Lebanon News

Data deficit hurting entrepreneurs

Beirut Digital District's building is pictured in downtown Lebanon January 4, 2017. REUTERS/Jamal Saidi

BEIRUT: In Lebanon, witnessing businesses and start-ups open and close over the course of a year is akin to the constant regeneration of Beirut’s ever-changing cityscape. In recent years, there has been a boom of entrepreneurial ecosystems supported by the central bank’s Circular 331 that opened up millions in funding mechanisms and backed support programs such as the Beirut Digital District, Berytech and U.K. Lebanon Tech Hub.

Together they have created an appearance that Lebanon has made entrepreneurship and business accessible to inexperienced individuals. The U.K. Lebanon Tech Hub alone aims to help create 25,000 jobs by 2025.

But experts and entrepreneurs themselves admit that Lebanon’s longstanding lack of data is perhaps one of the most frustrating challenges that can ultimately transform a good idea into a flop in a matter of months.

“There is no systematic way to reach data in Lebanon. There is a lack of official statistics and access to data was impossible till last year when the new law on access to information was ratified,” Alain Daou, assistant professor of entrepreneurship at the American University of Beirut, told The Daily Star.

The law, sponsored by MP Ghassan Moukheiber and passed in January 2017, theoretically renders a wide range of documents open to the public. According to Daou, however, this has yet to be practiced or enforced properly.

“Moreover, most of the statistics and indicators for Lebanon are [too broad] and not easily understood by young entrepreneurs. This data should be analyzed in a way to transform it into policies and set priorities to encourage and guide young entrepreneurs towards needs and opportunities. This is obviously not done in Lebanon.”

Tracy El Achkar, project manager at the investment fund at Fondation Diane, an organization promoting eco-sustainable development explained that measuring impact was the most difficult challenge for her.

“At the end of the day, it’s a business and everyone is looking for growth. When I work with startups that are trying to create a positive effect environmentally, we want to see if it has reach, sometimes even beyond Lebanon. ... Understanding whether it’s scalable or not is extremely important.”

Unsurprisingly, such data are not readily available and conducting the research to gather information can be too costly for young entrepreneurs, Achkar added.

Jad Wakim, a 25-year-old managing partner of Kitchen Avenue, a luxury appliance retailer in Bouchrieh, admitted that he would have reconsidered opening his business options if he had access to adequate and up-to-date market information.

“Since my father was in the industry, I at least had access to data of an actual company that was doing the same exact thing. For the most part, it was enough for us. But still, at the time the data was already six years old,” he said.

For Wakim, accurate information on levels of imports per year is vital to understanding the market, but he said that the government was unable to provide such data for a number of reasons.

“Usually Lebanese companies report wrong numbers to the government, creating misrepresentation in the market. This is found around the world actually, but also there are a lot of gray market products, things that are not bought through an official agent. These cannot be reported, which then makes it difficult to understand.”

Highlighting France’s recent decision to invest nearly $2 billion in researching artificial intelligence, the young businessman drew stark comparisons between Lebanon and more stable developed countries.

“You have France literally investing billions just to obtain more data and analyze it. Then there’s Lebanon, where some of the most basic numbers are largely inaccessible,” Wakim said.

Joseph Aoun, a 25-year-old restaurateur in Metn’s Baabdat did not thoroughly contemplate the risks of being uninformed about the market when opening his restaurant Qortoba Baabdat three years ago. Citing the same naive attitude described by experts, he acknowledged much blind optimism at the time.

“I opened with a partner who I thought would be able to take care of that side of the business,” Aoun told The Daily Star.

“Because he had experience in the industry, albeit in another country, I thought it would be more valuable than having proper information on client trends or the average market price of produce. But I learned the hard way.”

Looking back, Aoun doesn’t necessarily regret his decision. But moving forward, the young businessman now keeps in mind the details he should have considered.

“If there was a price index on market prices for produce in the country or data on tourists coming to this area, it would have affected the season I chose to open or how many staff to employ at certain times. But also I think it’s part of the culture here not to think and just move.”

Separately, Daou agreed.

“I believe that young Lebanese entrepreneurs don’t have the culture of data. They are not systematic in their approach to building a business. But with the blooming of the entrepreneurial ecosystem in the past three or four years, young entrepreneurs now have access to multiple forms of support organizations.”

David Munir Nabti, founder and CEO of AltCity, is one of the supporters working to fill this gap.

In one of AltCity’s projects, “Startup Scouts,” access to data is a primary goal.

“We’re trying to see how we can improve links between education, entrepreneurship and the private sector by actually working with the Trade and Economy Ministry and the Education Ministry.

“At the same time, we’re looking at the universities that offer programs for young entrepreneurs and talking to the private sector to understand what skills are needed.”

For Nabti, conducting the research to create the “core framework” in which data can be created and more importantly, widely shared, is an easy investment aimed to benefit other ecosystems and improving their own work.

Dr. Walid Marrouch, associate professor of economy at the Lebanese American University, warned that Lebanon’s insufficient database compounded with the naive optimism found amongst entrepreneurs globally was a poisonous mix in Lebanon.

“I wouldn’t say Lebanon is a country of entrepreneurs,” Marrouch said. “It’s a country of opportunists.”

Working as a mentor for young entrepreneurs at ecosystem Berytech, Marrouch noted that many aspiring entrepreneurs rarely did any research on whether their ideas were viable in the current market.

“You have to do your homework before you begin these things.”

 
A version of this article appeared in the print edition of The Daily Star on April 04, 2018, on page 3.

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