Photo Credit: Nicolas Hindi
On 4 August 2020, 2,750 tonnes of ammonium nitrate exploded in the port of Beirut, killing more than 200 people, damaging 70 per cent of the city’s buildings, and flattening the bustling business district surrounding the port. Prior to the blast, Lebanon was already facing a crisis – a worsening economy and a nearly 30 per cent unemployment rate – only exacerbated by the COVID-19 pandemic.
Since 2019, the Lebanese government has been struggling to curb a massive budget deficit and secure foreign support. In the Spring of 2020, Lebanon defaulted on all of their outstanding Eurobond obligations, totalling over USD 3 billion and sent the national economy into a further tailspin. Citizens took to the streets to protest in response to the Lebanese pound’s dramatic depreciation and resulting inflation, stopping only in response to COVID-19 lockdown restrictions.
According to Palladium’s James Carty, who has been based in Beirut for two years, it’s difficult to comprehend the extent of the damage caused by the August explosion on an already fragile nation.
“Practically every member of our team, from all parts of the city, has suffered damage to their homes,” he describes. “One team member even found shards of glass inside their fridge. For a week after the blast, all you could hear all over Beirut was the tinkling of broken glass being swept into piles on every street corner.”
Lifting Up Small Businesses
Carty is Team Leader on the Lebanon Enterprise and Employment Programme (LEEP), launched to fund and support small and medium-sized enterprises (SMEs) across the country.
“SMEs are the backbone of the Lebanese economy and employ roughly half of the working population,” he explains. “Most of the businesses in the blast affected areas are SMEs and they are at the heart of the communities affected, providing livelihoods, entertainment and vital services to those who live nearby.”
In addition, SMEs are often the major source of innovation and growth – vital to the overall recovery of the Lebanese economy, especially in the wake of the multiple shocks over the past year.
Through partnerships with banks, financial institutions, and NGOs, LEEP provides SMEs with access to crucial financing and business development advisory support to build their businesses, hire employees, and further expand.
For many SMEs in Lebanon, the extra assistance from LEEP has meant the difference between keeping their business alive and shutting down completely.
Talal Daou, a first-generation organic farmer and owner of the business La Recolte, benefitted from a LEEP grant in 2019.
“With a civil uprising bringing the country to a standstill, a banking system in full-blown crisis, inflation and capital controls, poverty rates rising, and people being very careful about how they spent their money, our operations suddenly stopped,” he says. Daou credits LEEP’s support with keeping his business open.
Pivoting in the Wake of a Crisis
While people around the world sought ways to help those affected by the blast, many business owners turned to crowdfunding platforms like GoFundMe to raise money. Unlike the more traditional bank loans the LEEP team was accustomed to, their experience matching private investments since the beginning of the financial crisis allowed them to adapt quickly.
The program pivoted its strategy in the wake of the explosion, matching up to 50 per cent of what business owners raised for repairs. LEEP SME Development and Partnerships Manager Tania Nader notes, “While we cannot recreate the structure of our original program, we still want to match the funds that businesses have received, whether it’s through a crowdfunding platform, insurance, or even donations.”
The program also provides private business development sessions with experienced advisors. “Our hope is that through these sessions, we can help them adapt to the circumstances and get their businesses back up and running again,” Nader adds.
The tightknit Beirut business community was quickly in touch with LEEP and through word of mouth, they shared the updated matching campaign, says Nader. Some of those affected by the blast were familiar with the program and had previously benefitted from a LEEP grant. For many, it was through the funding and support of the program that they were able to launch their stores and restaurants.
A Hopeful Future
For many Lebanese, the blast was the last straw, and sparked what some are calling a ‘mass exodus’ from the country. Google Trends show searches for the word ‘immigration’ from Lebanon hit a 10-year high in August, and an increase in illegal immigration from Lebanon to Cyprus was recorded between 29 August and 9 September.
Those who choose to stay, however, remain hopeful and vow to rebuild better than before. Georges Obeid, a restauranteur in Beirut whose damaged business has been closed since the explosion, is focusing on the opportunity.
“We are used to crises in Lebanon but I believe Lebanon always rises from the ashes,” he says. “We are rebuilding our business with help from all of our employees and LEEP again. I’m hoping for the best and that things settle down in Lebanon.”
For other business owners, rebuilding will require even more support. Sally Arbid, the owner of pet store Cane and Gatto launched her business with LEEP’s help and had only been open for 8 months before she lost everything. “I believe we need a push to be able to rebuild and sustain and continue,” she explains. “I wish to rebuild my store, but the losses are too big for me to handle alone.”
While Beirut is beginning to recover, Carty believes that the road will be long. “We are continuing to support SMEs damaged by the blast, but things are moving more slowly than we had hoped. With so much demand for repairs, and so much to be done, it is taking a long time for SMEs to be able to get quotes for repairs and secure funds that we can match.”
Even during the best of times, he says the program has faced resource constraints to provide grants in a timely manner, but confirms that the LEEP team is close to hitting their target number of SMEs.
“We’re looking forward to dispensing our first grants soon. Meanwhile, we continue to provide support to SMEs throughout the rest of the country who are also in need of grant funding and business development advisory services.”
The Lebanon Enterprise and Employment Programme (LEEP) is implemented by Palladium and funded with UK Aid from the British people. LEEP has been supporting small- and medium-sized businesses in Lebanon through funding and business advisory support since 2017. For more information, visit: http://leeplebanon.com/