Business as Usual in Lebanon

Writer Michael Karam vacations every summer in his mountain house. He sits in his garden overlooking the verdant Bekfaya region typing his latest commentary on Lebanese politics and economic issues. But for creative people such as Karam, filing an article—which involves just a simple “click” in most countries—is no mean feat. His work is hindered by electricity cuts, his reliance on an unpredictable generator and an excruciatingly slow Internet connection.

While Lebanon’s current government has worked on improving DSL and 4G speeds, as well as reducing Internet prices, the infrastructure is still lagging behind most countries. According to the Net Index website, Lebanon’s broadband download capacity is 2.2 Mbps compared with an average of 19.1 Mbps worldwide. Internet in Lebanon ranks at number 181 out of 192 countries—behind Sudan and Egypt at 173 and 174 respectively.

In addition, the mobile network infrastructure has not kept up with the increase in mobile subscribers. The Lebanese population, numbering 4.4 million, has swelled by more than a million since the beginning of the Syrian conflict and the resulting refugee influx. The Lebanese have become accustomed to an increasing number of dropped calls and network interruptions.

The situation is worsened by severe power cuts, lasting three hours a day in the capital Beirut and as long as 11 hours in other parts of the country. The electrical grid is further strained by the population increase and the use of air-conditioning during the scorching summers. Many Lebanese have even resorted to using the Beirut Electricity Cut Off app—a tool that forecasts power outages.

The repercussions of Lebanon’s inadequate infrastructure on the business sector are profound. “The high costs of communications and their lack of reliability make it more difficult and expensive for entrepreneurs to operate on a daily basis,” Tarek Saadi tells The Majalla. Saadi is managing director at Endeavor Lebanon, an organization dedicated to supporting talented entrepreneurs.

The impact in economic terms is also significant. A 2009 report by the Telecom Regulatory Agency highlighted the fact that a 10 percentage point increase in broadband penetration in Lebanon would result in a recurring 1.38 percent increase in the growth rate of gross domestic product per capita. “To get their work going, entrepreneurs find themselves struggling daily with small obstacles related to the weakness of the Internet and electricity grids as well as their high cost, which leaves them with less time to focus on strategic tasks,” says Lebnan Nader, co-founder of Game Cooks, a game development company for mobile platforms.

The bottleneck paralyzing the Lebanese telecom and electrical sector is not only rooted in the failing infrastructure but also in the government’s monopolistic policies. Currently, the two main telecom operators Alfa and MTC and the various Internet companies operate locally on the basis of semi or annual contracts with the government. This arrangement, which discourages players from planning long-term investments, also reduces competition. The same can be said of the electrical sector.

Squabbling between the country’s two main political factions, the March 8 alliance and March 14 alliance, has further crippled these vital sectors. This means that ambitious creatives and entrepreneurs are either forced to emigrate or keep on trying to survive Lebanon’s chaotic business environment.

All views expressed in this blog post are those of the author and do not necessarily represent the views of, and should not be attributed to, The Majalla magazine.