Location
Though fragmented by colonial rule, civil war, and foreign occupation, as a small, middle-income Mediterranean country, Lebanon still enjoys ready access to investment capital, ports, and strategic Middle Eastern hubs. However, while many large firms are performing well enough to successfully export their goods, this is not spurring the type of small- and medium enterprise (SME) activities needed to bring about broad-based economic growth. Due to the impact of ingrained sectarian divisions and historical grievances, most large, family-owned and -operated Lebanese firms continue to trade through personal supplier and market relationships, a tradition which limits growth opportunities. Furthermore, commerce and jobs are predominantly centered in Beirut and other urban centers, a situation exacerbated by political turmoil and factionalism, which makes it difficult to spread economic growth into rural areas.
In order to address the poverty and joblessness that sustain factionalism, new approaches to markets, marketing, outsourcing and small business development are required. Inter-firm collaboration needs to be promoted as a means to coordinating economic behavior and achieving collective growth benefits. There is also a need for stronger private sector institutions and improved private-public engagement and partnerships.
In response to these challenges, a USAID-funded private sector driven program, the Lebanon Business Linkages Initiative (LBLI), is working directly with the private sector to expand market access, support sector strategies and cooperation, and strengthen the private sector framework, while also strengthening business associations and private-public engagement. Working with a broad team of partners, the Academy for Educational Development (AED) is implementing this two year, $4.5 million competitiveness program using a value chain approach in agribusiness (led by ACDI/VOCA and AFE), tourism (ACDI/VOCA) and ICT (IJMA3), as well as working with the BADER Foundation on institutional and private-sector strengthening.
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Raja Cortas of Cortas SAL, one of the oldest canning companies in Lebanon, comments on the LBLI-facilitated Sector Strategy: "This is the first time that such an approach is taken collectively. This will give Lebanese processors the chance to compete within the market instead of competing against each other, which has been bringing down their profit margin and quality."
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The project works on three fronts: (1) strengthening vertical linkages within target supply chains; (2) strengthening business linkages among “market driver” firms; and (3) improving private sector capacity to drive economic growth. The first seeks to catalyze impact by building the core of vertical business linkages needed in successful agribusiness value chains, and by identifying the market opportunities that will lead to market-driven value chain activity in ICT and tourism. For example, IJMA3 is working with both buyers and suppliers to identify opportunities for ICT applications across several market segments, including banking, tourism, services, education, agribusiness, and media. Interventions are expected to result in expanded job opportunities and income growth for rural populations as they are incorporated into supply and support networks created by the increased demand.
The second focus area works with and through key sector organizations to identify and develop programs through which they can deliver improved services to members and increase their potential for institutional self-sufficiency. To this end, ACDI/VOCA and Action for Enterprise (AFE) are working with market driver firms within the agribusiness industry to increase sales and expand participation by input suppliers and service providers. A group of producers are currently meeting to forge and ratify a shared strategy for increasing the long-term competitiveness of the industry, as well as increasing group accountability controls. The core group consists of key decision makers at six of the leading agribusiness companies in Lebanon who understand that their own firm’s competitiveness is tied to that of others. LBLI’s engagements with the group are done with a conscious effort to build industry ownership of the strategy; following this initial meeting, LBLI’s role will be that of facilitator and advisor with the Syndicate of Lebanese Food Industries (SLFI) taking long-term responsibility for ‘housing’ the strategy.
The final front works on improving private sector capacity to drive the country’s economic growth by catalyzing the private sector as a force for change within the entire business system. LBLI works with private sector leaders and their institutions to address Lebanon’s need for an organized private sector able to work as an effective partner with government in developing a growth-with-equity enabling environment. A private business association, BADER, is stimulating private-public sector dialogue on issues pertinent to enabling the environment, and articulating private sector viewpoints with regard to pro-business growth to the government. Many of the business linkage functions and facilitation roles initiated by the project will have sustainable impact through the ongoing work of BADER.
LBLI is successfully catalyzing private sector involvement by working with sector associations and groups in all activities. LBLI has identified new market opportunities and channels for distribution, as well as facilitated creative strategies for reaching them. By improving the supply chains and production practices of market driver firms, LBLI has already seen sales double in participating firms. The project has also seen a 30 percent increase in outputs combined with a substantial decrease in costs. Perhaps just as important, but not as measurable, is a growing private-public engagement, with an increase in private sector input for decisions regarding policy and business environment and the hope of competitive cooperation in a factionalized society.
Learn more about USAID’s FIELD-Support Leader with Associates.
Acknowledgments
This publication was produced for review by the U.S. Agency for International Development. It was prepared by Arya Zartosht Iranpour of Trickle Up.
Disclaimer
The views expressed in this publication do not necessarily reflect the views of the U.S. Agency for International Development or the U.S. Government.
