© EuroMed@Change 2013 1 · The Mediterranean Business Guide, focus on ICT in Lebanon has been prepared by INNO AG under the EuroMed@Change Project, a Preparatory Action initiated

© EuroMed@Change 2013 1


Building EuroMed partnerships

This guide is a Doing business toolkit dedicated to

clusters, SMEs, or entrepreneurs interested in

developing business partnerships in the ICT sector in

Lebanon. It provides an overview of the main

opportunities available for the private sector, as well

as concrete and useful data to those interested

parties who require more detailed information.

(contacts, agenda of events, etc.).

References

The Mediterranean Business Guide, focus on ICT in

Lebanon has been prepared by INNO AG under the

EuroMed@Change Project, a Preparatory Action

initiated by the European Parliament and

implemented by the European Commission (DG

Enterprise and Industry).

EuroMed@Change proposes new dynamics for SME

and cluster internationalisation between Europe and 4

targeted partner countries: Morocco, Tunisia, Egypt

and Lebanon. It is managed by four organisations

from across Europe (ANIMA Investment network as

Project leader, the European Business Innovation

Centre Network, INNO AG and the Fondation Sophia

Antipolis as partners) and it coordinates with more

than 45 associated regional businesses, finance and

innovation networks.

Authors

This Business guide has been prepared by Bertrand Copigneaux, with contributions from Franck Le Gall, Marc Pattinson, and Soraya Bernard.

The author would like to thank the National ICT Strategy Coordination Unit at the Lebanese Prime Minister office, the Lebanese Ministry of Telecommunication, and the Investment Development Authority of Lebanon for their support and contributions.

Disclaimer

This publication has been produced with the support of the European Commission. The contents of this publication are the sole responsibility of INNO AG and can under no circumstances be regarded as reflecting the views of the European Union”.

Copyright

© EuroMed@Change May 2013. No part of this

publication may be reproduced without express

authorisation. All rights reserved.

Table of contents

List of acronyms

•BDD: Beirut Digital District

•CAGR: Compounded annual growth rate

•CNRS: National Council for Sciences and Research

•GRP: Grant Research Program

•ICT: Information & communication technology

•IDAL: Investment and Development Authority of Lebanon

•IP: Internet Protocol

•IPZ: Investment Project by Zone

•ITU: International Telecom Union

•MBWA: Mobile Broadband Wireless Access

•OMSAR: Office of the Minister of State for

Administrative Reform

•PDC: Package Deal Contract

•WIMAX: Worldwide Interoperability for Microwave Access

1. Mediterranean overview...................................p.5

2. Market trends and opportunities......................p.7

3. Foreign direct investments..............................p.9

7. ICT PE funds operating in Lebanon.................p.11

4. Key actors and events....................................p.13

5. Recent national policies................................. p.15

6. Opportunities and international programmes... p.17


Mediterranean overview

The two sides of the Mediterranean represent 7% of

the world population, and represent the leading GDP

on the planet as they produce 15% of the world’s

annual wealth and carry out 16% of trade. In the

North, ICT represents around 2% of GDP, and in the

South, 3%, 4% or even 5%1. The development of

ICT is not only contributing to growth but is also

having an important social impact on societies, as the

Arab spring of 2011 has shown. The level of

development is still unequal between the two sides of

Mediterranean, but the South has shown a strong

dynamism in catching up and is in several domains

technologically and scientifically comparable to the

North.

A skilled generation

Consumption of ICT technologies has developed

rapidly in the Mediterranean South. Progress in

mastering and accessing mobile phone and IT

technologies is good, and the computerization of

society and the economy is following. Mediterranean

consumers can now be considered as advanced

users. Mobile phones are used for remote banking,

getting economic information, accessing emails, etc...

This assimilation of ICTs is occurring rapidly in the

South because of the rapid extension of networks

access and of the specific demographic structure of

1 IPEMED (Institute of Economic Prospective in

Mediterranean Region)

the region. Young people in the South are making

considerable generational impact in the use and

acceptance of new technologies and media. This

phenomenon is particularly strong since inhabitants

south of the Mediterranean are on average ten years

younger than those in the North. Education is crucial

here and the role played by ICTs in this area is

constantly increasing, especially as eLearning

develops and offers new opportunities.

Developing networks

Although the development of fixed networks

infrastructure in the South remains behind the level of

the North, the growth in mobile networks has made it

possible for countries in the Mediterranean South to

rapidly catch up with the equipment levels of

countries in the North.

In most of the southern countries the widespread

access to broadband will mainly happen through

mobile networks( few exceptions exist - Lebanon and

Turkey where the fixed infrastructure has been

already well developed). If penetration rates of

mobile networks are compared, there is no clear

divide between countries in the South and North

(European Union). The move from fixed to mobile

networks has been very strong in the Mediterranean

South. In the first decade of the 21st century traffic

mainly travelled through fixed networks, often via

shared channels. In 2010 it was travelling through

mobile networks fostering its rapid growth.

Figure 2 - Submarine cable network in the

Mediterranean region

Figure 1 - Network penetration (source ITU)

6 © EuroMed@Change 2013

Voluntary policies

Countries in the South have acknowledged the

importance of ICT and set up ambitious government

policies to support the deployment, use and

development of ICT. National strategies and plans for

the development of ICT have been drafted for most

of the countries. Spreading the ICTs in countries with

young populations is a strategic line of development

with the goal to build a knowledge-based economy

integrated into markets in the North.

Most of the national policies include strong efforts on

network deployment and access to ICT (including

policies to reduce the access costs to internet

connections).

The development of the eGovernment initiative is also

ambitious in the Mediterranean South region as it is

considered an opportunity to reinforce the quality of

administrations.

Digital literacy is also considered an important goal in

particular offering opportunities to young people in

developing countries who are keen to access the new

communication tools. Most countries have set up

ambitious training and education programmes for

ICT.

To offer local opportunities to this emerging skilled

workforce the governments are developing programs

targeted towards the development of local

entrepreneurship such as incubators networks ,

clusters and technological parks (like the Egyptian

Smart Village which specialises in cutting-edge

technologies, and CasaNearshore Park in Morocco,

that is set to generate 30,000 jobs).

Most countries also directly target out-sourcing and

have aggressive development and investment policies

offering numerous advantages and tax breaks to

foreign investors.

Dynamic economies, global impact

The development of the ICT business ecosystem is

unequal between the different countries of the south

but still mostly characterized by dynamic recent

developments and strong levels of Foreign Direct

Investment (FDI). Some countries such as Egypt and

Tunisia have been rewarded for their long term

commitment and voluntary policies toward the

development of ICT with very dynamic local business

environments. Others (such as Morocco) have

targeted more strongly outsourcing and have become

an important center of North Africa with the presence

of ICT multinationals (IBM, SAP, Microsoft, HP…).

Others such as Lebanon have created a cutting edge

education system which produces a highly skilled

workforce. The societal and economic impact of the

rapid spread of ICT in the Mediterranean South

region is very strong and offers good cooperation

opportunities with the North, towards the creation of

a digital Mediterranean region, re-establishing the

Mediterranean as a cradle of exchange and

communication.


Market trends and opportunities

Country Situation

The Lebanese Information Technology (IT) sector is

a fast growing sector with a market size of 253 million

Euros in 2012, and projected to reach 274 million

Euros in 2013. Over the next 4 years, the market is

expected to grow at a compounded annual growth

rate (CAGR) of 12% and reach a value of 429 million

Euros in 2017. The ICT market in Lebanon has

recently invested in infrastructures and networks. It

also has a young and skilled workforce that can both

act as an internal market and as a talented off shoring

resource and the as business environment is

becoming more user friendly.

Interior market opportunities

Ranking 64 out of 155 in the access index of the ITU2

and second in the Mediterranean South region,

Lebanon has greatly improved its network

infrastructure during recent years. All the indicators

used to measure the access sub index, show

impressive growth rates from 2010 to 2011. The fixed

telephone network is well deployed across the

country, high speed internet connection is mostly

deployed by broadband line. The mobile network is

also well deployed with 95% of the population

covered and 78.6 mobile subscriptions per 100

habitants. 3G started to be deployed in October 2011

with good initial results (reaching 722 000 subscribers

2 International Telecommunication Union, Measuring the

Information Society 2012.

by May 2012). However, there is still only has a

marginal choice for broadband access (representing

around 2% of households broadband connections).

Digital Literacy is high in Lebanon, as the country has

a very strong education system. Adult literacy is

89.6% and secondary education enrolment rate3 is

83% both higher than the regional average. But

Lebanon stands out and is recognised for its tertiary

education with a network of world class universities

(with a total of 41 universities, representing 0.93

universities for 100000 habitants, higher than most

regional countries). The tertiary enrolment rate is one

of the highest in the region - 58% of the population.

In a recent study by the World Economic Forum4,

Lebanon was ranked 12 (out of 140 countries) for the

global quality of its educational system, 6 for the

quality of Maths and Science education, and 18 for

the quality of its management schools. Lebanon has

the highest ratio of Engineers per habitant and a

growing number of research and training centres are

being established mainly in environmental

technologies, medical science and agriculture.

This high level education system and relatively well

deployed infrastructure translates into a higher than

average individual usage of ICT. Although the

affordability of ICT access and technology is not

significantly lower than the regional average.

3 World Bank data 4 Global Information Technology Report 2012

Figure 3 - Network Readiness Index of Lebanon 2012

(source: World Economic Forum)


The deployment and use of technologies is strong and

stands out in the region: with more than 71% of

households having access to a computer and more

than 61% of households having access to the internet

(more than half of the Lebanese population are active

internet users). The use of virtual social networks is

also well developed, higher than world and regional

averages.

Despite this abundant and skilled workforce, active

ICT sector and well deployed individual usage, the

use of ICT technologies in general business is

comparable to average of the region, and the use of

ICT in government and administrations is still below

average.

However, this does create potentially strong

opportunities for ICT commercial developments in the

internal market of Lebanon as the infrastructure and

people are ready to embrace it. There is room for

improvement and growth in actual use of ICT

services.

Export and off shoring opportunities

The Lebanon ICT sector is developing fast, currently

employing up to 7000 individuals in ICT, and with

more than 2000 university graduates related to ICT

activities joining the sector every year. The lower

than average salary (salary for software engineers is

nearly 50% lower than in selected developed

economies) and this enables Lebanon to be a very

competitive choice for outsourcing not only of

services but also of R&D centres (more than 750

researchers are active with a 41m Euros budget).

Exports of ICT related activities represent a

considerable portion of total exported services,

accounting for 29% of the total in 20105. This highly

export oriented industry has ranked the Lebanese ICT

sector first among regional countries in terms of its

share of total service exports. The main export

destinations are the Gulf, other Middle Eastern

countries, and European countries (notably France).

The ICT industry in Lebanon covers a large range of

activities: Content development, Mobile and

Smartphone applications, Specialised Applications,

Mobile and online Gaming, Web development, E

services, but also hardware systems concepts,

semiconductor design, optic cables, electronic

components and power supply systems.

Lebanon offers a dynamic business environment with

access to many incubators, technology parks and

clusters specializing in ICT (Lebanon Softshore,

Berytech, Beirut Digital District, Beirut Creative

Cluster...). Several investment funds (both local and

international) are also operating in Lebanon to invest

and support the ICT industry (see list).

5 IMF data

LEBANESE WORKFORCE AS A STRONG ASSET

Ericsson opened in April 2013 a new local business

support centre in Beirut with the objective to promote

the firm’s services among telecommunications

companies and mobile operators and to service up to

600 network operator around the world.

Tarek Saadi, President of Ericsson, North Middle East,

said the centre will benefit from the local talent to

serve Ericsson’s global network: “The Lebanese

workforce has many advantages in terms of

culture, aptitude, and knowhow. Moreover there is

a well-trained Ericsson team working locally”.

Ericsson has been present in Lebanon since the 1970s

and has currently around 350 employees in Beirut.


Foreign direct investment

The large input of foreign direct investments into the

country since 2006 has made the Lebanese economy

the most open and internationalised of all the

countries in the region, in terms of FDI/GDP and

FDI/capita. Although still relatively small as a R&D

base, the level of openness has had a positive effect

on the quality of technology transfer and the

globalisation of its workforce.

Multinational corporations form a significant part of

Lebanon’s high-tech environment. Prominent

international IT companies are operating through their

subsidiaries in Beirut including Microsoft, Intel, Cisco,

Sony Ericsson, Nokia Siemens, Huawei and Aramex.

Policy toward investors

The policy towards investors is handled by the IDAL

(Investment and Development Authority of Lebanon).

The Lebanese government offers a series of

incentives to national and foreign investors as part of

its strategy to attract investments to growth

promising sectors. A series of exemptions and tax

breaks are offered by various Ministries and

government agencies to support companies in their

set-up and operational phases.

Two investment incentive packages have been

designed to encourage investment in Lebanon.

The IPZ (Investment Project by Zone) is primarily

aimed small and medium sized projects. It provides

support to projects based on their location to help the

regions with the highest socio-economic challenges.

The minimum investment amount for

Telecommunication, Technology and Information

Technology projects is 150000 Euros for all three

zones (and this minimum investment threshold is the

lowest of all selected industries, reflecting the

government’s commitment to ICT development. ) The

incentive - depending on the region - includes full or

partial exemption on income and dividends taxes for

up to ten years. The north-east and south east of

Lebanon are the regions given most priority (region

“C”), while the centre (“B”) and the coast line (“A”)

have been designated as lower priority regions.

The PDC (Package Deal Contract) is a scheme

designed for larger projects, with a stronger impact

on employment. The threshold for a ICT project is

300000 Euros and 25 jobs created. The incentive

includes tax exemptions (income, dividends, land

registration, work permits, and construction fees).

LEBANON: FDI and partnership project announcements in ICT (2003-2013, ANIMA-MIPO)

Data processing and software

Télécom and Internet


Lebanon: Origin of FDI announcements in ICT (in nb of projects, 2003-2013, ANIMA-MIPO)

4

2

1 1 1 1

0

1

2

3

4

5

USA France Italy South

Africa

Jordan Kuwait

Lebanon FDI and partnership project announcements in ICT (ANIMA-MIPO)

0

1

2

3

4

5

6

0

500

1000

1500

2000

2500

3000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Invested amounts (€m) Number of FDI projects

Number of partnerships

The 10 biggest FDI announcement in ICT in Lebanon (2003-2012, ANIMA-MIPO)

Investor Origin Date Type Project

MTN South Africa 2006

Acquisition, total privatisation

South African telcom giant to buy Lebanese-based Investcom, owner of Areeba Syria, from the the Mikati family's M1 holding, for USD 5.3 bn

Ever France 2005 Financial JV, partial acquisition

Merger with the local group Arachnea to provide e-commerce solutions

World Bank / IFC USA 2011

Financial JV, partial acquisition

The private sector arm of the World Bank to invest in telecom software solution provider MobiNets to support its international development

Unilog France 2004 Greenfield Unilog creates an off-shore R&D centre in the Berytech technological park

Maktoob Jordan 2005 Acquisition, total privatisation

Maktoob.com and Aramex International have jointly taken over Lebanon-based virtual shopping site Adabwafan.com

Telecom Italia Italy 2009 Greenfield

The telephone operator to set up a communication service center for its customers and those of Orange Telecom in France and Symetric in the UK

Intel / Intel Capital USA 2010

Financial JV, partial acquisition

The semiconductor chip maker to invest in UK and Lebanon-based Nymgo, a provider of end VoIP services

Zain (MTC) Kuwait 2010 Branch, delocalisation

The telecommunications group subsidiary to open 15 new outlets in Lebanon and to expand its service portfolio

Abraaj Capital USA 2011 Financial JV, partial acquisition

After Intel in 2010, the Emirati fund manager to invest in UK and Lebanon-based Nymgo, a provider of end VoIP services

IFusion Labs USA 2011 Branch, delocalisation The IT company, which developed web analytics service Woopra, to launch an affiliate in Beirut


ICT specialised investment funds for Lebanon

ICT focused funds targeting Lebanon (2008-2013-Source ANIMA-MedFunds)

Fund manager Investor country Investor region

Name of the fund Launch

date Fund size (targeted)

MED host country Host region Investment stage

Berytech Lebanon Mashreq Berytech Fund 2008 Less than $20m Lebanon Mashreq 1. Early stage

Arbah Capital Saudi Arabia Gulf Arbah Nanotechnology

Fund 2008 $100 to 500m MENA MENA 1. Early stage

New Enterprise East Investments

United Arab Emirates

Gulf Gulf Venture Capital Fund

I (GVCF1) 2008 $100 to 500m MENA MENA 1. Early stage

Malaz Capital / ICT Ventures JSC

Saudi Arabia Gulf ICT Ventures Limited 2008 $50 to 100m MENA MENA 2. Second stage

twofour54 Abu Dhabi UAE AppsArabia Fund 2011 Unknown MENA MENA 1. Early stage

Iris Capital Dubai UAE STC Ventures 2011 $50 to 100m MENA MENA 1. Early stage

Wamda Lebanon Mashreq Wamda Capital Fund 2011 $20 to 50m MENA MENA 1. Early stage

Timar ventures Turkey Turkey Timar technology Fund 2011 $100 to 500m MENA & Other

emerging countries

MENA & Other emerging countries

1. Early stage

Accelerator Management Company / Silicon Badia

(former IV holding)

Jordan Mashreq Badia Impact Fund 2012 $20 to 50m Mashreq Mashreq 1. Early stage

Y+ Ventures United Arab

Emirates Gulf Y+ Ventures Fund 2012 Unknown MENA MENA 1. Early stage

MENA Venture Investment

Jordan Mashreq MENA Venture

Investment fund 2012 Less than $20m MENA MENA 1. Early stage

Berytech Lebanon Mashreq Berytech Fund II 2013 $20 to 50m Lebanon Mashreq 1. Early stage

Middle East Broadcasting Corporation

Dubai Gulf MBC Ventures 2013 Unknown MENA MENA 1. Early stage

Sinbad Ventures Jordan Mashreq Sinbad Ventures Fund 2013 Less than $20m MENA MENA 1. Early stage

EFG Hermes / EMEA technology investments

Egypt Mashreq EMEA Technology Investment Fund

n.a. $20 to 50m MENA & Other

emerging countries

MENA & Other emerging countries

2. Second stage

http://www.zawya.com/cm/profile.cfm/cid1010014/

http://www.zawya.com/cm/profile.cfm/cid1010014/


Key players

Government & Governmental organisation

National ICT Strategy Coordination Unit Operating under the presidency of the council of ministers and responsible for the National ICT Strategy Action plan.

http://www.ict.pcm.gov.lb/

Ministry of Telecommunication In charge of broadband infrastructure and liberalization of state-owned assets http://www.mpt.gov.lb/

Telecom Regulation Authority (TRA) In charge of telecom regulation under the supervision of the Ministry of Telecommunication http://www.tra.gov.lb/

Office of the Ministry of State for Administrative Reform (OMSAR)

Responsible for the eGovernment policies in Lebanon. http://www.omsar.gov.lb/

Government Portal for Information and Forms Main eGovernment portal http://www.informs.gov.lb/

Ministry of Economy and Trade Involvement in policies related to the digital economy, and responsible for encouraging and favouring the growth of the ICT sector.

http://www.economy.gov.lb/

Investment Development Authority of Lebanon (IDAL) IDAL is Lebanon investment promotion agency, acting as a one-stop-shop for investors. http://www.idal.com.lb/

Ministry of Education in charge of the IT curriculum but also of the National Educational Network and the local implementation of the “One Laptop per Child” program

http://www.higher-edu.gov.lb/

CNRS National Council for Scientific Research, responsible of the country scientific research programs and national science and technology policy

http://www.cnrs.edu.lb/

Ministry of Finance involved in ICT policies for the taxation of telecom, and the investment policies http://www.finance.gov.lb/

Main cluster and technology park

Beirut Creative Cluster Multimedia and digital cluster: To date, members of this cluster, include professionals at

various stages of media production, including design, sound, post-production and marketing. http://www.beirutcreativecluster.org/

Beirut Digital District The objective of this new technological park is to provide Lebanese ICT companies with all the different services they need to develop their products in a single zone and to create a cluster effect.

http://beirutdigitaldistrict.com/

Berytech Technological Pole

Incubation, Office space, space sharing, multimedia / Access to financing. Subsidised incubator services for start-ups / Business support: selection process, consulting, with incubation price (10 K$/7 K€) offered to the best projects. Event organisation/networking: "Forum for Entrepreneurs"

http://www.berytech.org/

The Lebanon SoftShore Cluster

LebanonSoftShore was created in 2007 to offer software development services to international companies, especially in Europe, US and the Middle East. With currently 15 software companies and a pool of over 400 software developers, this cluster represents a unique spectrum of skills, expertise and worldwide market experience.

http://www.lebanonsoftshore.com/

http://www.idal.com.lb/

http://www.lses-lb.org/


Incubators

South BIC

Incubator created in 2007 and located in Saida (with 2500m² of office space). It offers companies hosting, coaching, access to finance, business development (support to business plans, connection to customers etc.) and promotion / networking (organisation of events).

The Incubator has a specific focus on cloud computing.

http://www.southbic.org/

Seeqnce Created in 2010 and located in Beirut, this small incubator (200m²) focuses on Web2.0 and mobile applications. It offers companies hosting, coaching, networking with investors (Riyada, Cedrus Venture, Middle-East Venture Partners) and Organisation of workshops.

http://seeqnce.com/

AltCity Located in Beirut and active since 2012 the Altcity incubator proposes pre-incubation/incubation program for resident and non-resident clients as well as business management and development advisory services and training in business management.

http://www.altcity.me/

Level 5 Developed by Solidere and Wamba, the Level 5 incubator offers since 2012, hosting, consulting, investment, and coaching to ICT companies in Beirut.

http://www.solidere.com/

Business Incubator Center Tripoly (BIAT) Hosted by the Chamber of Commerce of Tripoli, the BIAT incubator offers 3x300 square meters of office space, business plan consulting, training and networking events to Lebanese start-ups. The BIAT incubator is multi domain and not restricted to ICT.

http://www.biatcenter.org/


Major events IC

T

Business Entrepreneurship Forum in BIEL

Sector: General Business

Number of editions: 2

Organiser: CAREERS MIDDLE EAST

Focus: will showcase the best business opportunities services and solution as

well as the latest office product and supplies under a single roof (including in

ICT)

2012 Participation: 54,700 visitors

Last event : 18th-21st April 2013, Biel

Information : www.lebanonbusinessforum.com


Recent national policies

Global ICT vision and policy

Until recently the Lebanese ICT policy was limited in

terms of government usage and priority. In a recent

survey by the World Economic Forum6, Lebanon is

ranked last (142 out of 142 countries) in terms of

government prioritisation of ICT; 141/142 in

importance of ICT to government vision and

government procurement of advanced technologies;

and 140/142 on ICT use and government efficiency.

However, recent ICT policies seem to indicate a new

direction with stronger focus on ICT by the Lebanese

administration. The “National ICT Strategy Action

plan” 7 tabled by the Presidency of the Council of

Ministers recognises the importance of ICT and aims

to transform Lebanon into a “knowledge based”

economy and to establish it as a “Hub for e-services,

creativity and innovation, telecom and internet

services”.

Established in 2010 the National ICT Strategy

Coordination Unit operates at Prime Minister Office

level with the with the long term objective to

establish this “connected republic of Lebanon” vision.

The role of the National ICT Strategy Coordinator is

to propose policies, develop action plans, establish

partnerships and raises awareness about ICT topics.

He is also responsible for monitoring and evaluating

policies and progress by establishing indicators.

6 Global Information Technology Report 2012 7 http://www.ict.pcm.gov.lb/

The priorities identified by the National ICT Strategy

Coordination are:

Broadband and physical infrastructures

Legal Framework

e-government

Education and human capacity

development

ICT as a production sector

Innovation, Research and Development

ICT for social and economic development.

Organisation of ICT policies

The actual policy implementation and regulation

responsibility is transferred to different Ministries and

government bodies depending on the topics involved.

The Ministry of Telecommunication handles the

broadband infrastructure, and is also responsible for

the liberalisation of state-owned assets.

The Ministry of Economy is involved in policies

related to the digital economy, and is responsible for

favouring the growth of the ICT sector. It is also in

charge of Intellectual Property right management.

The Ministry of Education is also involved with ICT

policies, as it is in charge of the IT curriculum but

also the National Educational Network and the local

implementation of the “One Laptop per Child”

programme.

Finally the Ministry of Finance is involved in ICT

policies for the taxation of telecom and the

investment policies. Several other governmental

offices are also concerned by ICT policies such as the

OMSAR (Office of the Ministry of State for

Administrative Reform) which is responsible for the

eGovernement initiatives.

The IDAL (Investment and Development Authority of

Lebanon) is responsible for promoting Lebanon as a

key investment destination, and attracting, facilitating

and retaining investments in the country. The IDAL

has identified Information Technology, and

Telecommunication sectors have also been identified

as key sectors for investment opportunities in

Lebanon.

The CNRS (National Council for Scientific Research) is

responsible for establishing the country’s scientific

research programmes and formulating national

science and technology policy.

Telecom infrastructure policy

The Ministry of Telecommunication has recently

launched important investments to improve the

country’s connectivity by increasing the international

and local capacity (see case study).

eGovernement

eGovernment services are still quite limited in

Lebanon. The development of eGovernment services

is the responsibility of the OMSAR, and currently the

“Governement Portal for Information and Forms” is

mainly a generic portal to access official information.

http://www.ict.pcm.gov.lb/


The usefulness and relevance of information provided

on government websites is comparable to the regional

averages (Lebanon rank 40/142 on the United Nation

survey of eGovernement8). But the services provided

online by the government are limited.

Policy toward business and SMEs

The Lebanese government is developing a business

friendly environment through the Ministry of Economy

and Trade. The economic environment is comparable

to the regional average in terms of the business

linked administrative burden.

However, the judicial environment is still lagging

behind, both for dispute settlement and on

Intellectual Property Rights Protection. Despite the

1999 law covering patents; trademarks, copyrights,

unfair competition, and penalties for infringement the

enforcement of the law could still be improved. In the

specific case of software, up to 72% of installed

software can be considered “pirated”.

The SME Support Unit has been set up to oversee the

creation of an enabling business environment; to

implement EU project ‘The Integrated Small and

Medium Enterprise Support Programme (ISSP)’ at the

Ministry of Economy and Trade. This includes the

Creation of three Business Development Centres

(BDCs) to improve the competitiveness of start-ups

8 United Nations, UN E-Government Survey 2010: Leveraging e-

Government at a Time of Financial and Economic Crisis

PUBLIC INVESTMENT IN BROADBAND CONNECTIVITY

Lebanon has made several recent investments

to raise its international profile. This includes a

38.4 million Euros investment in the IMEWE

(India - Middle East - Western Europe)

consortium for the construction of a cable

linking India to Europe through Lebanon, as

well as a reinforcement of the cable link with

Cyprus through the purchase of additional

capacity and a project of a new cable named

Europa.

On the domestic side, Lebanon has launched

the deployment of a 4,700 km fibre optic

network at a cost of 34.6 million Euros, which is

to be deployed by the end of 2012.

RECENT INVESTMENTS

The following investment recently benefited from

the IDAL investment incentive packages:

Navigate Lebanon: a pioneering engineering

company that develops maps and GPS navigation

systems. Navigate Lebanon benefited from a

276000 Euro investment in 2008 through the IPZ

investment scheme, resulting in 10+ job creation.

Waves: Located in Jdeideh, a suburb of Beirut, it

intends to introduce MBWA (Mobile Broadband

Wireless Access System) a breakthrough in IP-

centric wireless architecture, designed to extend

the broadband internet to wherever people are,

based on the mobile WIMAX technology.

Investment Size: 9 million Euros for 50+ jobs to

be created.

Figure 4 - International connectivity of Lebanon

(source: Ministry of Telecommunication)


Major opportunities and international programmes

Main opportunities

Today there are today more than 300 companies in

Lebanon involved in the ICT market. A vast majority

are specialised in software development (74%).

Software development activities have grown steadily in

Lebanon over the past few years. The software market

value was estimated at 34 million Euros in 2013, and

is expected to grow at a compounded annual growth

rate of 14% from 2013 to 2017.

The software development sector concentrates

primarily on software development (50%), including

the development of specialised applications, the

creation of multimedia products and the supply of

desktop and database applications. Web development

activities are well represented (37%) including web

hosting and design but also for the supply of e-

services, notably for the banking sector (26% of e-

services). Finally the mobile software development

sector already accounts for 13% of the Lebanese

software development sector with good prospects and

opportunites for the future.

Opportunities also exist on the hardware side.

Computer sales in Lebanon are expected to reach 170

million Euros in 2013. The PC market is far from

saturated but is still dominated by the major

international hardware manufacturers, represented in

the country by local agents and distributors. The local

hardware industry however is still in its early stages.

Operations include assembly, production of fibre optic

cables, the design and production of power protection

and power supply systems.

Lebanon also offers incentives for companies wishing

to outsource their contact centre services or establish

call centres. Lebanon location can target not only the

Arab/MEDA region but also Europe, and the US. The

educated; multilingual (Arab, English and French)

workforce of Lebanon is an asset for such ventures.

Access to regional markets

Thanks to its central location, Lebanon has many

assets with which to target the Middle East and the

North African region. It can rely on an educated,

multilingual and multicultural work force, on the

country’s be strong business culture and on a wide

Diaspora network which provides investment and

business linkages opportunities. The regional ICT

market was estimated at 67 billion Euros in 2011 with

strong growth projections estimated for the future

(expected value of 90 billion Euros for 2015).

Benefiting from a growing infrastructure, a rapid

adoption of new technologies and a strong

demography, the region’s number of internet users is

growing rapidly and expected to reach 150 million by

2015. The Arabic language will then be ranked 4th in

the category of the most used languages on the web

and will create a very strong demand for ICT product

and services in the region.

Thanks to an increasingly business friendly ecosystem,

DERMANDAR, A LOCAL SUCCESS STORY

Founded in 2010, Dermandar Panorama is a

company established at Berytech Technology Pole

in Beirut and is part of Berytech Fund’s portfolio. It

has one of the best apps for iOS and Android for

photography, and it has been awarded world’s best

app at the UN-based World Summit Award for

mobile content (WSA-mobile) in early February

2013.

DMD Panorama - 7M downloads since their launch

in June 2011. The panorama creation process is

extremely fast: just a few seconds for stunning 360

results.

In the Arab world, it’s one of the few startups to

successfully reach a global market. With 6 million

downloads to date and 50,000 active daily users.


INITIATIVES FOR ENTREPRENEURS

Beirut Digital District is a pilot project,

inaugurated on September 3, 2012. It currently

covers 5,000 m2 and will eventually go up to

40,000 m2 by 2016. The objective is to provide

Lebanese ICT companies with all the different

services they need to develop their products in a

single zone.

BDD will offer the rental of flexible office spaces,

small living units, furnished apartments, and will

offer abundant community animation and

recreational facilities

The initiative aims to attract more than 200

companies and to be the centre of IT events in

order to create a “Cluster” effect. The physical

proximity between companies and persons will

contribute to stimulate productivity and creativity.

CREATIVE CLUSTER

Launched last summer, but still in its infancy,

the Beirut Creative Cluster project is based at

the business development centre Berytech, and

aims to give new companies a boost by giving

them the institutional support they need to

make it past the crucial first five years.

So far, members of this cluster, include

professionals at various stages of media

production, including design, sound, post-

production and marketing.

“Lebanon is a small market. If we want to

compete on a global scale, we need to think

about cooperating – not competing – with the

companies next door,” says Salim Tannous,

founder and head of the BCC.

Lebanon is well placed to be a strong actor in

software development and the IT services sector

which is already well developed in Lebanon.

Business environment

Today Lebanon hosts more than 7 incubators (see

case study ) which have managed to turn local, start-

up ICT companies into global players. This is

increasingly supported by the fact that software

programmers and designers in the Lebanese ICT

sector are considered among the best in the Middle

East.

Opportunities for local investment exists through a

developing venture capital business, and public and

private stakeholders are creating more and more fi-

nancing mechanisms accessible to small as well as

large companies, including the financial incentives

provided by IDAL (presented above).

R&D programmes

The National Council for Science Research (CNRS)

runs various integrated action programs and manages

4 research centres, which are linked to regional and

international networks for implementation of

collaborative programmes.

The CNRS also manages a number of funding

schemes in collaboration with other governments and

institutes. Examples are Programme Cedre and the

Grant Research Program (GRP), which has more than

600 projects over the past few years


.


This guide is a Doing business toolkit dedicated to clusters, SMEs, or entrepreneurs

interested in developing business partnerships in the ICT sector in Lebanon. It provides an

overview of the main opportunities available for the private sector, as well as concrete and

useful data to those interested parties who require more detailed information.

It has been prepared by INNO AG under the EuroMed@Change Project, a Preparatory

Action initiated by the European Parliament and implemented by the European Commission

(DG Enterprise and Industry).

EuroMed@Change proposes new dynamics for SME and cluster internationalisation

between Europe and 4 targeted partner countries: Morocco, Tunisia, Egypt and Lebanon. It

is managed by four organisations from across Europe (ANIMA Investment network as

Project leader, the European Business Innovation Centre Network, INNO AG and the

Fondation Sophia Antipolis as partners) and it coordinates more than 45 associated

regional businesses, finance and innovation networks.

Documents

© EuroMed@Change 2013 1 · The Mediterranean Business Guide, focus on ICT in Lebanon has been prepared by INNO AG under the EuroMed@Change Project, a Preparatory Action initiated