
 CEDRO (UNDP project)

o Hassan Harajly (Director), Jessica Obeid (Energy Engineer)
 United Nations Development Programme
o Rola Rizk Azour (Senior Economic Advisor)
Government
 Kafalat
o Dr. Khater Abi Habib (Owner), Basel Aoun (Project Manager)
 Office of Prime Minister (UNDP)
o Salam Yamout (National ICT Strategy Coordinator), Yasmina el Khoury
(Economic Officer)
 Trade Information Center (UNDP)
o Ms. Rafif Berro (Project Manager)
 Ministry of Economy and Trade (UNDP)
o Zeina El Khoury (Head of Enterprises Team)
 The Lebanese Center for Energy Conservation (LCEC)
o Pierre Khoury (Director)
 National Employment Office (NEO)
o Mr. Jean Abi Fadel (Director)
 US Embassy
o Claude Basbous (Senior Economic Advisor) & Tim Forsyth
(Economic/Commercial Officer)
Training/Workforce Development/Universities
 Moawad Foundation Technical Institute, Rene Moawad Foundation

o Nabil Moawad (General Manager)
 Kortbawi Institute
o Sister Souhaila (Director)
 Makhzoumi Foundation Training Center, Makhzoumi Foundation
o Vartkes Keutelian (Deputy Manager), Samer El Safah (General Manager)
 Arab Open University
o Andre Abi Awad (Head of Entrepreneurship Dept.), Ms. Rana Haidar
Jabri (Head of Student Affairs)
 Lebanese American University
o Josiane Sreih (Director, Institute for Family and Entrepreneurial Business)
 Modern University for Business and Science (Career Development Center)
o Abed Chehab (Head of Career Development Center)
 Forward (job fair)
o Tania Eid (Managing Partner)
 Saint Joseph University
o Ms. Nisrine Lattouf (Director of Physiotherapie)
 European Training Fund (ETF)
o Sabina Nari, Abdelaziz Jaouani (Head of TVET)
 YMCA
o Tony Elmir (Operations Manager)

 Don Bosco Technique
o Father Shady (Deputy Director)
 Pigier School
o Toufic Tasso (Director)
 CIT Dora
o Said Fakhoury (Head of IT Department)
 American University of Beirut
o Dr. Maryam Ghandour (Student Affairs Career and Placement Services)
 High institute of Technology, Tripoli
o Eng. Tony Kahaleh (General Director)
Key Experts
 Yasser Akkawi (Chairman), Executive Magazine

 Ramzi el Hafez (Managing Editor), Lebanon Opportunities Magazine
 Prof. Ahmad Houri, Lebanese Solar Energy Society
 Fadi Chedid, Expertise
 Gerhard Rettenbacher, GOPA TVET/SME Expert
 Roger Melki, Economics Professor at Saint Joseph University (former advisor to
Min. of Economy and Finance)
Bekaa Valley
 Agriculture/Food Products
o Ethel Chocolate, Haikal Ethel (Owner)
o Chateau Ksara, Mr. Elie Maamari (Export Manager)
 Chamber of Commerce and Industry and Agriculture of Zahle and the Beqaa
o Mounir Teeny (Vice President)
Government
 Terbol Municipality
o Fadi el Khoury (Mayor of Terbol)
North Lebanon
 Agriculture/ Food Products

o Wilco, Tony Boutros (Manging Partner)
o Mackieh Sweets, Samih Mackieh (Owner)

o Msallem Food Tech, Wissam Msallem (Owner)
 Chamber of Commerce, Industry and Agriculture in Tripoli

o Marcel Chabtini (President), Rana Mawlawi (Project Manager) & Khaled
Omari (Food Lab Director)
 Business Incubation Association of Tripoli (BIAT)

o Mr. Fawaz Hamidi (Director)
Training/Workforce Development/Universities
 Safadi Foundation
o Vanessa Yakan (Executive Assistant-General Manager and Senior Project
Development Officer)
South Lebanon
 Generators
o Jubaili Bros, Ramzi R. Jubaili (Chairman /General Manager) & Hiba El
Harakeh (Senior HR Officer)
 Light Manufacturing
o Jouni Trading Contracting Co., Yeihya Jouni (Owner)
 Chamber of Commerce, Industry & Agriculture in Sidon

o Mr. Mohamad Saleh (President)
 South Business Innovation Center (SouthBIC)

o Mr. Andraos Bacha (Director General)
o Samir Zaarour (Facility Manager)

ANNEX C. SME PROFILE TIERS
CLIENT TIER RATIONALE IMPLEMENTATON ASSISTANCE FOCUS

FACTORS
1) Converting SMEs Rapid means to create These tend to be micro or Formalization advantages,
from informal to formal sector jobs and very small, which are not eliminating mystery of
formal sector improve SME sector otherwise targets. However, registration, assisting with
transparency. conversion to formal could be permits, incentivizing with
appropriate for formal low cost services,
employment gains. Mitigating partnering with third party
factors exist, however. entrepreneurship training
Currently, there are strong providers to help them.
disincentives to move from
informal to formal. The social
security process is
bureaucratic, taxes appear,
and hiring becomes a risk
due to difficult termination
regulations. Note: If these
SMEs are assisted, the
population of target firms
grows substantially.
2) Assisting ~10 Well known barrier and 10 person firms can be Basic management, HRM,
employee firms to difficult to overcome difficult to reach because they business planning, SOPs,
grow to 20 employees without assistance. 20 usually don’t belong to marketing.
person SMEs require associations and have often
more formalized never conceived of seeking
management structure assistance to grow. Requires
and SOPs without which outreach beyond usual
employment growth is chamber and association
unlikely. methods – public media for
instance. They don’t tend to
buy consulting services so
heavy initial subsidizing is
necessary.
3) Facilitating growth This and the next Can usually be reached HRM, Value chain and
for companies with category is where much through associations and logistics, market
between 20 and 50 of the employment chambers. More receptive to penetration/export
employees growth in the program’s buying consulting services, assistance, quality
target beneficiary though initial subsidization standards, cost reduction,
population is likely to still necessary. technology adoption, B2B
happen. matching
4) Facilitating growth Most likely to hire new Easiest to reach, most likely Advanced quality
for companies over employees if the to buy services with or standards, lean
50 employees assistance proves without subsidies if they are manufacturing, process
successful. persuaded of the value and re-engineering, R&D
ROI.

ANNEX D. OVERVIEW OF TUNISIA BUSINESS REFORM AND
COMPETITIVENESS PROGRAM APPROACH TO SME GROWTH
The USAID-funded Tunisia Business Reform and Competitiveness Program (BRCP)

began in April 2014. The approach of the BRCP project is to help and assist Tunisian
enterprises become more globally competitive, create business growth and employment.
Employment (jobs creation) is the core, measurable goal of the project.
BRCP is composed of three components:

 Component 1: Technical assistance to Tunisian enterprises as well as assistance
for access to finance for Tunisian enterprises.
 Component 2: Training, job fairs and CDCs
 Component 3: Policy
Component 1 of the Tunisian BRCP project is the core element that leads to job creation
with partner enterprises of the project. The original, official goals for Component 1 of
BRCP project for year 1 (April 2014 to April 2015) was to work with 80 partner
enterprises and create 2000 jobs.
Component 1 of the BRCP project has decided to take a “by business people, for business
people” in order to have a high level of efficiency, and to bring professional coaching and
mentoring to the project’s partner enterprises. Component 1 is therefore composed of a
team of five Tunisian Business Advisors and one international expert leading them.
Each of the Tunisian business experts is required to have a minimum of 10 years of

international business experience, preferably in a management position for a few of these
10 years. Each of them specializes in specific industries or sectors (IT, manufacturing,
garments, electrical, retail, etc.).
The core strength of this “by business people for business people” approach is that the
BRCP business advisors are truly able to advise local, Tunisian enterprises on their real
needs. Many enterprises have their own perceived needs that are often misaligned with
their real need, in terms of long term, global competitiveness. The key role of the
business advisors is to coach and mentor the management of each partner enterprises
about their real needs in terms of innovation, technologies, better products or services,
new markets, critical certifications, etc.
In order to be more effective in terms of direct job creation, it was decided that priority
would be given to individual Tunisian enterprises with good business growth and
therefore employment prospects. Value Chain spillover effect would then come into play
(downstream, horizontally and upstream) as soon as more than 3 to 5 enterprises of the
same sector work with the BRCP project.
Each BRCP partner enterprise signs a “partnership agreement” with the project, stating
clearly:

 Specific type(s) of technical assistance required
 Details of the expert(s) / consultant(s) hired for the task
 Monthly, measurable and quantifiable goals
 Expected business growth (new product lines, clients, etc.)
 Expected jobs creation.
By December 2014, the team of business advisors of Component 1 had signed a total of
112 partnership agreements for technical assistance, for a total of 3500 jobs created.
These enterprises vary in size from small companies with 30 to 40 employees to large
groups employing thousands of workers. The high quality of the project’s business
advisors helps create a “branding effect” for BRCP. The Business Advisors are seen as a
source of quality, professional coaching and mentoring services.
The most popular areas of technical assistance detected and proposed by BRCP’s
business advisors in order to help each enterprise grow and create new jobs are: new
markets development, lean manufacturing, improved efficiency, certification, quality
standards, etc.
The cost per job varies very much from case to case and from enterprise to enterprise. It
depends on the type of industry, the experts or services providers contracted, the number
of jobs created, etc. The cost per job can range from a low of US$800 to a high of
US$2,500. The average to date is US$1,550 per job created.
The ratio paid by each partner enterprises also varies. It ranges from 80 – 20% (80% for
BRCP and 20% for the enterprise) to 30 – 70%.

ANNEX E. OVERVIEW OF MAURITIUS BUSINESS GROWTH
SCHEME
Mauritius Business Growth Scheme Activity (MBGS)30 is a five-year World Bank

funded program that began in 2012. It is designed to promote business growth. MGBS is
built around a team of business advisors, who help local enterprises reach substantially
higher business growth than they would otherwise have reached organically. Partner
enterprises are selected by criteria that measure potential for business growth, and
outcomes are measured a year and two years after each intervention. A total of 1,050
enterprises received mentoring from the business advisors of the project. Roughly 350 of
those have reached the stage where a formal partnership agreement for technical
assistance was signed with them.
MBGS’ efforts have resulted in positive, incremental business growth with most of their
partner enterprises. The project has created an average of 42 jobs per partner enterprise,
for over 350 enterprises, in the course of the first three years of the project. The
Government of Mauritius has taken over management of the program due to its success,
so that it will continue beyond the horizon of the initial program scope. MBGS started on
a “cost sharing basis” (50 – 50) for its first year of activity and moved to a “revolving
fund” model beginning in year two.
One of the main challenges of the project is that official, audited accounts are requested
from partner enterprises for each year of partnership. This is often seen as a negative
point by local business people.
30
Details at http://mbgs.govmu.org/English/Pages/default.aspx.

ANNEX F. LEBANESE IMPORT AND EXPORT CUSTOMS DATA
OVER THE LAST 5 YEARS BY SECTOR (MILLIONS OF LBP)
Export Sector Exports Exports Exports Exports Exports 5-Year Annual Percentage
2011 2012 2013 2014 2015 Total Average of Total
Exports
Live animals / 34,361 35,465 43,973 45,663 33,802 193,544 38,709 1%
animal products
Vegetable 263,431 263,822 332,162 322,683 122,290 1,304,390 260,878 4%
products
Fats and oils 32,505 46,543 55,413 49,449 24,143 208,053 41,611 1%
Prepared 601,801 624,047 710,446 812,089 407,085 3,155,467 631,093 9%
foodstuffs,
beverages,
tobacco
Mineral products 747,557 808,078 1,242,482 695,702 206,846 3,700,664 740,133 11%
Chemicals / allied 626,642 552,960 529,719 614,193 347,247 2,670,761 534,152 8%
industries
Plastics / rubber 228,572 247,496 245,517 228,263 105,888 1,055,739 211,148 3%
Raw hides / 21,590 24,118 29,793 31,666 11,813 118,981 23,796 0%
leather
Wood products 23,127 34,201 31,257 20,404 10,586 119,576 23,915 0%
Paper, pulp 328,569 276,595 266,122 318,047 119,017 1,308,351 261,670 4%
products
Textiles 204,533 186,483 196,222 200,467 88,166 875,871 175,174 3%
Footwear 35,856 38,534 31,350 41,807 16,302 163,849 32,770 0%
Stone, glass 59,846 66,958 66,699 55,886 24,462 273,851 54,770 1%
products
Pearls, precious 2,278,104 2,604,979 1,163,623 820,763 359,239 7,226,709 1,445,342 21%
stones, metals
Base metals 803,064 717,651 801,504 575,967 255,988 3,154,174 630,835 9%
Machinery, 1,328,748 1,321,114 1,391,055 1,106,32 562,283 5,709,521 1,141,904 16%
electrical 1
instruments
Vehicles 692,105 355,525 365,161 598,791 281,948 2,293,530 458,706 7%
Medical, optical, 76,343 54,061 77,681 82,310 34,920 325,314 65,063 1%
musical,
photography
instruments
Arms and 1,200 623 430 604 169 3,026 605 0%
ammunition
Misc. 146,651 164,018 174,824 180,085 84,879 750,456 150,091 2%
manufactured
Artwork, antiques 6,574 44,653 40,542 57,791 6,975 156,446 31,289 0%
Source: Lebanon Customs, 2015.

Import Imports Imports Imports Imports Imports 5-Year Annual Percentage
Sector 2011 2012 2013 2014 2015 Total Average of Total
Imports
Live animals / 1,308,466 1,242,796 1,345,365 1,584,549 639,824 6,121,000 1,224,200 4%
animal
products
Vegetable 1,282,119 1,309,161 1,392,085 1,459,212 753,441 6,196,097 1,239,203 4%
products
Vegetable 261,705 293,492 300,854 276,812 126,610 1,259,473 251,895 1%
and animal
fats and oils
Prepared 1,905,026 2,086,186 2,135,375 2,138,051 1,007,220 9,271,857 1,854,371 6%
foodstuffs,
beverages,
tobacco
Mineral 7,496,692 9,599,871 8,319,122 7,916,034 2,323,687 35,655,405 7,131,081 25%
products
Chemicals / 2,630,507 2,639,883 2,936,953 3,048,082 1,506,946 12,762,371 2,552,474 9%
allied
industries
Plastics / 1,084,254 1,158,950 1,267,318 1,261,392 564,730 5,336,644 1,067,329 4%
rubber
Raw hides / 123,164 117,986 117,539 122,616 57,554 538,858 107,772 0%
leather
Wood 357,038 371,451 357,695 405,739 170,928 1,662,851 3321,570 1%
products
Paper, pulp 665,142 565,859 574,616 575,641 251,232 2,632,489 526,498 2%
products
Textiles 1,065,490 1,138,195 1,200,309 1,249,550 601,985 5,255,529 1,051,106 4%
Footwear 204,034 210,453 237,087 239,854 123,297 1,014,724 202,945 1%
Stone, glass 606,345 615,209 677,124 697,291 320,943 2,916,912 583,382 2%
products
Pearls, 3,230,112 2,390,731 1,713,444 1,472,111 615,754 9,422,152 1,884,430 7%
precious
stones,
metals
Base metals 2,370,819 2,348,110 2,417,142 2,299,854 880,995 10,316,921 2,063,384 7%
Machinery, 3,509,956 3,425,826 4,190,549 3,538,972 1,590,963 16,256,267 3,251,253 11%
electrical
instruments
Vehicles 2,195,345 2,434,416 2,832,444 2,380,742 1,363,819 11,206,765 2,241,353 8%
Medical, 451,070 490,654 519,024 526,849 249,644 2,237,241 447,448 2%
optical,
musical,
photography
instruments
Arms and 42,419 30,083 35,047 34,637 11,615 153,801 30,760 0%
ammunition
Misc. 466,958 570,609 608,242 617,812 300,319 2,563,940 512,788 2%
manufactured
Artwork, 34,850 53,348 34,381 29,506 21,665 173,749 34,750 0%
antiques
Source: Lebanon Customs, 2015.

ANNEX G. QUALIFICATIONS OF BUSINESS ADVISORS
Examples provided by James T. Riordan in his book We Do Know How, detail key
qualifications and attributes of successful business advisors. (Riordan, 2010, pp. 285-286)
These qualifications and attributes are listed below:
“Business sense and experience. The most effective advisors generally have had a
number of years of hands-on experience in the private sector and can communicate
effectively with the business community. They understand the businessperson’s point of
view and can assess intuitively whether a business proposition is worth further probing.
They have an idea of what questions to ask to identify the source of business problems
and to develop solutions to those problems.
Analytical skills. A business advisor is called upon to prepare Memoranda of

Understanding [Client Growth Plans] with client businesses. The MOUs spell out the key
problems of clients and how to attack them at a favorable incremental cost-to-sales ratio.
Business advisors must have the capacity to quantify the impact of assistance provided to
a client, estimate the profitability of an activity, and work closely with clients to close
transactions.
Problem-solving ability. Most instances of program support wil run into unexpected
obstacles and require creative problem solving, on the spot, by the business advisor. It is
imperative that business advisors possess a demonstrated capability for effective and ad
hoc problem solving.
People skills. One of the most important roles of the business advisor is to bring people
together and cultivate trust along the market chain so that the commercial relationships in
question do not require the continuing presence of the advisor in the future. This is a key
element of the buyer-led approach to transaction sustainability.
Commitment to making the transaction work. Most cases of program support will require
persistence and extra effort from time to time to keep things moving forward. A high
level of energy and professional commitment is essential for a business advisor to
achieve sales targets.
A robust professional network. This is a significant asset for developing new

opportunities, evaluating potential clients, and making the business community aware of
program capabilities and services.
Integrity and trustworthiness. These characteristics enable the business advisor to gain
the confidence of clients to overcome mistrust and natural reluctance to enter into
difficult business transactions with potentially high returns on investment.”
Source: Adapted from USAID/Caribbean Open Trade Support Program

ANNEX H: NORTH LEBANON SME COMPETITIVENESS AND
JOB CREATION ACTIVITY CONCEPT NOTE
A. Background
North Lebanon has extensive infrastructure including an oil refinery, an airport, a train
station, agro-industry potential, and a harbor. It also has several cultural and touristic sites
that, in an ideal world, should lead to a vibrant and vivacious city. However, North
Lebanon has been long neglected by the government since the 1970s. Most forms of
investment in development have been concentrated in the country’s capital of Beirut
leaving citizens of the North at a
great disadvantage. The North
Lebanon region benefits from the
existence of export opportunities
by land due to the proximity to
borders and existence of
exporters serving the entire
region. However, the Syrian
crisis has tremendously affected
export volumes, especially in
fresh produce, which have been
forced into costly air and sea
shipments. This forced change
has resulted in high volumes of
damaged, and often disposed of,
exports.
North Lebanon is a region of the

country that is currently facing
significant social, economic and
political challenges that are
threatening security and any form
of progress. Unemployment is on
the rise, particularly among
young people estimated at up to
25%; drop-out rates in the poorer
areas are estimated at up to 50%;
delinquency and violent clashes characterize the daily life in many parts of the region.
The majority of economic activity in the area is characterized by micro size enterprises
run by families, which don’t offer career opportunities to young graduates. Furthermore
traditional hiring practices are commonly known to be characterized by nepotism and
favoritism in business and employment relations. What is known as “wasta” can be
interpreted as “connections”; obtaining a job only through your connections.

B. Scope of Work
To address these realities, the aim of this concept note is to provide technical assistance
to SMEs who are willing and capable of increasing their sales and export potential, while
also committing to hiring additional Lebanese employees. The aim of the project is to
create business growth leading to incremental employment. Specific activities are to
include, but not be limited to:
Activity 1: Support the establishment of a Trade Support Center (TSC) at the Tripoli
Chamber of Commerce Industry and Agriculture (CCIAT). The purpose of the TSC,
which will be managed by selected staff of the CCIAT and two project staff members, is
to provide technical assistance to Lebanese enterprises to improve their services and
products, assist in creating niche or ‘super niche’ products and services for the regional,
international, and global markets. Additionally, the TSC will support beneficiaries
through providing assistance in business development, quality assurance, legal support in
exporting, collecting and sharing trade data, and addressing requests from producers on
local and international trade-related issues. The project will support the development of
the TSC through providing technical support and guidance, procurement assistance, and
outreach. The project will provide ongoing support through providing two specialized
business advisors to work directly with select SMEs to offer firm level technical
assistance.
Activity 2: Support SME identification and hiring of employees. To ensure that SMEs in
North Lebanon are able to hire employees with necessary industry and basic skill
requirements, the program will assist employers and job seekers through job matching
activities as well as subsidizing job skills trainings through local career and training
centers. During the first year of the project, the project team will aim to meet with 300
employer entities, identified in close collaboration with the Tripoli Chamber of
Commerce and BIAT, and establish partnerships with at least 50 who will be able to
select candidates for vacancies in their organizations. These entities will directly benefit
from competitive and capable individuals that could be assets to their operations. 50
selected firms will undergo a needs assessment in order to identify, with a project
business advisor, the skills they need to become more competitive. Following this
assessment, the project will identify 300 job-seekers (with a focus on women and youth)
through already established career fairs, online recruitment platforms, and university
centers (ie. Continuing Education Program at the Lebanese American University—CEP).
On an as-needed basis, the project may sponsor job seekers enrollment in quick/intensive
certificate programs at CEP, or basic language, ICT and professional training at Safadi
Foundation’s English and ICT learning centers located across North Lebanon. These
centers are located in 7 marginalized communities, offering easy and affordable access to
training programs. This will allow for participants to successfully meet the minimum
requirements for being hired.
Additionally, the project will embed a local project staff member in Lebanese American
University (LAU) to proactively pursue local firms to post their job vacancies at the
University and assist in job matching. At a minimum this will result in two key outcomes;
1) spreading awareness of this activity to local private sector firms, and 2) widening the

network of local SMEs using transparent and competitive hiring practices by posting their
vacancies with LAU, the Safadi Career booth, and other platforms.
Activity 3: Support the establishment of a “Career Booth” (both physical and online)
housed within the Safadi Foundation. The project will work with the Safadi foundation to
further their plans to establish a physical an online platform form companies to post their
vacancies and for job seekers to submit their CVs. This activity aims at linking job
seekers with the right skills and capabilities with jobs that fit their qualifications. It is
anticipated that 200 visitors can benefit from the services of the booth and the website in
one to two years. The booth will be open to all job seekers and employers across the
country, but will have a special emphasis on those in North Lebanon in order to continue
contributing to the enhancement of the workforce in the region.
The program will assist through the provision of technical assistance, procurement
support, and ongoing embedded staff members if necessary.
Activity 4: Assist businesses of the informal sector become officially registered and legal.
A large number of SMEs in Tripoli are informal and therefore their employees do not
count as part of the officially registered workforce. In order to further boost job growth
numbers through this activity, the project will take an opportunistic approach to guiding
firms to convert their informal businesses into formal businesses, leading to increased
formal employment. When appropriate, the project business advisors will coordinate
efforts currently being undertaken by the International Labor Organization and promote
the usage of key tools such as the Resource Guide on Decent work. This resource guide is
a practical approach that demystifies transitions to formality, looking at all possible
approaches that can present win-win situations for workers, entrepreneurs and
enterprises, communities, and the State. The guide provides a one gate access to a
comprehensive set of approaches that are grouped under seven broad policy areas and 28
practical Briefs. Each Brief details the challenges facing institutions, actors and
enterprises within the informal economy, and highlights the range of policy innovations
in facilitating transitions to formality.
Subsequent to these conversion efforts, these firms will be encouraged to participate in the job
matching and career booth activities. Additionally, if project business advisors detect a strong
potential for business growth and employment within those firms, they may ultimately become
eligible for assistance via the TSC.
C. Target Groups and Beneficiaries
SME traders and exporters. The TSC will serve SME traders and exporters primarily the
North Lebanon region; however, beneficiaries from other regions can be served as well.
It is envisioned that medium and larger enterprises have more potential to create a higher
number of jobs at a lower cost per job, however it will also provide greater opportunities
to improve the small-scale productivity, quality, and quantity of products available for
local and export markets resulting in higher income and reinvestment. Beneficiaries can
be SMEs, cooperatives, farmers, processors especially in the furniture, food and

beverage, metal products, textiles, wood and carpentry, paper and cartons, and chemical
products sectors.
Job seekers and SMEs demanding skilled professionals in the private sector. The main
targeted regions of the project are low-income areas of North Lebanon. This includes
rural Akkar, Minnieh-Donnieh and the three cities of the region of Al Fayhaa – Tripoli,
Mina and Beddawi. The targeted beneficiaries in this region are mainly unemployed
youth between the ages of 20-35 and women 36 years and up. In addition, the project will
also target, among youth, 4th year students and fresh graduates of the Public Lebanese
University – North Lebanon campus. These students are at an observable disadvantage in
terms of having competitive skills upon graduation in comparison to graduates of private
universities across the country. Our project will directly benefit 50 private entities, and
provide jobs for 500 women and youth job-seekers across North Lebanon.
D. Results Monitoring / Anticipated Results
The proposed results of the project, during a 1-2 year Period of Performance are:
 Employment Creation (500 job placements anticipated)
 Businesses Supported with Technical Assistance (50 businesses anticipated)
 Business Growth, by employee number, per business (TBD% anticipated)
 Increased Exports per business (TBD% anticipated)
Additional, non-measurable results:

 Improved Competitiveness
 Spillover Effect (investments, exposure to larger markets, equipment, machinery,
indirect employment, etc.)
E. Partner Institutions
Tripoli Chamber of Commerce Industry and Agriculture. CCIAT is a nonprofit public

utility organization, involved in trade and services, industrial and agricultural affairs.
CCIAT currently provides services to 17,000 member companies, of which 5,000 have a
permanent status. The Chamber serves enterprises in the regions of Tripoli, Akkar,
Batroun, Koura, Zgharta, Dannieh, Becharre and the towns and villages surrounding
them.
CCIAT will be responsible for the establishment of the Trade support Center. CCIAT
already has some facilities and services that can be used to support the center; namely the
food laboratory, the food research facility, the transaction department that issues
certificates of origin and other required attestations, bar-coding, a web portal for
standards and norms required in foreign markets, and a network of contacts with trade
offices in Consulates and Embassies and foreign Chambers. Project Business Advisors
will direct export oriented firms to the Trade Support Center for assisting in expanding
and reaching external markets.

Safadi Foundation. Safadi Foundation is one of Lebanon’s leading development agencies
based in Tripoli. It has extensive human capacities, infrastructure and social outreach to
marginalized communities in several regions of the country. The foundation is one of
Lebanon’s largest and most trusted NGOs with a long history of successful activity
implementation.
Safadi Foundation will assist in the design and execution of the short-intensive training
plans (basic language and ICT skills), and establish/host the career booth (both online and
physical) recruitment platforms. In order to manage these activities, they will have a
Project Management Unit (PMU) based at the Foundation’s headquarters in Tripoli. This
unit will be responsible for planning, monitoring, reporting (both financial and narrative),
and field coordination. Safadi Foundation will also coordinate and ensure the full
participation of all partners in every aspect of the project, and will coordinate with its US-
based partner to establish a scholarship fund for at-risk youth who would like to take part
in the activity.
Business Incubation Association in Tripoli. The Business Incubation Association in

Tripoli (BIAT), is a nonprofit organization, established with the assistance and back up of
the Integrated SME support program, an EU-funded project at the Ministry of Economy
and Trade of Lebanon. BIAT is managed by a motivated, professional, experienced, and
caring team ready to assist clients with their financial, technical, marketing, legal,
accounting, exporting and training issues along with relevant authorities’ connection.
BIAT will recommend potential SMEs that the project can work with who are willing to
grow and increase employment.
Continuing Education Program at the Lebanese American University. CEP at LAU aims
to offer innovative learning opportunities for future business leaders of the community
while enhancing performance, promoting professional advancement, and encouraging
achievement. It gives adult learners necessary information through programs designed for
the 21st century workplace, while acquiring pertinent knowledge and developing
specialized skills. It strives to create an energetic learning environment that fosters both
personal and professional growth. The CEP now offers 18 certificate-based programs at
the post-secondary and post-baccalaureate level and well over 90 short courses for
prospective students. Many programs culminate with the distinguished CEP certification
granted by LAU.
CEP at LAU will implement short-intensive certificate based programs for youth and
women supported by the project. When possible, CEP at LAU will also contribute to
establishing strong linkages with potential employers and link those employers to the
career booth to be established by the Safadi Foundation.

ANNEX I. ASSESSMENT SCOPE OF WORK
I. Objective
The objective of this SOW is to assess impediments to private sector growth —

particularly the growth of small and medium sized enterprises (SMEs) — and
opportunities for USAID to remove or alleviate these impediments in the future. In line
with a “buyer-led” approach31, this assessment will examine the needs of SMEs and
high-growth lead firms within key sectors and value chains to identify specific
bottlenecks to growth and to identify strategic interventions to support SMEs developing
goods and services for which demonstrated demand and commercial matchmaking
opportunities exist. The assessment will examine SME needs across five areas to provide
a state of the field report on the current situation of SMEs in Lebanon as well as
recommendations to support: 1) improved business enabling environment and
institutional capacity of business associations and chambers; 2) demand-driven business
development services (BDS); 3) increased trade and export linkages; 4) enhanced
workforce development; and 5) opportunities for growth in special economic zones.
Furthermore, this activity will examine opportunities that exist for potential public-
private sector partnerships to leverage resources to contribute to increased SME,
productivity, sales, and exports. This work should be coordinated and integrated with
“Lebanon SME strategy, a roadmap to 2020” that was just released by the Government of
Lebanon’s (GOL) Ministry of Economy and Trade.
The final deliverable from this scope of work, looking through a lens of increasing
private sector competitiveness, will address all five areas listed above to identify needs,
constraints, and opportunities in the short and intermediate term at the micro, local, and
national level. Recommendations from the final report should reflect the parts of the new
GOL SME strategy that USAID should help to implement.
Of particular cross-cutting interest across the components will be: the role of
technological innovations to increase economic growth and private sector
competitiveness; gender-focused programming; and synergies with USAID/Lebanon’s
current economic strategy and ongoing portfolio. The team should compare and contrast
findings from urban SMEs (Beirut) as well as rural SMEs (regions).
II. Background
Lebanon is a high-middle-income country with a population of around 4.2 million and a

per capita (2012) Gross Domestic Product (GDP) of US$10,310. Despite the global
financial crisis, the country has managed to show positive economic growth and a
31
The buyer-led approach, as explained in We Do Know How: A Buyer-Led Approach to Creating Jobs for
the Poor by author and development practitioner James Riordan, focuses on identifying and supporting
business opportunities for which there is market demand, abiding by the maxim, "produce what you can
sell,” and not “sell what you produce." The approach identifies business opportunities, as well as the ways
to solve the specific problems (i.e. bottlenecks) that stand most in the way of local businesses meeting
buyers' requirements.

measure of stability mostly due to a strong banking system, continued foreign capital
flows, and domestic private investment. However, the Syrian conflict has had a profound
effect on the Lebanese economy since 2012. Lebanon, already a recipient of foreign aid,
has seen an approximate 17% increase in the number of individuals living below the
poverty line between 2012 and 2014 (approximately 1 million to 1.17 million). The
unemployment rate doubled to 20% during that same period32. In addition, as of
September 17, 2014, 1,155,928 Syrian refugees are registered in Lebanon33 with several
hundred thousand awaiting registration34, putting additional strain on the country’s fragile
economy. Due to these systemic issues, high migration of young educated Lebanese
pose significant challenges for the Government.
Private sector-led growth is a crucial factor for the country and constitutes a core pillar of
the national development agenda. USAID/Lebanon’s economic growth priorities under
its new country development strategy, currently in draft, are shifting towards enhancing
economic opportunities that will support the strengthening of private sector
competitiveness. Lebanon’s private sector must grow and create more jobs for its young
professionals and semi-skilled laborers. This has to occur through a growing and more
competitive private sector.
III. Activities and Deliverables
A. Activities
This assignment will include the activities below:
Activity 1. Offsite secondary literature review and stakeholder mapping (January 15-
February 6). The team will analyze the vast stock of current literature on Lebanon’s
private sector, including USAID data and assessments, the World Bank Doing Business
Report, the World Economic Forum’s Global Competitiveness Report, and Lebanese
government reports to understand the general characteristics of the private sector and
SME landscape in Lebanon, as well as governmental priorities and national strategies to
support private sector competitiveness.
The team will: identify sectors and value chains with high rates of SME participation or
with potential to contribute to significant future SME growth, trade, and exports; identify
SME needs and constraints within those sectors and value chains; and conduct market
and industry analysis to map key public and private sector actors within those
sectors/value chains. Sectors to be investigated may include, but are not limited to: agro-
industry, finance, education, tourism, handicrafts, transportation, and oil and gas.
The literature review will also identify and prioritize key public and private sector
32
http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/09/24/000333037_201309241112
38/Rendered/PDF/810980LB0box379831B00P14754500PUBLIC0.pdf
33
http://data.unhcr.org/syrianrefugees/country.php?id=122
34
US State Department factsheet

organizations which support or contribute to SME growth. These organizations may
include relevant:
● Lebanese government counterparts, ministries, export and trade governmental
agencies
● Chambers of commerce and business associations
● Workforce development-focused counterparts
● Business development and specialized technical assistance service providers
● Stakeholders with a vested interest in industrial parks and special economic zones
● SME owners and operators and employees (at various levels of the organization).
The literature review will also identify policy and regulatory constraints to SME growth,
trade, and exports.
Activity 2. Assessment methodology and survey design (February 9-11). From the
literature review, the consultants will identify additional information needed to assess:
1) Business enabling environment for SME growth and competitiveness and local
capacity to advocate for policy and regulatory improvements;
2) Private sector capacity to provide specialized technical assistance and business
development services to improve competitiveness in key sectors;
3) Policy, regulatory, and operating environment for trade and exports;
4) Human resource skill constraints in key sectors and existing and potential
strategies for workforce development to contribute to SME growth and
competitiveness;
5) Effectiveness and potential of Special Economic Zones/Industrial Parks to
contribute to SME competitiveness and growth.
The Consultants will design a methodology and series of questions for different types of
interviewees (i.e. relevant chambers of commerce, business associations, government
agencies and ministries, donors, SMEs, and lead firms in value chains) to gather this
information during site visits.
Activity 3. Work Planning (February 12-14). AMEG and its consultants will draft a work
plan in-country to carry out the five-pronged assessment of SME competitiveness in
Lebanon. This activity will yield Deliverable 2: Work plan.
Activity 4. Assess opportunities to enhance private sector competitiveness across five key
areas (February 16-March 20). AMEG Consultants will identify specific opportunities to
increase SME competitiveness in Lebanon, analyzing the five areas of support below.
The assessment in each area will focus on those sectors, clusters, and value chains
identified during the literature review and work planning that have high rates of SME
participation and/or that have potential to contribute to significant future SME growth,
trade, and exports. Analyses in each area should also assess how technology and
innovation has (or has the potential to) affect productivity and competitiveness of SMEs
in Lebanon.

AMEG will conduct an initial findings debrief with USAID/Lebanon immediately
following the assessment of each area, and the final report will include written findings
for all areas in this scope of work.
A1. Analysis of Policy and Regulatory Constraints and Institutional Capacity of

Chambers and Business Associations to Advocate for Change
This portion of the assessment will include a two-pronged approach to assess the
following areas: 1) business enabling environment; 2) institutional capacity of business
associations and chambers to advocate for policy improvements.
Policy and Regulatory Analysis. As part of the literature review in Activity 1, the team
will review the existing business enabling environment for SME development, as well as
opportunities for policy and regulatory improvements to enhance SME trade and
competitiveness. The team will analyze existing reports by USAID and other donors,
Lebanese government data, the World Bank Doing Business Report, and the World
Economic Forum’s Global Competitiveness Report to identify constraints and
opportunities that can be cross-referenced with interviewees during the field assessment.
In-country the team will (1) confirm that the identified policies and/or regulations are
hindering SME growth; and (2) identify opportunities for reform based on current
political will.
***The team will look at the SME development authority/secretariat model and its
applicability in Lebanon. The model will be derived from the model used in Pakistan by
the USAID/FIRMS project.
Analysis of Institutional Capacity of Business Associations and Chambers to Advocate

for Change. Through site visits and interviews, the team will conduct a rapid review of
the institutional capacity of relevant chambers and business associations in key sectors to
advocate at the national level for reforms and changes to improve the business enabling
environment, particularly for SMEs. The team will gauge the organizations’ leadership,
services provided, membership, level of organizational development, and reputation
within the business community to determine their capacity to serve as advocates for
policy reform and change. The team will also review the administrative and management
capacity of relevant business associations and chambers to receive USAID assistance as
well as the types of assistance they need, based on organizational gaps identified in
interviews and site visits. In addition, the team will attempt to gauge levels of member
engagement (including participation of SMEs) and member willingness to contribute or
leverage resources with USAID or other donors to create more effective chambers,
associations, or business service organizations. The AMEG team will work with
USAID/Lebanon to determine which associations to target.
A2. Enhancing Private Sector Competitiveness through Business Development

Services
This component will focus on the availability of business development services that align

with the most common needs among Lebanese SMEs in key sectors. The team will
analyze the current provision of business development services to SMEs in key sectors
and value chains to determine whether more demand-driven, specialized technical
assistance can help to make firms and value chains in those sectors more competitive.
Survey data will be disaggregated by sector, geographic area (i.e. rural/urban), sex of
owner, age of owner, ethnicity of owner, religion of owner, and other variables deemed
appropriate by USAID.
Demand-side: SME Needs for Specialized Technical Assistance in Key Sectors and Value
Chains. Through interviews and questionnaires, the AMEG team will first determine the
needs and constraints of SMEs in Lebanon in key sectors, and identify areas where
specialized technical assistance to these firms could potentially help overcome existing
bottlenecks to growth. The AMEG team will work through the business associations and
chambers it has identified in key sectors to interview and/or survey member SMEs about
their technical assistance needs as well as services received through the chamber,
association, or other provider. Questions will likely be refined based upon findings from
the literature review and interviews with relevant public and private sector organizations.
Questions will also provide insights on SMEs’ willingness to pay for BDS services, and
how they expect those services to impact their productivity, links to markets, and
competitiveness.
Answers from SMEs, which will be disaggregated by sector, sex, age, ethnicity, religion,
etc. of the owner/operators, will help identify specific technical assistance needs and will
guide team recommendations on potential improvements to BDS services to improve
their quality and relevancy. The team will also identify gaps between SME needs and
expectations and provision of technical assistance from business associations, chambers,
and other service providers. Answers will also help identify those organizations, firms,
and individuals providing the highest quality, demand-driven assistance in areas like
trade and exports, production support, job matching, etc.
Supply-side: Capacity of Business Associations, Chambers of Commerce, and other

Providers, Particularly Private Sector, to Provide Specialized Technical Assistance and
Business Development Services to Improve Competitiveness.. As part of the analysis of
institutional capacity of relevant chambers and business associations described above, the
team will assess technical assistance provided to SMEs in resource management,
technology use and transfer, quality control, financial and risk planning, marketing and
trade plan development, and other areas required to enhance productivity. Through the
literature review and interviews with SMEs described above, the team will also identify
other public and private sector providers of business development services, such as public
agencies, consultants, private firms, and individuals.
The team will look at the overall number of chambers, associations, private consulting
firms, individuals, and others delivering such services to SMEs. In addition, based on
interviews and surveys, the team will analyze whether the range of services being
provided responds to the needs of SMEs in key sectors. The team will review the
mandates, willingness, capacity, and effectiveness of current BDS providers to provide

relevant, demand-driven, and affordable technical assistance to SMEs and any gaps that
may exist in services.
Based on needs identified and the current provision of technical assistance from a variety
of providers, the team will develop a series of recommendations for improving the quality
and relevancy of BDS services in the short and intermediate term, as well as identify
providers with the highest levels of capacity to provide quality services. In particular, the
team will identify opportunities for chambers, business associations, and private sector
providers can to supply technical assistance and market linkage services that integrate
competitive Lebanese SMEs into national, regional, and international export or sales
networks.
A3. Enhancing Trade and Exports
As part of the literature review, the team will examine Lebanon’s export and import data,
analyze trends in exports and imports, look at potential for increasing exports and/or
substituting imports, and identify factors of competitiveness for Lebanon’s SMEs vis-à-
vis competitors in regional and global markets. The team will identify sectors having
potential export competitiveness, sectors with significant potential for growth (local,
regional and international), sectors creating more value add in terms of sales and
employment, sectors supporting inclusive growth, and those sectors creating ripple
effects on value chains and the economy. Through the literature review, SME
surveys/interviews, and interviews with business associations and chambers of
commerce, the AMEG team will also map the current policy, regulatory, and overall
operating environment for trade and exports, and pinpoint the primary constraints to
SMEs’ ability to trade and export goods and services in each of the key high-growth
sectors identified (e.g. regulatory constraints, management, financial, technology transfer,
sales practices, and/or workforce constraints).
Once they have identified critical constraints to trade and exports in each key sector, the
assessment team will review and recommend development assistance approaches at the
enterprise-level as well as at the cluster and/or value chain-level to remove constraints to
trade and exports (a priority of the Lebanese government). Approaches should be relevant
to the Lebanese context and consider the stage of the value chains in which the targeted
enterprises and clusters operate, the required national and international standards for
products and services, and skills needed by workers to fill jobs in logistics, finance,
marketing, etc.
A4. Enhancing Private Sector Competitiveness through Workforce Development
Foreign investors often determine where to open up new factories or offices based on the
skills of the workforce in a given country. Likewise, when domestic firms seek to enter
new export markets they often require skilled workers to either compete in an
international marketplace and/or successfully scale their operations to succeed in these
new export markets. Despite Lebanon’s highly-skilled workers, SMEs struggle with
attracting and retaining the right human capital for jobs. Brain drain as highly-educated,

highly-skilled workers leave Lebanon is part of the problem, but SMEs also need
specific, practical skills from employees which are not taught in universities.
Furthermore, SMEs are often not members of business associations and have little
interaction with universities to help tailor curricula to fit market needs.
Building on the recent workforce development assessment conducted for USAID by FHI
360, the AMEG team will review current and best practices in workforce development in
the key sectors identified as well as in other sectors such as finance, education,
manufacturing, media, and telecommunications, etc. as time permits. To reduce
duplicative efforts, the AMEG team will focus on the findings and any gaps uncovered
by the FHI 360 research. Through SME interviews and surveys, AMEG consultants will
identify challenges faced by SMEs and high-growth lead firms in the value chain when
increasing production and/or serving new markets. The AMEG team will examine the
potential for workforce development approaches, such as job creation and matching, on-
the-job training, internship programs, and demand-driven vocational technical training, to
address SME constraints to growth.
The assessment team will recommend approaches that target critical human resource skill
constraints in key sectors. The team will evaluate opportunities to support on-the-job-
training, job matching, and demand-driven vocational training initiatives that incorporate
training in both “hard” technical/managerial skills and “soft” language and workplace
socialization/teamwork skills required in modern efficient work settings.35 The team will
also examine the potential to apply new technologies (a la Microsoft Youth Works) that
can enable workers to access available entry-level jobs, resources to develop and improve
their skills, and job networks. Emphasis should be placed on approaches that respond
directly to private sector demand for skills and that engage SMEs and lead firms in
curricula development and cost sharing.
A5. Enhancing Private Sector Competitiveness through Special Economic

Zones/Industrial Parks
The AMEG team will assess the effectiveness of Special Economic Zones and Industrial
Parks Lebanon, their future feasibility in the Lebanese context, their ongoing and
potential impact on SME growth and competitiveness, and the role that USAID may play
through future programming in their growth and development.
During the literature review, the team will analyze existing SEZs and Industrial Parks
within Lebanon to better understand the governmental vision, international best practices
and lessons learned, and USAID’s role in SEZs more broadly.
35
Job-matching support involves planning, promoting, and conducting job fairs where prospective private
sector employers in growth-oriented sectors are convened with job seekers. It also includes assistance
provided to career development centers or other platforms that link prospective private sector employers to
new graduates or unemployed workers in key skill areas, and that provide training services to those
entering the labor force. Demand-driven vocational training involves curricula development and instructor
training focused on meeting needs of specific private sector partner industries and companies. Increases in
job placement are a key outcome of both.

Through interviews with key stakeholders and site visits, the assessment team will
examine the impacts of Industrial Parks and Special Economic Zones on SMEs, key
sectors, and specific value chains in Lebanon. Additionally, it will assess the capacity of
Lebanese public and private sector counterparts to implement these economic growth
models and their impacts on regional and international trade. The team will also gauge
the feasibility of creating more SEZs in Lebanon, the effectiveness of donor-funded
efforts to promote them, and opportunities for future USAID interventions as well as
public-private partnerships to support them (i.e. infrastructure development, visibility
support, regulatory formation, etc.).
Activity 5. Development of final report (March 23-April 17). The Consultants will submit
a draft final assessment report to USAID/Lebanon and to USAID/Washington staff
within 30 business days of completion of the field assessment. The report shall clearly
summarize the state of the field and identify clear and concrete opportunities to support
private sector competitiveness in each of the five areas above. Recommendations will
focus on future opportunities to support each area, highlighting specifics such as time
frame, political will for change, required assistance to the Government of Lebanon, and
required assistance to the private sector, and opportunities to leverage resources from the
private sector. Recommendations will highlight potential short, intermediate, and long-
term interventions as well as small, medium, and large-scale ones to support SME growth
in Lebanon. They will also identify key actors and potential partners at the micro, local,
and national level. The report will prioritize recommendations according to their potential
impact and success. Recommendations shall also identify opportunities that promote
synergies across areas.
The report should address gender considerations and detail specific opportunities to
support women and youth in Lebanon. The report will also identify and/or recommend
effective ways to invest in technology and innovation and specific practices that can be
derived and scaled-up. The Final Report will be the fourth, and final deliverable of this
scope of work.
***Political will. Regardless of ways to measure and monitor USG efforts, without the
political will of the host country, success will be limited. Political will is ideally coupled
with a mobilized and vocal private-sector who can hold the government accountable for
changes. The Mission should be tuned in to the frequency of cabinet-level changes,
development of forward-thinking development plans and their implementation, and the
reaction of the private sector and the citizenry at large to socioeconomic realities in
Lebanon.
B. Deliverables
Deliverable 1: Stakeholder Map and Assessment Methodology. From the literature review
of existing reports/documents from the government of Lebanon, USAID, other donors
and organizations, the AMEG team will identify key sectors to investigate and map key
stakeholders to be interviewed in those sectors, both inside and outside of Lebanon. The

team will also develop and document the methodology to be used to carry out the
assessment of each of the five areas. The AMEG team will submit the list of key
interviewees, assessment methodology, and list of questions for interviewees in key
sectors. The list of interviewees, methodology, and questions will be shared and approved
by USAID at the end of the team’s first week in country.
Deliverable 2: Work plan. The work plan shall include timing for the assessment of each
area, an outline of activities, a list of stakeholders to be interviewed, and a timeline for
meetings and interviews.
Deliverable 3: Initial Findings Debrief (5x). After completion of the in-country

assessments, but prior to departing Lebanon, the AMEG consultants will conduct
briefings with USAID/Lebanon on the initial findings of each area assessment. AMEG
will share each set of debrief notes and/or power point presentation with USAID.
Deliverable 4: Final Report. AMEG will submit a draft final assessment report to
USAID/Lebanon and to USAID AMEG staff within 30 business days of their return from
the last area assessment. The final deliverable will be a report that will clearly
summarizes findings, highlights key challenges and opportunities, details
recommendations, and includes an annotated bibliography as an annex. The final report
should include options and priorities for USAID to support Lebanon’s SME strategy
outlining different options and/or scenarios at different funding levels.
The Consultants will refine the report after receiving comments from USAID and key
stakeholders (to be coordinated by USAID/Lebanon), and will submit the final report for
USAID approval approximately 10 business days after receipt of USAID feedback.

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INCREASING

Asia & Middle East Economic Growth Best Practices Program

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON v

Annex A. References ........................................................................................................ 78

vi INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON vii

viii INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

1. Advocacy for an improved business enabling environment

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 1

2 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 3

Program recommendations. The AMEG team’s mandate included the development of

 Contribution to sustainable job creation;

The three program recommendations below could be implemented as three separate

1) Firm-Level Technical Assistance to Enterprises

Objective: Achieve business growth leading to incremental employment, increased

4 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

3) Workforce development and job matching

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 5

6 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

1. Evolving Business Leaders

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 7

The assessment examined impediments to private sector growth — particularly the

8 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 9

A. Overview of Policy and Regulatory Constraints to SME Development

B. Findings: Policy and Regulatory Constraints to SME Growth

 The Code of Commerce

10 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

Law Priority Considerations

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 11

C. Findings: Non-Regulatory Barriers to SME Growth

12 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

Source: World Bank, 2009.

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 13

Additionally, Lebanon’s trucking sector is extremely fragmented and badly

14 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 15

16 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

D. Findings: Institutional Capacity for Advocacy

This dysfunctional situation is perpetuated by Lebanon’s political culture. Most

Advocacy in Lebanon is not structured or systematic. It is not even well understood.

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 17

Instead of utilizing systematic advocacy and public-private dialogue (PPD), as described

18 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

Source: MoET, 2015.

Private sector chambers, associations, and other advocacy organizations. In terms of

The largest and most influential of the Lebanese private sector

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 19

E. General Recommendations to Support Regulatory Reform

process forward. Assuming UNDP and Role and Responsibilities

20 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

Educate private sector advocates to Four-stage Training in Scoping, Analyzing,

private sector to structure platforms which 2. Prioritized list of recommended options to

INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON 21

Table 3. Illustrative Interventions to Address Non-Regulatory Constraints

Business Possible Local BDS Possible Additional Expected Outcomes

22 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON

Lebanon’s market for business development services (BDS) is increasingly sophisticated