January’s winter storms battered Lebanon with heavy rain and snow at the start of 2015, once again highlighting the poor living conditions in which most Syrian refugees live. Executive travelled with members of the international Orthodox Christian charities to two camps in the Bekaa Valley, Qoub Elias near Chtaura and Tell Serhoun near Dalhamieh. There, dozens of tents housing Syrian refugees had collapsed under the weight of mounds of snow and well water had frozen in the sub zero temperatures. Despite help provided by NGOs, many refugee families still lack basic necessities such as blankets, warm clothes, shoes, medicine and medical care, as well as wood and fuel to burn.

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We in Lebanon love to complain about traffic. But when we tire of bemoaning our clogged roads, we often move on to another popular gripe: the poor state of the country’s information and communications technology (ICT) infrastructure. Internet speed is slow, mobile data connections come and go as you move, and calls drop with annoying frequency. While both the current and former telecoms ministers have promised jumps in internet download speed, the country’s speed ranking embarrassingly fluctuates near 170 out of 196 countries whose internet speeds are tracked by the Ookla Netindex. That’s better than dead last — as was the case in October 2011 — but still not the lightning speeds that will usher in the billions in economic activity that we were promised. Given the fact that successive telecoms ministers have touted the goal of creating a ‘knowledge economy’, Executive set out to examine the actual state of Lebanon’s ICT infrastructure — to better understand where we are now and what needs to be improved. We did not expect the answer to be so difficult to find.

ICT infrastructure — from our national data and telephone backbones to the copper wires that connect the backbone with users’ homes to the base stations sending out mobile phone signals — is the property of the Lebanese government. But because these assets are built and maintained with taxpayer money, they also belong to the people. And the people have a right to know how their money is being spent, what they are purchasing and the status of those investments.

We reached out to Ogero, the state owned enterprise that monopolizes fixed line services, but were denied an interview. Back in June, when Telecommunications Minister Boutros Harb called Ogero’s director general and booked a meeting on Executive’s behalf, the director general promptly kicked Executive out of his office. Never to be deterred by such a refusal, Executive spoke with employees of the Ministry of Telecommunications, top market players and even a company that completed north of $50 million in contracting work on an ICT infrastructure project, but received divergent answers to the most basic question: is Lebanon using a fiber optic backbone for data traffic?

It is absurd and unacceptable that such a simple query cannot be answered with a Google search. Even more ridiculous — and indeed worthy of public outcry — is that government officials tasked with developing ICT infrastructure do not themselves appear to know. Executive will keep searching and will not stop our investigation until we have solid, verified answers. In the meantime, we believe the person with answers must be out there. That person has an obligation to the nation to honestly and transparently explain where we are and what is needed for further improvement. Will Mr. or Ms. X please step forward?

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Located in the Jisr al-Wati district of east Beirut, the infectious medical waste treatment center of NGO Arcenciel is never empty. All day long, trucks bring in tons of waste generated by 112 hospitals in Beirut and its surroundings. Since 2003, Arcenciel has carried out a very necessary task: sterilizing medical infectious waste, which often contains contaminants and is capable of spreading diseases. Among the waste is blood, used bandages and syringes. Although it often occurs in Lebanon, these should not be mixed with domestic waste: burning or burying infectious waste without treating it first is very dangerous for the environment and public health.

Treating medical infectious waste is new in Lebanon: before 2002, sterilizing it was not common practice. Most waste was eliminated alongside domestic refuse or dumped in the open. Some was also incinerated. “We used to incinerate them by ourselves. For about one year Sukleen took them but it stopped when the Bourj Hammoud incinerator closed,” says Youssef Rahal, the former head of the waste management section at Hôtel Dieu Hospital. Until now, only two organizations have been in charge of treating medical infectious waste in Lebanon. According to Joseph Hallit, an official from the Ministry of Environment in charge of auditing hospitals’ medical infectious waste management, Arcenciel deals with 80 percent of the treated infectious waste. The remaining is taken by Safe, a sub-branch of Mirage for Waste Management & Environmental Services, which treats medical infectious waste of hospitals in the Tyre region. A handful of hospitals also treat the waste themselves, such as Haykel in Tripoli and Clemenceau Medical Center in Beirut. All of those using in-house treatment use the autoclave system, whereby a machine crushes the infectious waste, then uses very high temperatures to sterilize it. Once this is done, medical waste is no more harmful than any kind of domestic waste, and it can then be given to domestic waste treatment companies like Sukleen in Beirut or Lavajet in Tripoli. This system is considered much less harmful to the environment than incineration, which was used by hospitals before, or disposing of it alongside domestic waste or burning it in bonfires.

Greg Demarque | Executive

Specialized facilities are required for the disposal of medical waste

Syrian crisis effect

Overflowing with yellow plastic bags used to transport medical waste, the Jisr al-Wati treatment center is facing a new challenge. “We are receiving about four to five tons [of waste] every day, compared to the two and a half tons three years ago,” says the head of the center Mohammad Keserwani. While the increase can be partially attributed to a growing number of hospitals opting to treat their own waste, this is not the only reason. “With the arrival of Syrian refugees the quantity of waste has also increased a lot,” Keserwani adds, saying that Arcenciel’s system is now jammed. “It is now working 24 hours a day, compared to 12 hours before the Syrian crisis.” 

“We have more breakdowns because the system is not [designed to work] so much. This sometimes forces us to move waste to another center to be treated,” he notes. Arcenciel has four other treatment centers throughout Lebanon, and activity has increased in all of them. While Arcenciel treated 1,858 tons of medical waste with infectious risks in 2011, this amount rose to 2,356 tons in 2014.

The hospitals that have an agreement with the UN to treat Syrian refugees — including 50 private and 15 public facilities — are particularly affected. One of them, Al-Kibbeh Public Hospital, in Tripoli, has noticed a significant increase in its infectious waste. “We generated 42,380 kg in 2014, whereas it was only 29,327 kg in 2012,” says the hospital’s hygiene supervisor Rania Ahmad. “New services have been added so it is only normal that infectious waste increased, but that is not the only reason. It is also due to an increase in admissions — mainly pregnant Syrian women.” 

The hospital has just implemented a new system which measures the quantity of infectious waste generated by each service. “For the first week of January 2015, labor and delivery services generated 95 kg and the neonatal intensive care 91. Other services, meanwhile, produce much less infectious waste, such as the intensive care unit which made 16 kg or the emergency 26 kg,” she adds. According to figures viewed by Executive, for the past two years these services have been provided to about as many Syrians as Lebanese, meaning the hospital’s activity has significantly increased. In November 2014, 125 Syrian women delivered babies at the hospital, compared to 155 Lebanese. “For every pregnant woman, we also have to plan for two persons: once the baby is born the nursery services are also affected by an increase of infectious waste,” Ahmad explains.

In September 2014, the Ministry of Environment published a report entitled “The Lebanon Environmental Assessment of the Syrian Conflict and Priority Interventions,” which confirms this trend. “The harsh weather and tough living conditions that refugees are facing are having a direct impact on their health. This increases the burden on health care centers in Lebanon and results in an increase in the quantity of infectious medical waste that requires proper treatment before disposal,” it notes. According to the report, there was a 420 ton increase in infectious waste in 2014. 

“We would like to buy another autoclave in order to increase our sterilizing capacity, but it costs around $500,000,” explains the head of the environment program at Arcenciel Olivia Maamari. “In [addressing] the Syrian crisis, priority is given to food and health care supplies — including vaccines — but infrastructure is forgotten, yet it needs to be reinforced because it is weakened by this crisis.”

A lack of needed protocols

This increase, while emanating from a particular context, highlights a long standing and serious issue: infectious waste is not properly treated in Lebanon. According to the September 2014 report, “Review of records for the quantity of infectious waste collected and treated at Arcenciel facilities in 2013 revealed that 72.2 percent of the waste (303,4 t/y) [is] being collected and treated by autoclaving and shredding while the remaining (116,8 t/y) [is] being disposed of in the environment.” Minister of Environment Mohammad Machnouk spoke about this problem in late December, after dangerous medical waste was discovered in coastal and mountainous areas. 

Some hospitals fail to treat all their infectious waste. “I saw some sharp containers, plasters with blood in municipality garbage cans,” says Ghazwa Barakat, who is in charge of waste management at Nini Hospital in Tripoli. Barakat was a consultant for a UNDP-led project in two hospitals in South Lebanon in 2010 and 2011 in coordination with the Ministry of Environment, and completed a study on infectious medical waste management for the Union of Private Hospitals in Lebanon in 2012. According to this report, only 32 percent of public hospitals treated their infectious waste in 2012, compared to 54 percent of private ones. “There is a lack of understanding about infectious waste in our country, even among the top management staff. Often, people are not convinced of the importance of treating this waste,” she says. In some cases, hospitals set an infectious waste treatment disposal plan but don’t use it. Barakat stresses the importance of regular staff training sessions to avoid these missteps.

According to Barakat, it is also a money issue, since treating infectious waste correctly is costly. It requires separating infectious and domestic waste, as well as special garbage cans for infectious waste and special containers for syringes. A low-temperature room also has to be procured for infectious waste storage. Every step of the process requires trained staff and managers. “At Nini hospital, we pay $6,000 per year for sharp object containers and $10,000 for yellow plastic bags,” Barakat adds. Organizing staff training also comes at a significant cost. “However, the Ministry of Health makes no distinction between hospitals that respect the law and those that don’t. It reimburses the hospital $26.50 per night for every patient, regardless of what the hospital does or doesn’t do.” 

Barakat suggests that the Ministry of Health should increase its support for hospitals that carry out infectious waste treatment properly. The Ministry of Health did not reply to Executive’s request for an interview to explore this point. Some hospitals merely ensure they prioritize services, because they don’t have money for other systems, like waste management. Hallit adds that some establishments just want to save money: “A lot of Lebanese hospitals are family businesses whose main aim is to make profits. In these facilities, decisions are often made by people who do not have any skills concerning medicine and waste management, they don’t see the necessity to spend money on it.”

“Many stakeholders have studied the possibility of establishing a treatment center, but at this point all of them have stopped, saying it is not advantageous,” says Viviane Sassine, the head of the chemical safety department at the Ministry of Environment. This point of view is shared by Najib Jaber, in charge of quality control at Safe. “Until now, there is no collective consciousness among health professionals concerning the importance of treating medical waste,” he says. “The more they realize the importance of such measures, the more they will treat their medical waste, and this in turn will create a lucrative business to treat it.”

Greg Demarque | Executive

According to him, at this point it has not developed into a very attractive market. “In addition to the large amount of Lebanese bureaucracy, companies need to have a lot of money. Building a medical waste treatment plant costs around $500,000, and it is not very lucrative yet,” he says, adding that Mirage can handle the low profit margins because it is not their main activity. “We did it because it was the continuity of our waste treatment activity but it is not the most profitable activity we have.” Mirage provides a wide range of services, such as street sweeping, hazardous waste management and water treatment. Jaber explains that Safe charges either $0.60 or $0.70 per kilogram of waste, depending on how far the hospital is from their treatment center. While he refuses to give an exact figure for how profitable the enterprise is, he denies it is a significant contributor to company’s overall profits. “We have a very small margin and we cannot consider it something that is very lucrative, because we only treat three or four tons of infectious medical waste per month. It is not enough to generate significant margins,” Jaber says. “If the aim was to make a profit we would increase our prices.” He adds: “We make profits mostly from our hospital cleaning and maintenance service. The infectious waste treatment is a service we offer because our aim is to protect the environment.” 

An existing but unenforced law

Lebanese law, however, requires hospitals to take care of their infectious waste. Issued in September 2004, Decree 13389 amended an earlier decree issued in 2002, implementing Environmental Law 444, approved by Parliament the same year. This law defines how to manage infectious medical waste and presents ways to ensure and verify the efficiency of the sterilization process. In 2010, the Ministry of Environment conducted an audit to check whether hospitals are respecting the rules. “We took the initiative to sue 88 hospitals, 16 public and 72 private ones, which do not respect the rules,” says Sassine. However, five years later, none of the violators have been forced to close or have paid a fine. “After we pressed charges, many hospitals provided us with information about their infectious waste treatment processes. The court asked for a second visit to be conducted,” says Sassine. “But they did not rule against anyone.” 

“I have seen places where there are yellow plastic bags in boxes, but they were not used by the staff,” notes Hallit, who was in charge of the latest audit of waste management in hospitals undertaken by the Ministry of Environment in 2013 and 2014. “Hospitals spent many years without being subjected to controls; it takes time to spread the culture of waste management.” 

However, a former employee of the Ministry of Environment, who was dealing with the infectious waste issue and spoke on condition of anonymity, argues that the ministry lacks human and financial means to monitor infectious waste management. “There is not enough staff to regularly check [whether] the law is being implemented, to make sure that accreditations are renewed regularly,” he says. “There is not enough [in the]budget. Even if the law exists, it is nearly impossible to enforce.” 

Arcenciel and monopoly

Arcenciel’s medical waste treatment system was funded partly via donations. Since 2003, it has received $1,485,278 from the European Union, the Spanish Agency for International Development Cooperation (AECID) and the French Agency for Development (AFD). According to the head of the waste management program, Arcenciel is barely able to cover operating costs, so it does not make any profit. The initial price Arcenciel charged medical establishments was $0.55 per kilo in 2003, and this has now been increased to $0.60. “We are not looking to make any profits,” Maamari says. Revenues from Arcenciel’s medical waste management program and the donations they have received funded the building of waste treatment centers, as well as training for hospital staff on proper waste management and autoclave maintenance. “Our aim is to serve the public interest. Thus, we made an official proposal to the Ministry of Environment to give our entire network to an incorporated company. The health establishments that use the network would be shareholders, proportional to the number of beds they have.” Until now, however, the ministry has not responded to the request.

More than 10 years after Arcenciel first began treating infectious waste, another fact is clear: the NGO has a near monopoly on the sterilizing sector. George Khayat, the owner of hospital equipment supplier Khayat Medical, tried to enter the market but failed. In 2002, he answered to a tender for selling and managing a common autoclave which would be used by four hospitals: AUBMC, Saint-Georges, Makased and Hôtel Dieu. “I calculated the expenses needed for installation, waste sorting, collection and sterilizing: it was $0.35 per kilo,” he explains. This figure is much lower than the $0.55 per kilo demanded by Arcenciel when it started in 2003. At this price, Khayat says he was planning to have a 25 percent profit margin per kilo. “I then did the Environmental Impact Assessment (EIA), but for one year and a half the Ministry of Environment did not give me any answer.” Finally, the ministry asked Khayat to hold a public meeting in Beit Mery, where the autoclave was planned to be established. Hôtel Dieu’s former waste management head Rahal recalls: “As soon as people heard it was for medical waste they were strongly opposed to the project … It is always the same problem when it comes to infectious waste: companies can never find a place to set up their treatment system because public opposition is very strong.” Without the approval of the municipal council, Khayat never got authorization from the Ministry of Environment. “I lost more than $20,000,” Khayat laments. 

According to him, the arbitrary way approvals are given discourages other entrepreneurs from investing in the market: “At the same time I was awaiting an answer from the Ministry of Environment, another company, Env-Sys, received approval in 40 days.” The former employee of the Ministry of Environment, who was employed by the ministry at that time, says that no technical approval was given for Env-Sys by the director general or minister of environment allowing it to treat infectious waste. He adds that Khayat’s company was the most serious of those trying to get the ministry’s approval. “There is a lot of corruption in the ministry,” he notes. “Choices to give accreditation to establishments in charge of sterilizing infectious waste are not based on objective and technical criteria, but rather political or personal ones.” 

Things were easier for Safe because the tender they answered was published by the Abbasyeh municipality in Tyre. As it was the municipality’s decision to acquire a medical waste treatment plant, there was no local opposition. “We decided to apply for a financial grant offered by the EU to Lebanese municipalities which had projects to treat waste,” explains Abbasyeh’s mayor Ali Ezzedine, who was vice-mayor in 2005, the year the tender was submitted. The municipality won the grant and the treatment plant opened in 2008. The land and the treatment plant are owned by the Abbasyeh municipality, which chose Safe to manage it. “According to public tender regulations we have to choose the cheapest company. Safe was the one,” Ezzedine says. Safe now treats infectious waste from three hospitals and two polyclinics. 

Jacques Chahine, general manager of Edessa, a company which conducts EIA and studies for prospective companies that want to enter the infectious waste treatment market, corroborates that challenges exist in the sector. “I have a lot of customers who would like to enter the market, but it is very hard to change the current system in Lebanon that gives 80 percent of the market to Arcenciel, even if our studies show that it could be easy to offer cheaper prices than those of the NGO.” According to him, it is also due to the law. “Arcenciel started its work with a special authorization to treat infectious waste, because Decree 13389 was not implemented at that time,” Chahine explains. Arcenciel started to treat infectious waste in 2003, but didn’t get its first license until 2005. “But for companies that have tried to enter the market after 2004, it is hard to meet the ministry’s requirements.” Arcenciel’s Maamari clarifies that the Ministry of Environment had started to audit the NGO’s centers in early January in order to renew their licenses, adding that they have all done the EIA since 2003. 

Haykel hospital in Tripoli launched a general environmental protection plan in 2005 and recycling is now a general rule in the establishment. This is not all. Treatment of infectious waste is part of the plan too. Haykel is one of the few Lebanese hospitals that has purchased its own autoclave for sterilization. “It requires a lot of investment at the beginning, but in the long run it is cheaper than Arcenciel. The cost is $0.50 per kilo,” explains Imane Abdo, head of waste management at Haykel. The hospital invested $37,000 in the machine at first, which has a capacity of treating 10 kg per 30 minute cycle. The hospital treats about 120 kg of infectious waste every day. Abdo underlines that the process is complex and onerous. In addition to the special plastic bags, boxes and purified water needed for the machine, the hospital has to send reports about biological indicators and waste treated every two months to the Ministry of Environment, as well as regularly training its staff. “The process is very intensive, I think that is why there are not so many hospitals which have their own autoclave,” Abdo says. 

Greg Demarque | Executive

Medical waste awaits sterilization

In a context where infectious waste treatment is still perceived to be more of a burden than a necessity, hospitals prefer to call on Arcenciel, as exemplified by Tripoli’s Al-Salam Hospital. “I started to look at the process to purchase an autoclave, but when I saw all the monitoring and reports we have to do, I decided that it was simpler to work with Arcenciel, even if it is a bit more expensive,” admits Al-Salam’s director Gabriel Sabeh. This commonly held thought is lamented by infectious waste treatment professionals. As Edessa’s Chahine says, infectious waste is highly dangerous and should not be moved by trucks — as Arcenciel does — but rather treated on site. 

A lot more remains to be done to make medical infectious waste management optimal. A large proportion of medical facilities are not subject to the Ministry of Environment’s oversight. According to Decree 13389, medical establishments other than hospitals should also treat their infectious medical waste. Labs, aesthetic centers or dentist clinics are not inspected at all in Lebanon. The lack of human resources at the Ministry of Environment makes their effective supervision difficult. “We are just three employees in the department,” says Sassine. “We started with hospitals and we will continue to audit the other facilities but we don’t know when.”

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Typically, not much thought is given to trash once it’s removed from the home — out of sight, out of mind. Not so in Lebanon. The problem of garbage disposal in the country has become a chronic and pressing issue. Every couple of years, the issue comes to a head: for one reason or another, trash isn’t removed from the streets, a public outcry ensues and the government devises yet another plan to fix the problem once and for all. Yet somehow, these plans always go unimplemented. Instead, bandaid solutions are applied with the promise that a long term plan will be studied. And once public outrage subsides, the issue is pushed to the side and all but forgotten.

In the latest iteration of this cycle of inaction, last month the government outlined an amended plan for waste management through a short (and hence vague) resolution that organized the country into six regions and called on the finance and environment ministries to launch waste management tenders for trash collection, treatment and disposal in each of these regions within two months. Bidders are to propose treatment and landfill sites themselves; if the winning bids cannot secure the sites within one month of being awarded the contract, a much more bureaucratic process begins, involving the Council for Development and Reconstruction, the Ministry of Environment and the Council of Ministers.

This plan is therefore not ideal. But it has a chance of success if the government remains committed to it — and commitment is perhaps the largest problem in Lebanon’s ongoing waste management fiasco.

Here’s one example: the Naameh dump, in a valley south of Beirut, was intended upon its opening in 1997 to be an interim solution towards developing sanitary landfills across the country. After 17 years, the dump has quintupled its original capacity spilling toxic emissions onto its environ creating what was meant as a stopgap solution into a long term public health and environmental crisis.

The Naameh disaster is not an isolated incident, but the result of a pattern of bad waste management decisions. Lebanon’s government has repeatedly promised that long term, sustainable solutions would be identified, outlined and delivered. These promises have gone unfulfilled. Instead, the government has consistently failed to implement any plans — even when they hold great potential.

To illustrate this point, let’s quickly run through the country’s catastrophic history of waste management. In 1997, the government produced plans to close the Normandy dump — where Biel sits today — while simultaneously constructing two composting plants, two sorting plants and two new landfills. In reality only one smaller composting plant was built, the service provider collecting waste expanded its area of coverage so that the sorting facilities operated beyond capacity, and when the landfills surpassed their planned lifespan, the rate of waste fluid seepage increasing while intensifying the release of odor and gas. In 2003, the Ministry of Environment devised another plan wherein sorting and composting plants and landfills would be built in each of the 26 districts in the country, with most of the chosen site locations for the waste management facilities rejected. In 2006, the plan was resuscitated and altered: 26 landfills became instead seven landfills spread around the country. This amendment was also rejected. In 2010, the government endorsed a plan to adopt waste-to-energy technologies, and in 2012 contracted a consulting firm to study the application of waste incinerators to produce electricity in urban areas. But in 2013, after months of preparation outlining a strategy to implement waste-to-energy incinerators, the government resigned. As part of that plan, the Naameh dump was to be closed this past January, a deadline that has not been met but rather extended for an additional three months with an option to further postpone its closing.

With no real commitment to a solution, residents have resorted to dumping garbage anywhere they can — there are now some 700-plus open air dumps in the country. These dumps are not only ugly and smelly, they’re ticking public health timebombs. Leaking — and potentially toxic — fluids and gases not only damage the environment by contaminating the soil and groundwater, but also threaten the health of residents living in the vicinity of the dump. According to a September 2014 report by the United Nations Development Program that assessed the environmental impact of the Syrian crisis on Lebanon, the most common health concerns to nearby populations of these open air dumps are eye irritation, tuberculosis, diarrhea, typhoid, dysentery, coughing and scabies. Open burning of waste at these sites releases toxic air pollutants such as carcinogenic dioxins and furans.

With evidence of public health and environmental concerns piled higher than the garbage itself, the Lebanese government cannot wait to negotiate a new long term solution. It must instead commit to its latest plan — and this time, follow through. Announce the tenders, award the contracts — but only in an open and transparent process — and push through the acquisition of new waste treatment and landfill sites. The current plan is not perfectly designed, but we can no longer allow the best to be the enemy of the good. Because if we do, Naameh and the open air dumps will only grow, and everyone will lose.

The post Tsu-Naameh appeared first on Executive Magazine.

We were all completely shocked,” says Shams, a Syrian refugee and mother of two from north of Homs province, commenting on December’s announcement by the UN World Food Program (WFP) that it had suspended payments of food aid to Syrian refugees. “It really bothered us because everything we get, we get from the UN,” she explains.

After months of warnings, the WFP simply ran out of money and was forced to delay the payment of vital assistance to 6.35 million Syrians displaced by this nearly four year long conflict. Suddenly, refugees across the region who rely on aid handed out by the international community had to go without this vital lifeline.

When one of the world’s largest providers of fundamental emergency aid starts to experience major funding issues — potentially leaving millions of people in six countries without assistance — it causes concern for both refugees and the region as a whole. Unfortunately, funding troubles for the Syrian crisis appear unlikely to be a short blip, but part of a downward trend, which in the coming months and years could also cause problems for many other agencies reacting to the crisis. In October 2011, just seven months after the start of the Syrian crisis, the WFP started an emergency operation inside that country. At the time, the response was localized and relatively small scale, initially only targeting 50,000 individuals for a period of three months with a total budget of $1.9 million. As the conflict rapidly expanded, so did the operation of the WFP: by the start of 2013, they were targeting 1.5 million people; by October 2013, this had increased to 4 million, and on the eve of 2014, 4.25 million Syrians were receiving assistance across the Middle East. Today, nearly 6.3 million Syrians receive food packages or assistance to buy food in Syria, Jordan, Lebanon, Turkey, Iraq and Egypt — a project with a total budget of $2.2 billion.

What the WFP provides

Inside Syria, the WFP has been buying and distributing food directly to roughly 4.25 million internally displaced persons (IDPs) through 27 partner organizations that work in all of Syria’s 14 governorates. However, unlike many of the countries in which the WFP works where food itself is scarce, local markets in many of the host countries for Syrian refugees had the capacity to supply the necessary food; the issue for most refugees was simply paying for it. Therefore the WFP moved from its traditional method of distributing food parcels to a printed voucher system. This allowed people to exchange the vouchers for food of the same value, at a number of shops. 

But by October 2013, the refugee population had swelled so much that the printing, distribution and reconciliation of the printed voucher system had become incredibly inefficient. In its place, the WFP introduced cash cards. The card acts, and looks, the same as any other debit card — it is even issued by MasterCard. The only distinguishing feature is that it has the words ‘humanitarian aid’ written across the top. The WFP credits the account monthly, allowing families to shop as they need throughout the month. As with the voucher system, refugees are still tied to shopping at particular participating stores. However, the main advantage of the cash card over vouchers, for the recipients, is that families can now shop when they want and need to rather than having to receive all their food in two installments when they cash in a printed voucher. It is also more secure as lost cards can be cancelled and refugees need to show proper identification and their UNHCR registration certificate (which has a unique number that is also stamped onto the card) in order to use it to purchase food. According to the WFP, about 88 percent of those the WFP assists outside of Syria and Iraq are now on the cash card system. In parts of Iraq the WFP and partners still provide direct food distribution as, due to the ongoing security situation, the market is unable to provide the food needed. 

What went wrong

Despite these improvements, the WFP has run into a major problem. At the beginning of December, the WFP announced that it would be suspending operations due to a lack of funding. “Donors were very generous in the early years of the Syrian crisis but we are nearly in the fourth year now. Since August we have been starting to run out of funding and we started warning [donors] when we saw this coming. Despite this, in December we had to cut funding completely,” says Joelle Eid, communications officer for the World Food Program’s Syria response. Luckily, after a mass appeal to the public, as well as private and national donors, the money to cover December was raised and cash cards were recharged on December 9. However, as winter storms and heavy snow hit the region, including Lebanon and Jordan, conditions worsened for many and a huge question mark hung over what would happen after January. 

The WFP has assessed the basic level of subsistence in Lebanon at $30 per person per month. While the cash cards give individual families autonomy on how they use this to feed their family, there are rules about what can be bought. The WFP restricts the money to buying food items, while clothing and cleaning products for example are not permitted. This is enforced through a contract with shopkeepers whereby they agree to a set of terms — including making sure that the rules on what’s purchased are followed and not hiking up prices for refugees — in order to continue being an eligible partner; the WFP and its partners then check up on shops to ensure this is followed. Upon receiving the card, families are given a seminar on nutritional value and how to make the most nutritious food possible with the available budget and ingredients. “I go and buy oil, stock, rice and macaroni,” says Hamda, a Syrian mother of two from Yarmouk who has been in Lebanon nearly two years. Although Hamda says that she has been getting by, she insists that things are far from easy. “Ninety dollars for a month just doesn’t buy anything for three people,” she says, adding that she doesn’t buy any meat as it is expensive and she is very skeptical of the quality and age of the meat on sale in her local shop that takes WFP cash cards. 

Where the issues came from

The WFP relies fully on voluntary donations from national governments, international organizations, companies and private individuals. While private donors made up the 11th largest funding source in 2014, the scale of the organization’s Syria response necessitates donations on a scale that is hard to find outside of direct government funding. The WFP needs approximately $120 million a month in order to adequately provide basic food assistance to 4.25 million people in Syria and 2.1 million outside of Syria. According to Eid, when funds ran dry in December, the WFP was $64 million short of what it needed to fund operations until the end of 2014. After a major emergency funding campaign, which included a social media push with the hashtag #ADollarALifeline, almost 14,000 individuals and private sector donors in 158 countries contributed $1.8 million dollars. A further $52 million of the final $88 million funds raised in December were a direct donation from Saudi Arabia. The World Food Program entered the new year with just $20 million, which had already been earmarked for operations in Syria.

The WFP budget summary at the end of 2014 highlighted that the “WFP received $365.8 million, or 40% of the requirements, for its food assistance programme [inside Syria] in 2014. Late and insufficient resources forced WFP to adjust the composition and size of its GFD food basket [General Food Distribution basket] almost every month, and resulted in lower calorie food baskets than had originally been planned.”

“It’s always different if it’s a man made disaster rather than a natural one,” explains Marc-André Hensel of World Vision, one of the WFP’s partner organizations that manages food aid in the midwestern areas of Lebanon’s Bekaa Valley. “People are more likely to assist with natural disasters like floods, tsunamis or volcanoes. Syria is this big confusing monster [and] we are all, including the international community, just clueless what to do [about it],” he continued.

Eid is stoic about the current situation, “It’s quite clear now that funding for the region will not be as generous as last year or the year before. The more the conflict is prolonged, the more there are other issues that require donor attention — the Ebola response, for example. Funds are coming in at a slower pace and are less … ‘driven’. This is something we have to get used to and we’re forced to respond as per the status quo. So if we get 70 percent funding, then we can plan for the next period accordingly. There are difficult choices we all have to make.”

Funding gaps have resulted in massive delays in aid (World Food Program)

What the WFP is dealing with now

The funding crisis highlights one of the biggest challenges now facing the program: forward planning has become almost impossible. In the early phases of the response, the WFP could plan months in advance, preplanning for acute emergencies and, crucially, ensuring a constant supply of food to Syria and Iraq where physical food parcels are still distributed. In Syria, it can take up to six weeks from purchase to supplying warehouses across Syria before aid reaches the IDPs and refugees, as transport is slow and there can be delays. This means that a funding gap of even a few weeks can cause substantial delays in people receiving food in Syria.

In mid January, the WFP announced its basic needs for the next three months. For the period of January to March 2015, the WFP will require $300 million to distribute 70 percent of the aid it had previously been disbursing. The latest figures show that at the moment the WFP has about $257 million, 86 percent of this funding requirement. While it will endeavor to continue to provide for all 6.35 million refugees they have been assisting with aid, the amount each person will get will have shrunk by at least 30 percent. In Lebanon, this translates as a reduction from $30 per person per month to just $19 per person per month.

The knock-on effect upon refugees is the most pressing issue for the WFP, but funding problems also impact the organization as a whole. Shortages force the WFP to make revisions to the entire organization, from staffing levels to offices. It constantly has to balance operating costs with delivery to make sure that as much as possible goes to helping people on the ground, but if it is forced to cut back staff and centers too much, it risks not being able to respond to the needs of the people it is trying to help. The operational costs of the WFP last year were approximately 5.4 percent of the total budget for the Syria mission, with staff salaries the most significant single cost. 

A more stable solution

Neither Eid nor Hensel believe that a more stable funding situation is possible under the current systems. The way that aid is given means that it is not possible to ensure future funding as it is completely reliant on the generosity of donors, and at a time when many Western nations are undergoing government cutbacks and austerity, foreign aid budgets are a tempting thing to cut. 

At the start of 2015, the UN formed the Regional Refugee and Resilience Plan (3RP), its latest annual outline of the crisis that brings together the national plans in Lebanon, Jordan, Iraq, Turkey and Egypt into a single unified regional response. The 3RP states that there is a need for $5.5 billion to help 3.4 million Syrian people outside of Syria in 2015, as well as 2 million members of the host communities. The 3RP is just one way that agencies, including the WFP, are trying to ensure that the Syrian crisis does not fall off the radar of international donors. While today the WFP is having funding issues, it is by no means the only organization experiencing a more difficult working environment. 

January and beyond 

January’s reduction in cash card payments was not the first cut refugees had seen, although previous shortfalls had been made up in a second payment. Such remuneration seems unlikely in this case. “The prospects are not too good this year,” explains Hensel. Means testing is almost impossible, Hensel points out, in part because the needs and situations of individuals can change on a weekly or even daily basis. 

There are now basically two options for the WFP and partners, like World Vision, in the short term. The first option, as has happened this month, is to reduce the amount paid out to all recipients so that they can continue to give everyone at least something. The second option is to highlight vulnerable groups and then prioritize assistance to these over others. Hensel believes that groups such as children under five, the elderly and the disabled are likely to be prioritized over other groups during the next year. There are also programs underway to identify the most vulnerable areas and groups, although this will take several months to have an effect.

Other organizations are looking for options to fill the gaps. “This is not such a good situation because if per month we’re looking for $30 million, what does $1 million or so mean? It’s a drop in the ocean. [At World Vision,] we have not agreed on any one-off payments because our supporters want something more sustainable, what happens the next month or after that?” says Hensel.

The post Running on empty appeared first on Executive Magazine.

Whether enjoying a glass of single malt whiskey after a long day, celebrating a special occasion with champagne, or simply catching up with friends over a couple of cocktails carefully prepared by a mixologist, it seems that alcoholic beverages constitute a part of life for many of us. While some other industries, such as the hospitality or retail industry, saw a decrease in their overall revenues in 2014 when compared to 2013, the spirits industry saw a growth in that period, aided by an active end of 2014.

2014 versus 2013 in terms of sales and growth 

According to Naji Hmouda, business manager at Neo Comet, the spirits distribution company which is part of Fattal Holding and distributes Bacardi, Martini and Dewar’s, among others, 2014 started out even worse than 2013 for the spirits industry from a macro perspective, due to the assassination of former Finance Minister Mohamad Chatah. The attack occurred a few days before New Year’s Eve 2013 and caused many people to cancel their celebrations, which in turn led to an accumulation of stock for many spirits.

Carlo Vincenti, owner of G. Vincenti & Sons who says his spirits portfolio includes Poliakov vodka and Label 5 whiskey, also considered the market at the start of 2014 to be tough. This was due to the continuing effects of the economic and social difficulties that have affected Lebanon, including a combination of the repercussions of the Syrian crisis and the dwindling economic capabilities of the Lebanese consumer, who has become almost the sole client of the hospitality sector given the lack of tourists, according to Vincenti. 

Yet, Vincenti says his company added the Beam Group — which includes Jim Beam bourbon and Teacher’s whiskey, among others — to their portfolio in 2014. The company managed to double Beam Group’s volume of sales in Lebanon from 2013, making 2014 a good year overall for the Vincenti Group. 

According to the spirits distributors Executive spoke to, the summer season was also somewhat sluggish in terms of sales but took a sharp upward turn during Eid El Fitr. Sales peaked during the holiday season in November and December 2014, which usually accounts for 40 percent of a spirits distributor’s annual sales. Hmouda explains that, once a sense of security and stability was restored in Lebanon towards the last quarter of 2014, they felt the positive effects in their profits and were able to make up for most, if not all, of their losses of the first half of the year, calling December 2014 a “phenomenal and amazing” month, comparable to some of the best Lebanon has seen in the past 10 years.

Etablissements Antoine Massoud (EAM), distributor of SKYY vodka and Jose Cuervo tequila, saw a growth of 15 percent in spirits sales in 2014 as compared to 2013. This was thanks to a strategy where EAM let go of some brands in their portfolio and added new ones, all the while “capitalizing on a few but bigger and better brands than we used to represent in the past,” says Anthony Massoud, managing director of EAM. 

Diageo, the multinational alcoholic beverages company and spirits producer with a $73.3 billion market capitalization, is mainly known for Johnnie Walker, which held 31.6 percent of the market share in whiskey consumption in Lebanon in 2013, according to the International Wine and Spirit Research (IWSR). With their regional offices now in Lebanon, Diageo considers the country to be “the showcase of the Middle East and the leader of nightlife in the region,” according to Ziad Karam, MENA corporate relations director for Diageo. 

In fact, the company witnessed solid growth of slightly more than 15 percent, according to Jad El Osta, IMC general manager at Diageo. “We basically followed the consumers’ taste and location, offering them a Diageo brand for every income level and every new drinking trend and location,” says El Osta. 

What the Lebanese are drinking 

Not all spirits are created equal and some types had a better year than others, according to the brand representatives and owners Executive spoke to. After skyrocketing for the past five years and increasing by 13.4 percent between 2008 and 2013 according to the IWSR, vodka consumption among the Lebanese in 2014 either stagnated with some brands or increased at a normal pace with others. “Consumers are looking for more complexity in what they drink and, whatever you do, vodka will always be considered a mixer,” says Vincenti.

The exception to this trend seems to be the vodka brand Grey Goose, with Hmouda saying that, “Fattal had excellent double digit growth in the vodka category in 2014 driven by the deals we did and the brand Grey Goose, but I cannot say it is the same for everyone.”

Whiskey, the third most consumed alcoholic beverage in 2013 after beer and mixed drinks according to the IWSR, remained the most consumed spirit in Lebanon by far with 471,000 nine liter cases purchased in 2013, almost double the second largest category of spirits consumed that year, vodka. Within that category, there was growth in the single malt whiskey consumption, though the volume remained small when compared to overall whiskey consumption, according to Hmouda. 

This increase was driven mainly by the global trend towards single malt consumption and by more maturity and awareness regarding the quality of spirits among the Lebanese consumer. Vincenti saw double digit growth in their single malt categories and Diageo, which owns 28 malt distilleries in Scotland, believes they managed to attract many consumers in this category through their strong market presence and wide portfolio of malts. 

EAM took the single malt trend to another level by opening the Malt Gallery in December 2014, a high end spirits concept store with a focus on malt whiskey. “We saw that there are a lot of wine stores but no conceptual liquor stores. Our aim is to educate the Lebanese consumer on this trend and develop the premium category in Lebanon through whiskey classes, dinners and trainings” says Massoud.

Closely related to the growth of single malt is the rising popularity of mixology, i.e. mixing cocktails using premium spirits, another global trend that Lebanon is now embracing. “The trends are moving towards cocktails and the good thing is that many of the bar owners are taking it very seriously and are training their staff in presentation and mixing,” says Hmouda, adding that such premiumization brings a better, more specialized type of business to the distributor, while also lending diversity and more complexity to the spirits sector in Lebanon.

Marketing the liquor 

Capitalizing on these trends and on spirits consumption in general necessitates that each distributing company develop a competitive growth strategy which plays on their brand portfolios’ strengths. “We players try to find where we are competitive and where we can add value based on these trends. We at EAM are reorganizing our strategies and portfolio and implementing this with our trade partners,” says Massoud. 

Sustaining a strong market share and ensuring annual growth of a company’s brand consumption requires targeted and specialized marketing such as visibility in venues, sponsorship deals with venue owners and special activities and events — referred to as below the line advertising — as opposed to mass media marketing through traditional media channels or above the line advertising, explains El Osta. “We only began to spend on above the line marketing last October but in marketing below the line, we are very strong and present, considering such activities volume generators. Instead of reaching the consumer through TV ads, we reach them directly in the venue through the bartenders or shop owners whom they trust. The market is moving from the bulk towards the differentiated and specialized,” elaborates El Osta. 

Other distributors are also focusing on below the line marketing, with Massoud attributing 25 percent of what he calls their trade marketing budget to secure their brands’ visibility in hospitality venues through sponsorship deals and quality presence in places such as Skybar where they are the main vodka partners.

According to Hmouda, Fattal’s marketing budget is mainly being spent on below the line marketing. “In a better situation, half of that budget should be on advertising, but today with all the pressure on maintaining relatively reasonable prices, some of our marketing investment is going behind that. Until such times when we have steady growth, we will look back at our strategy of spending to have more consumer and image communication rather than below the line marketing,” he says.

Challenges in the on trade and off trade sectors

Despite 2014 being a relatively good year for spirit vendors, alcohol distributors do not operate in a vacuum and the challenges facing the Lebanese economy certainly had an effect on their business.

Regarding the on trade sector, or the hospitality venues, Vincenti explains that one issue they had to deal with a lot more in 2014 was delays in payment from hospitality venues, which were having a difficult couple of years due to the economic situation in Lebanon. Hmouda says Neo Comet has also had to deal with more deferred payments over the past three years, calling the situation “dangerous” but saying that this year was better than the two preceding it. 

“New venues open at a very fast rate in Lebanon and close at an equally fast rate as there is no regulation or study into their financial feasibility. We [spirits distributors] end up losing the most as we deal with these operators who can close down anytime if their business fails, sometimes still owing us money,” complains Massoud, explaining that they have become cautious in who they deal with and are focusing on the big operators in Lebanon who they know are sufficiently reliable.

Such a situation has led to low morale both among hospitality venue owners and their distributors, who themselves have their payments to make and their quotas to maintain with the companies they represent. 

The off trade sector, or the retail stores, according to the distributors interviewed, account for the bulk of their sales and generally constitute a more significant market for them as opposed to the on trade sector. The off trade sector saw an increase in their spirits sales, according to Vincenti, because people consumed more alcohol at home in 2014, especially around the New Year which saw many celebrations held at home. “This is a good thing for us because when people consume alcohol at home, they consume more,” says Vincenti, adding that reaching the consumer is easier in the off trade division as all the brand choices are right on the shelf, as opposed to a bar which is influenced by exclusivity deals with distributors. 

The off trade still represented challenges to the spirits distributors, namely due to the fact that the number of retail outlets increased significantly in 2014. “Supermarkets in Lebanon are cannibalizing each others’ business through prices which are eating away at their profit margins. Their businesses are not operating in a healthy way and when this happens, I am the one with the supplier who has to pay for this in one way or another, by either delaying payments or granting them additional requested terms such as discounts or marketing incentives,” says Vincenti. 

Whether in the on trade or off trade sector, Lebanese will continue wanting to have a good time and so, as long as this attitude prevails, spirits distributors and producers in Lebanon will always have a reason to toast.

The post Raise your spirits appeared first on Executive Magazine.

Lebanon is a small dependent economy, built on a quasi-complete consumerist system where we import more than 80 percent of our energy, food and most consumed products and services. The country also relies on financial inflows to finance its public debt and domestic consumption, with foreign inflows per year into the Lebanese economy reaching more than 50 percent of gross domestic product in the past few years. As a result, we now have an oversized banking sector, with the consolidated balance sheet of commercial banks in the country growing from 188 percent of GDP in 1997 to 360 percent of GDP in 2013.

Where does all this money coming into Lebanon originate? Remittances from emigrants largely finance domestic consumption. With petrodollars and remittance income increasingly available (but not for long, given the recent fall in oil prices), Lebanon has become extremely reliant on this abundant source of capital. This dependency also manifests itself in economic relationships among various groups within the country: civil servants depend on government salaries and pensions, the state relies on funding from local banks to finance its oversized and inefficient public sector and local banks balance their accounts by relying on constant foreign inflows of capital. This has created a system of economic linkages that is highly fragile and subject to volatility.

The dangers of dependence

Overreliance on foreign capital has anchored profound abnormalities in the local economy. Dependency has had deep impacts on development strategies. While rebuilding infrastructure after the war was essential, the choice of all groups in society (and not only the government) was to develop an import dependent services sector. The banking, real estate and tourism sectors all rely on foreign transfers. In parallel, the society is mainly consuming and not saving, with most families and enterprises in debt. The agricultural and industrial sectors have been falling into backwardness, and dependency has even impacted educational curricula, which are now geared towards training individuals to work in the dependent services sectors, both in Lebanon and abroad. 

With an over reliance on incoming financial flows, the system has created monopolies around these sources of economic activity. Powerful lobbies have formed around the financial flows into Lebanon: if you control the pipelines of commodity, monetary and human flows into the country, then you hold the true economic and political power. Proof of this hegemony is apparent in the corruption and nepotism in the Customs Administration, the concentration of the dealership and distribution sectors under sole dealership privileges, the big banking lobby not investing enough in the local economy, the powerful lobbies of petroleum imports and construction, and the continuing control of human flows of migrant workers by the security and intelligence apparatus. At least half of the markets in Lebanon may be considered to have monopolistic or oligopolistic structures. Even at the community level the balance of power is concentrated in the hands of the groups controlling economic flows into and out of the community. Political and religious leaders of nearly all communities excel in maintaining and strengthening a dependent relationship with their followers, denying them massive development that would otherwise undermine the leaders’ authority.

Khalil Gibran wrote in the early 1900s: “Pity the nation that wears a cloth it does not weave, eats a bread it does not harvest and drinks a wine that flows not from its own wine-press”. More than 100 years later, nothing has changed in this small country.

The post Our small, dependent economy appeared first on Executive Magazine.

“We gradually noticed a few abandoned commercial venues being renovated and then new tenants moving in. They were mainly little boutiques owned by young adults and at first we felt a sense of pride that people were recognizing our neighborhood as a place for creative business activities but now, with all the bars and the traffic and the noise, it’s just too much!” says Agop Barberian, an old time resident and electronics repair shop owner in Mar Mikhael. He recalls how his once almost forgotten neighborhood emerged as a destination for designers less than a decade ago, and how it rapidly turned into what he now compares to an insatiable monster.

Mar Mikhael’s urban fabric 

While districts such as Monot and Gemmayze have roared with nightlife since the 1990s, Mar Mikhael was considered a low to middle income, mainly industrial area where many car services outlets, metal workers and workshops could be found. These venues generated reasonable activity during the day, often noisy or smelly, especially when involving car repairs, but the evenings were always calm, recalls Barberian. The area, with its narrow streets and architecture dating back to the 1940s, retained a somewhat charming mode of urban life that was fading away in other areas of Beirut. 

Speaking about what makes people appreciate an urban area such as Mar Mikhael, Mona Harb, associate professor of urban studies and politics at the American University of Beirut, explains that it is more than just the old buildings. Rather, according to her, the appeal lies in the very fabric of the district, such as the narrow streets signifying a time before the introduction of private cars to Lebanon, the little gardens in front of buildings where the neighbors gathered, and the stairways facilitating a climb over a steep hill. All of these elements gave the neighborhoods that had developed on the then-outskirts of central Beirut — such as Furn El Hayek, Zokak El Blat, Ain El Mreisseh and Gemmayze — a human side.

Designers move in 

This charm was one of the main factors that first attracted those in the arts, crafts and design (ACD) industries to Mar Mikhael. “I fell in love with the wide space when I first saw it and I loved the industrial feel of the area,” says Maria Halios, interior architect and founder of MHD Designs, who transformed an abandoned chocolate factory in Mar Mikhael off Armenia Street into her office and design showroom early in 2009, when there was only Liwan, a contemporary design boutique, on that street.

Rania Naufal, owner of the arts and architecture bookstore Papercup, has been living in Mar Mikhael since 2005 and cites the “vibrant charm” of the area as the reason she opened her bookstore there, a few months after Halios.

Today there are approximately 71 commercial venues rented out to the ACD industry in Mar Mikhael including boutique retail stores, design studios and offices, according to the Mar Mikhael Creative District map developed by Georges Zouain, principal of GAIA-Heritage, with financial assistance from the European Union under the MEDNETA project. GAIA-Heritage is a Beirut based company founded by Zouain in 2002 which provides consultancy services to manage cultural and natural heritage. As part of the EU funded MEDNETA project, GAIA-Heritage launched on January 16 a week long conference entitled “In Mar Mikhael” aimed at regenerating Mar Mikhael and reinforcing creativity in the area.

Harb explains that ACD professionals were attracted to Mar Mikhael because of several factors: its central location, its urban features, its proximity to Bourj Hammoud — where many of the craftspeople are located — and because the rents were low when they first moved in. They did not fundamentally disrupt the social and economic life of the neighborhood.

As Mar Mikhael began to blossom as a “hip” neighborhood where the ACD industry could be found next door to mechanics in an industrialized yet artistic environment, it caught the eye of real estate developers, who saw an opportunity to use the area’s contemporary feel as a marketing tool to develop and sell their properties there. “The designers somehow participated in the promotion of residential real estate as we were used in their promotional brochures. People find it nice to live in a hip area,” says Halios. 

And hospitality venues move in 

Around the same time, towards the end of 2010, hospitality developers who were fed up with the high rent costs or overcrowding of places such as Downtown’s Maarad street or Hamra were looking for a new area to expand into and found Mar Mikhael to be perfect for their needs. Like the designers, they were enticed by its proximity to Gemmayze, its low rents and urban heritage charm. Very quickly, two or three pubs on Armenia Street progressed into more than 40 hospitality venues, with more slated to join the mix in 2015.

With this rapid real estate development, Mar Mikhael has become unrecognizable to its long time residents who complain of not finding anywhere to park, of the intense traffic, of the loud noise at night and of having to pick up broken bottles and debris from their doorsteps every morning. 

Commercial rental prices were driven up by the boom in the area and landlords who were charging a mere $600 per month for a 50 meter square commercial venue back in 2009 are now asking for, and getting, $3,500 a month, a 483 percent increase. While part of this increase is due to normal market inflation, part is also due to opportunism among landlords.

It’s all about the money 

Concentrations of hospitality venues tend to be transient in Lebanon: they have migrated from Monot to Gemmayze to Hamra to Uruguay Street and now to Mar Mikhael, with many already moving now to Badaro. All of these destinations became intensely popular for an average of three years, before the customers and operators moved on. Many landlords are seizing the narrow time frame to maximize their profits and are asking for significantly increased rent from their commercial venue tenants, evicting them when they can’t pay and their rental agreement is up, or paying them the key money they owe them, if they are on the old rental agreement, and giving them a month’s notice to pack their bags. 

Victor Hamdjian is standing in front of the small garage where he now works as an employee. He points to the larger garage down the street which he used to operate himself on a property he rented, but has now been rented to a restaurant. Hamdjian names seven other industrial businesses, all in just two alleys off Armenia Street, which have closed down in the past two years to make way for a restaurant or bar. Hamdjian explains that it is not only the increased rents which have driven these businesses away, but says the whole area is changing and there is no room for them anymore. 

Zouain explains that a market only thrives by the agglomeration of trades that complement each other, which was the case with the industrial workers in Mar Mikhael and also with the ACD industry today. However, unfortunately this is slowly fading from the area in favor of hospitality venues.

Many of the designers feel that the area is changing in terms of what first attracted them to it and worry that they will not be able to compete rent-wise with the wealthier hospitality venue owners in the long run. “Two years ago, the hospitality investors began moving into the area and so now you see fewer designers opening up here. Restaurants are paying more in terms of rent so commercial real estate owners prefer them as clients as opposed to us designers,” explains Halios, adding that her rent contract will end in June. While she is not sure if her landlord will increase the rental fee, she is confident that her landlord will not rent the venue to a pub as she wants to preserve the street’s quality. 

Naufal says her rent has increased since her contract was first issued but is still “viable and realistic.” She adds: “However, I did hear of other landlords in the area who are being extremely greedy at the risk of losing their current tenants and changing the spirit of the neighborhood.” 

Halios wishes new young designers would open shops in Mar Mikhael but knows that this is unrealistic at this point and fears that the sense of community that was created among designers in the area is being destroyed. “It’s a pity though because we really built a connection with this area and helped shape it. We have good energy and good communication between us in the neighborhood and organize events among each other for the street,” she says. 

Balancing act of gentrification 

Gentrification is not unique to Mar Mikhael or even new to Beirut, as Harb explains. Monot and Furn El Hayek went through it in the 1990s, but with less intensity than Gemmayze and Mar Mikhael.

However, adds Harb, gentrification could bring economic opportunities for the city and its residents if it is managed in a way that takes into account public interests. Halios says that some of the restaurants in the area, especially those that open on Saturdays for lunch, compliment their ACD venues and generate some added business for them. “Since the restaurants opened, we have had increased footfall to the area and in our businesses. I am seeing some new faces that are not my usual clients. The positive effect of the presence of such restaurants in Mar Mikhael is that a crowd of potential clients are discovering the area because of them,” says Halios.

As one landlord, who is currently using his property as an electronics repair shop for cars, puts it, “I am asking for $150,000 annual rent for my shop because it is big. If I get it, I will gladly rent it and retire: who keeps on working like this when they can just relax and have money delivered to their doorstep?”

“The challenge is how much one wants to develop an area economically without destroying its heritage. It is a balancing act,” says Zouain, explaining that GAIA-Heritage doesn’t want to prevent construction or harm the economy. Rather it wants to do what should be done in any city that grows in an organic and harmonious manner: balance the interests and needs of the community with the need of the investors. This is what the “In Mar Mikhael” conference is attempting to illuminate.

Harb also speaks of the importance of balancing private economic interests and public interests when it comes to development of a neighborhood with remarkable urban heritage such as Mar Mikhael where gentrification risks are high. “The problem is that we lack a strong public agent, such as the municipality, willing to implement existing urban planning regulations that can protect the public good, of which urban heritage is a key element, and to restrict the freedom of private real estate developers who will always look for ways to enrich themselves,” says Harb.

This lack of regulation applies to residential real estate as well. Real estate developers have been obtaining several small lots, which, by themselves, are not big enough for huge developments, but when joined form a big piece of land which they can then build high rises on, as is evident by the three towers already protruding awkwardly amidst the short buildings of Mar Mikhael. While this is not illegal, not regulating it could lead to Mar Mikhael becoming a jungle of towers and losing its urban identity, says Harb.

The ironic aspect, explain both Zouain and Harb, is that commercial and residential real estate developers, through their unregulated growth and the rising rents they bring to the area, end up destroying the very elements that first attracted them to it, namely its authentic charm. “What is going to happen if we leave the market totally free is that all those who want to buy the developers’ condominiums in Mar Mikhael because the neighborhood has a charming flair will end up living in a place that is as dull as any other place in Beirut and will move on,” says Zouain, adding that this, in the long run, will lead to the rental prices going down again for both the commercial and residential projects.

Through the “In Mar Mikhael” conference, Zouain is hoping to initiate dialogue between the residents, the ACD industry and the investors on how they are all sharing and shaping the Mar Mikhael of today and what their common needs are. His next aim is to make the municipality of Beirut, the Ministry of Culture and the real estate developers aware of the importance of protecting Mar Mikhael’s urban fabric before it is too late. “We are fighting it but I don’t know if we can really do anything: we are trying with our goodwill, the tools and knowledge we have. We will see what will happen but it is very long term,” concludes Zouain.

The post (De)sign of the times appeared first on Executive Magazine.

In December 2014, the United Nations General Assembly endorsed a request to Israel to compensate Lebanon for environmental damages to the latter’s coastal and marine territories following an oil spill. While the endorsement does not provide binding measures, it is the first time that the General Assembly has included a compensation figure — eight previous resolutions had not. In reaching this point, Lebanon has worked to identify its legal options justifying Israel’s responsibility for the spills — its next step will be to determine the scope of its argument and in which jurisdiction to pursue it.

Resolutions and politics

The first such decision, asking Israel to compensate Lebanon for an interim figure of $856 million, resulted in the General Assembly voting 170–6 in favor of the resolution — Israel, the United States, Canada, Australia, Micronesia and the Marshall Islands all voted no. The compensation request is in regard to oil spills from Israeli Air Force attacks on oil storage facilities during the 2006 war. The resolution also acknowledged comments from an August report by UN Secretary General Ban Ki-moon, noting “The Secretary General expressed grave concern at the lack of any acknowledgment on the part of the government of Israel of its responsibilities vis-à-vis reparations and compensation.”

According to a statement released by Lebanon’s Permanent Representative to the UN, Nawaf Salam, “Lebanon considers this to be a major progress, especially [since] a figure has been put forward as a basis for compensation using a clear and legal method of calculation.” Though General Assembly resolutions are not legally binding — UN Security Council decisions are — they do generally reflect world opinion says Nasri Diab, a lawyer studying Lebanon’s legal recourse. As such, a statement obtained by Executive from the Israeli Mission to the United Nations rejected the resolution, stating that it “has long outlived the effects of the oil slick, and serves no purpose other than to contribute to institutionalizing an anti-Israel agenda at the UN.”

Politics aside, the environmental effects of the spill are not to be trivialized. The destruction of seaside oil storage tanks in Jiyeh, some 30 kilometers south of Beirut, spilled oil into the Mediterranean which then spread up the coastline of Lebanon and into Syrian waters, suffocating marine life, destroying fishing, breeding grounds and fauna and flora, both onshore and off.

Yet what does Lebanon hope to achieve from these legal proceedings? Is it in pursuit of a moral judgement against Israel or does the government of Lebanon actually expect Israel to provide financial compensation for environmental damages? What does seem clear, as indicated by Israel’s staunch reaction to each decision reached by the General Assembly, is that if a binding resolution were reached, it would open a can of worms to all compensation liabilities for the damages caused by Israeli aggression against its neighbors dating all the way back to the country’s inception in 1948.

Environmental damage 

Just a few days into the July War of 2006, Israeli air force planes swooped into Lebanon, bombing the Jiyeh power station and its oil storage facilities, spilling more than 15,000 metric tons of heavy fuel oil into the sea. Another 55,000 tons stored onsite burned, causing a plume of black smoke reportedly visible from 60 kilometers away. It was a “major disaster” according to a 2009 paper for the National Council for Scientific Research — a public research institute in Lebanon. The oil extended nearly 3,100 square kilometers shortly after the spill, reaching the northern coast of Lebanon — “from both volume and geographic perspectives, most of the Eastern Mediterranean basin was affected,” the research concluded. In the months following the spill, surveying by the Italian Coast Guard of oil sinking to the sea bottom off the Jiyeh coast was measured to cover an expanse of 50,000 square meters, and that oil “occupied every space between the rocks.”

Green Line, a local environmental NGO, described the oil spill as catastrophic with “tremendous negative environmental, social and economical [effects] both [in] the short term and long term,” adding, “It damaged marine ecosystems, destroyed fishermen’s livelihoods and rendered coastal areas lifeless.” The United Nations Environmental Program’s 2007 report had a similar conclusion, saying that the “spill resulted in significant contamination of the shoreline.”

Marine life suffered as a consequence; invertebrates such as crustaceans and algae were covered in oil and population recovery is expected to take several years. No significant losses were reported among sea birds, but fauna for the birds was smothered, affecting migratory patterns. Lebanon’s coastline — a breeding sanctuary for sea turtles to nest and hatch their offspring, such as the Green Turtle species — was heavily affected as were breeding waters for sharks and Bluefin Tuna. In addition marine plant life suffocated where the oil spill blocked sunlight.

Richard Steiner, an environmental consultant with Oasis Earth, described the environmental damages caused by the spill to be quite serious. Though Steiner has not studied the long term effects of the spill since his initial research for a 2006 report commissioned by Lebanon’s Ministry of Environment and the International Union for the Conservation of Nature, he acknowledges that, “We know that large marine oil spills can have very long term ecological effects. And human health was certainly affected by the smoke plume from the burning oil.” Steiner also concluded that damage can take time to show, citing the Exxon Valdez spill in Alaska as an example, “Some fish population collapses did not occur until 3 years after the initial spill.”

For Diab, the compounding factor of the spill was due to Israeli negligence — their naval, land and air blockade of the Lebanese territory intensified the damage, “The people who could have mitigated the spill could not do their job at that time because of the blockade. For long weeks the spill was there without the possibility to clean it up.” Steiner, corresponding with Executive via email, added, “Certainly, if there had been a prompt and full scale response to the spill, far less damage would have occurred.”

Indeed, as Steiner wrote in his report published one month after the spill, the Israelis would not allow even aerial observations. “I asked the French Embassy in Beirut for support to conduct an aerial survey with their relief helicopters along the coast, to ascertain the extent of remaining offshore oil, and to better guide what response options might be necessary. After several attempts by the French ambassador as well as [the] European Union to secure clearance from Israel for this flight, Israel refused to grant clearance at that time.” 

Donor support

In the immediate aftermath of the spill, funds to aid Lebanon in its cleanup were relatively miniscule. As part of a previous resolution Lebanon had agreed that the Lebanon Recovery Fund — a fund to aid Lebanon in its recovery and reconstruction — would host the Eastern Mediterranean Oil Spill Restoration Trust Fund that would receive any funds earmarked for the cleanup. The former fund received nearly $46 million in contributions from 2006 to 2008 with roughly another $6 million added in 2013 by Germany. After factoring in another $3 million for interest, total contributions amounted to just over $54 million — the latter fund received zero. 

Secretary General of the United Nations, Ban Ki-moon, had urged donors in previous resolutions to provide funding specifically to clean up the spill and monitor the recovery, but to date no contribution has been made to the fund according to comments received by Executive from Rony Gedeon, Monitoring and Evaluation Officer at the UN Resident Coordinator’s office in Beirut. Gedeon did point out that the resolution highlights bilateral contributions, “A project is currently under development by the Government of Lebanon for funding by the European Union that will include a component on the sound management of recovered wastes.” Gedeon added that from 2006–2009 the UN mobilized support for the cleanup which saw contributions of some $3 million; additional money, expertise and specialized equipment for the oil spill cleanup effort was obtained by Lebanon from various other international donors. However, Steiner argues that the “International response to this intentional environmental damage was terribly insufficient.”

Calculating compensation

“The General Assembly and the Secretary General in his reports have asked for a figure of what Lebanon is claiming from Israel,” says Diab who has been an integral figure in preparing Lebanon’s legal case. Working with a number of stakeholders — the Ministry of Environment, UNDP and the Ministry of Foreign Affairs — Diab has laid out which avenues Lebanon might pursue to obtain compensation from Israel for the damages caused by the oil spill. The first step, though, was calculating a figure that would hold up under legal scrutiny. “For eight years, the General Assembly had already said that Israel is liable and responsible for the damage. Now a figure has been put [down] and this is the most important thing,” Diab says.

Ban Ki-moon, in an October 2013 report to the General Assembly, advised UN bodies to build on the World Bank’s initial economic assessment of the environmental degradation resulting from the spill. The 2007 report concluded that the conflict had a devastating effect on Lebanon with significant impacts on the economy, environment and public health. The report cites degradation due to the oil spill amounting to $240 million, but Diab says this figure was incomplete and omitted the passive use value (value on public goods not in use, like the monetary value of a national park) of the coastal resource — for this Diab calculates an additional amount of $218 million since 2006, totaling $458 million. 

Adjusting for global inflation and lost opportunity in terms of an interest rate, Diab explains, leads to a compensation valued at $856.4 million by 2014 as requested in the resolution, but the figure might continue to climb. “There is no limitation. As long as you have damage that will appear in the future and which you can prove is linked to the oil spill, it should be covered. That’s why it is an interim figure and not definitive.”

In the months following the spill, Steiner, the environmental scientist, tells Executive that “The spill, and of course the war, had profound negative effects on local businesses, including fishing and tourism. Most were shut down for a time period during the spill, and lost considerable economic value during that time.” He adds that in meetings in the months after the spill with both the governments of Israel and the United States he had, “Proposed a $1 billion restoration and compensation fund, to be paid by Israel.” By December 2006, the Israeli ministry of justice had rejected this proposal. 

Legal recourse

Diab, alongside a team of experts at Lebanon’s ministries and UN bodies, is ‘writing the book’ on legal compensation in relation to war and environmental damages — it is an area of law with limited precedence. Sure, Diab may not have as high a profile as another international legal expert with marital ties to Hollywood but, “If this decision will be translated into legal texts — whether environment or war — it will be important,” Diab blushes.

But the legal justification is not there yet. It has taken several years to obtain these decisions — nine General Assembly resolutions, and a resolution by the United Nations Human Rights Council — yet all are nonbinding. Diab has explored every option available to Lebanon through two reports including what he terms the “dead-ends” — the non-available options that seem plausible but for one reason or another are not. These would include many international conventions, for example the United Nations Convention on the Law of the Sea. “In Lebanon, we already have a problem in that we do not recognize the existence of Israel, so it is very difficult to invite Israel to join Lebanon before some international forums devised by certain treaties and conventions,” Diab explains.

Diab now is in discussions with the other stakeholders to begin preparing a third report looking at which legally binding option is most viable to pursue. “Lebanon now has a nonbinding resolution rendered by the highest institution of the United Nations after the Security Council. What Lebanon needs to do at this stage is see what it can do with it in order to have it enforced somewhere. We have other avenues but I’m not sure yet, it still needs to be studied.”

When pressed, Diab suggests the next step will define the scope of Lebanon’s legal argument, “The International Court of Justice would be a reasonable forum for the next stage, especially in its advisory jurisdiction.”

The post Israel’s cold shoulder appeared first on Executive Magazine.

It is in Lebanon, of all places, that the tale of Technica unfolds. The company manufactures and customizes automated end of line solutions — those machines that prepare products after they’ve been individually assembled, or wrapped, for shipping. So, if you were to say, eat a Twix candy bar in Cairo, it would have been Technica’s machines that prepped the boxes of candy bars for shipping, separating products by the barcode number and sending them to the warehouse by automated conveyor belts. Or, for example, if you were to pour yourself a glass of milk bottled by Almarai — one of Saudi Arabia’s largest dairies — it would have been Technica’s machines that collected the milk bottles, sanitizing and sorting them before carrying them off to a refrigerator warehouse for shipping — all completed automatically with little human interface. And these machines are all designed and built in Lebanon, who would have thought?

Tony Haddad, Technica’s founder and general manager, is on a mission to transform the way other factories package and prepare their products. The family owned business and manufacturer of robotics and automated assembly solutions has completed expansion of its Bikfaya factory with an eye on further entrenchment in the GCC markets and new opportunities in Africa.

Robotic dreams

If adversity produces champions, then Technica is Lebanon’s poster child. Especially as in the world of industrial manufacturing big usually conquers small. But for firms operating in niche fields, such as robotics, small yet aggressive companies can thrive in even the toughest of environment. Technica is aiming to be the preferred partner for automated solutions in the Middle East and African markets by 2020. According to Technica’s survey of the Middle East market, the sales of automated solutions have reached $10 million annually.

Today, Technica is going head to head with large European players already entrenched in the business, such as Krones (a large German conglomerate) and OCME (an Italian automation firm), as well as a few regional companies offering more niche solutions. Yet Technica has rooted itself in the Middle East market — its client list stands presently at 276 — serving local divisions of global corporations like Mars, Nestle, Procter & Gamble and Coca Cola, to name a few. And by 2020 Technica hopes its client base will reach 325, partly driven by further expansion in the GCC markets but also propelled by the push into African markets.

All of this started in a tiny garage during Lebanon’s Civil War. When the war became too intense to continue operations, Haddad packed everything on a boat and moved the business to Cyprus. When tensions eased in 1991 and the Syrian occupation lent some stability to the country, Haddad moved the company back and began construction of a new factory in Bikfaya — the site of their present operations. By this point one starts picking up on a recurring theme, and maybe Haddad took note from Warren Buffet — the American billionaire investor — who is famously quoted as saying “Be fearful when others are greedy and greedy when others are fearful.” That is to say that where others in Lebanon have found war and conflict to be insurmountable, Haddad has perceived them as mere “bumps in the road.”

Bumps in the road

In its first two decades Technica’s sales progressed steadily, the company was growing and revenues were roughly doubling every five years. By 2006, with the July War unsettling the country, Haddad set out to again expand operations, adding factory floor space to the existing facility with growth driven by entry into new markets in North Africa. By 2009 the company’s revenues had reached nearly $8 million.

There have been hiccups, Haddad points out, along the way. A broader look at gross revenues shows continuous growth apart from two years, 2009 and 2010, where Haddad admits that the company’s sales were stagnant. He links the issue more to the slowdown of the global economy and a slump in GCC markets — like the slowdown of Dubai’s economy in 2008 — as projects were put on hold or simply canceled. Likewise in 2013, the worsening of the Syrian conflict halted Technica’s transportation of goods across the territory for delivery to factories in the GCC. Now the company, like other firms in Lebanon, has to export by sea on routes that are just as expensive. But what at first was a negative for the business, Haddad describes, has turned into an advantage — Lebanon’s ports have expanded and the shipping companies have developed their maritime routes. For Technica, the costs of shipping by sea to the GCC are not substantially different — reliability has become the most important factor. And according to the company, shipping by sea to Jeddah, for instance, now takes only five days when transit times by land were 11 days — “We’re using faster shipping routes now and we’re saving on that in terms of the cost of time. It became an opportunity stemming from a problem,” Haddad explains.

By 2011 the company was again flush with cash and Haddad announced plans for another expansion of the factory — despite civil unrest budding to the east. With the war raging in Syria, Technica undertook capital expenditures totaling $1.5 million — the expansion was to double the size of the factory while creating an additional 18 technician and engineering jobs. This latest expansion phase was completed in 2014 and by the end of the fiscal year the company’s revenues had risen to nearly $16 million with exports amounting to 90 percent of the company’s sales.  

Now Haddad is eyeing new markets in Africa — places like Ghana and Nigeria, which are themselves looking to develop value chains in the production of food products, providing big opportunities for companies like Technica to supply solutions to new and expanding factories. Ultimately, Haddad says Technica’s strategic vision is to double the size of the company by 2020, with a goal of increasing revenues by 15 percent each year. This, Haddad says, would give Technica greater capacity to build bigger, more complex automated systems and multiple projects simultaneously.

Into the future

And here’s where Technica’s story gets really interesting. The company has been built by the family from the ground up — yet Haddad has been the integral figure driving Technica’s evolution since its inception in a garage in the early 80’s. So after a 30-plus year career he is starting to think about easing his workload, and with this come questions about executive leadership. For all businesses, let alone a family owned one, this is an important issue — leadership drives the culture and defines the company’s strategic vision. Yet, if this idea of executive leadership were suggested to Haddad, he’d clarify that his style is to lead from behind. Technica subscribes to what is called servant leadership — a philosophy with its roots in the annals of history but adapted for modern application. In organizations employing the servant leadership philosophy, diffusing power through the organization and the development of employees into top performers are the priorities. The general notion is that top management serves the middle managers who serve the factory workers so that the entire organization can better serve its customers — similar to an upside down, pyramid structure. Indeed, it was from the factory floor and then the employee cafeteria that Haddad initially spoke with Executive.

By 2018, Haddad reaffirms he’ll no longer be Technica’s general manager — and similar to most family businesses, the assumption is that one of his children will take over when Haddad steps back. Yet it is not only the GM position that will need to be filled — Haddad is also Technica’s sales manager. There are four children in the Haddad family, each owning a 24 percent stake in Technica (Haddad retains a 4 percent minority stake in the company), three of whom work in the family business — Cynthia Haddad Abou Khater as stategy management officer, Cyril Haddad working in customer service, and Michel Haddad in multinational account sales. While being a family member has been a prerequisite to own shares of the factory and receive a dividend, having the same blood has never guaranteed a job in the factory. “If you have something to bring to the table we want you to work in the company — being a family member is not a guarantee,” Haddad says, somewhat sidestepping the question of who will run the company when he gives up the reins.

Technica has no formal board of directors. Its top management team sets the strategic vision of the company — its managers of operations, finance, human resources, sales and strategy. So while Haddad fills both the role of general manager and sales manager, his daughter, Abou Khater, is the company’s strategy manager. Currently the team is working internally — Haddad says they might bring in a consultant at a later stage — to develop its corporate governance to formalize succession plans by refining the descriptions for each managerial position while cultivating the leadership attributes desired for the top position. Haddad says his plan is to continue grooming his replacement so that in three to four years he might be able to step out of daily operations and assume a more strategic advisory role. “I’ve already put the right people in place,” he adds. When reached by telephone Abou Khater tells Executive that the process of succession planning began last year to formalize Technica’s corporate structure — job descriptions were drafted and key attributes to be honed were identified. But Abou Khater was also vague when discussing who might lead Technica in the years to come, “We would prefer an internal candidate and have shortlisted maybe two or three individuals.” But Abou Khater also rationalized that the company just isn’t yet in a position to say who will take over when the elder Haddad steps down — some three to four years from now. “We also don’t want the rest of the factory finding out who our next GM might be from a magazine — the candidates names will be announced on our terms.” 

Succession planning aside, the important question is whether Technica, and manufacturers in a similar position, can continue in such a hostile local environment. There is support from the government but it remains limited to plans executable over the long term. The rehashing of policies toward mitigating production costs, the introduction of new industrial zones, and the promotion of links to education have helped manufacturers little in the short term. According to data published by the World Bank, manufacturing has been contributing less than 10 percent to national GDP in each year since 2005. For some, long term plans sometimes become indefinite.

The post Automating the future appeared first on Executive Magazine.

In every corporate narrative, some dates are noted as remarkable, while others less so. For the founders of Shahiya, a digital portal for Lebanese culinary secrets and cooking instructions, January 28, 2015 is one such memorable date. It is the day when NetSila, the holding company that owns the five year young Shahiya recipe site, completed the last step of handing over its entire equity to Japanese acquirer Cookpad for $13.5 million, as well as the date they had to evacuate the Cookpad team on only its second visit to Beirut.

Just as the ink was drying on the papers that would finalize the acquisition, a cross border exchange of fire, including rockets, erupted on the country’s southern border in what is considered the most significant military confrontation between Israel and Hezbollah since 2006. There is perhaps no better example of the Lebanese security situation taking its toll on business than the anecdote of having to evacuate the buyer.

For those of us used to these cyclical bursts of violent happenings, generally without escalation, it would be good to remember this is not necessarily something that falls within the comfort zone of your average buyer — and certainly not your average Japanese one. Tokyo was ranked the safest city globally by the Economist Intelligence Unit’s Safe Cities Index 2015, with third largest Japanese city Osaka also ranked high at number three.

Perhaps not surprising, then, is the absence of significant Japanese investment in Lebanon. Cookpad, which operates in the same digital space as NetSila but with global ambitions, is a rare example of a Japanese company buying an Arab startup. Though the Japanese embassy in Lebanon could not confirm whether Shahiya was the first acquisition made by a Japanese company, they did assert that Japanese investment in Lebanon was marginal. Japan does not appear on the United Nations Conference on Trade and Development’s (UNCTAD) list of foreign direct investment into Lebanon by country, which includes 15 states.

The business of food

But while Beirut and Tokyo are very different in terms of lifestyle, security and culture, there is something that brings Lebanese and Japanese people together: food.

Food, that is, and the internet. In the increasingly digital world, where content perusing has shifted to the web and mobile platforms, the Shahiya team is still convinced that some things have remained the same, particularly people’s appreciation of, and fascination with, food. “The tools are changing, but the relationship, the need, is constant,” says Daniel Neuwirth, cofounder of Shahiya. The portal, created in 2010, was focused on food all the way. “We really wanted food, the best in food, only food,” says Hala Labaki, cofounder and CEO of Shahiya. Labaki and Neuwirth are two of the four cofounders of the platform, along with Carole Makhoul Hani and César Gemayel.

Cooking up the concept for Shahiya in a period when digital business in Beirut was very young and new startups could still find virgin markets, the four founders tell Executive that they specifically moved back to Lebanon to start the venture. Living abroad at the time, they saw promising signs that internet penetration in Lebanon, which had been lagging behind, would increase. “We sensed very positive growth signals in this industry in particular. And we thought, ok, let’s do something,” says Labaki.

Five years on, the numbers proved them right in so many ways. Usage of the new site roared along with roughly 100 percent annual expansion in user numbers and peak consumption during Ramadan, the Shahiya team says, citing a “smooth” progression to 3 million unique visitors per month at the time of acquisition. In terms of turning a profit from their advertising based business model, the team would not say more than claiming they are “almost there.”

But present operational profits should momentarily be a reward of very minor concern for the founders and NetSila’s two local financial investors, Middle East Venture Partners (MEVP) and the Building Block Equity Fund. By far the most dramatic growth ratio in the venture’s short history is its increase in valuation when you compare the $13.5 million sale price cited by MEVP to the valuation in 2012 when MEVP and the Building Block Equity Fund injected $500,000 ($250,000 each) into the company. 

According to Walid Hanna, managing partner at MEVP, the two financial investors each took an 11.1 percent stake at the time, implying a valuation of $2.25 million. This translates into, for Lebanese standards, an almost incredible valuation leap of 500 percent in under three years. It also means that the two funds each walk away with close to $1.5 million and the cofounders with over $10 million shared between them. Labaki, however, would not go into those details and says the quartet did not wish to disclose the shareholding structure at the time of the exit.

For Shahiya, having no prior ties to Cookpad, it was a bit of a surprise when their eager Japanese colleagues contacted them via LinkedIn. Labaki acknowledges that while they hadn’t anticipated an exit so soon, when building a company that resembles companies in other more mature countries, the idea of an exit was not entirely far fetched. “You always think about what is the global player that can acquire you, because this is a big part of the game. You’re not obsessed about it, but you’re aware,” she says.

For Cookpad, the company had been waiting to sink its teeth into an Arabic language food portal. After investing in Indonesian recipe service DapurMasak in 2014 and acquiring American recipe apps provider Allthecooks and Spanish recipe provider Mis Recetas in 2014, the Shahiya acquisition was Cookpad’s fourth installment in their chosen quest of virtually conquering the food world.

While food appreciation remains a human staple, one thing the digital age has brought on is the appetite for user-based companies to expand globally. Tomoya Yasuda, head of international business development at Cookpad, had been busy scouring markets for potential buys, and settled on Shahiya because he claims they were the “largest in the region” in the domain of food. When Executive jokingly asked Yasuda if Cookpad was seeking world domination, his answer was short and to the point: “Yes.”

Big in Japan

Cookpad is listed on the Tokyo Stock Exchange (TSE) and has seen its share price grow by over 250 percent in the past two years, taking the closing of the NetSila deal on January 28, 2015 as a reference date at which the value of the Cookpad stock was JPY 5,000 (approximately $42). Coming after years when the Japanese stock market had been in slow-cook mode, the stock’s rise came in context of Japanese Prime Minister Shinzo Abe’s economic reform policy — coined Abenomics — initiated in 2012, which has consisted of fiscal stimulus, monetary easing and structural reforms that have led to a boom in the Japanese stock market overall. 

However, Cookpad’s share price growth was unusual even when taking this positive environment into account as the stock outperformed the TSE’s broadest index — the TOPIX general index — almost four times over the same two year reference period. 

According to Cookpad’s latest financial disclosures, the company achieved sales of JPY 6.7 billion ($56.4 million at current exchange rates) and net income of JPY 1.52 billion ($12.8 million at current exchange rates) in an eight month period ending on December 31, 2014. The company did not calculate percentage changes as the reporting period reflected a change in the financial year from April to December. 

According to its full year financial statements for 2013 (ending in April 2014), sales increased 30.5 percent between 2012 and 2013 from JPY 5 billion ($42 million at current exchange rates) to JPY 6.5 billion ($54.7 million at current exchange rates). Their largest revenue is in premium services, which make up over half of their sales, with most of the remainder in advertising. By the end of Q4 they had 44.04 million monthly unique users, with 1,300,000 paid members for their premium services business, served by 181 employees. In addition to their acquisitions of the other food companies, they also acquired Coach United, a Japanese marketplace of private lessons, to diversify their business in Japan.

The crossover

NetSila will become Cookpad MENA, which is wholly owned by Cookpad and registered in Lebanon. The Shahiya team will stay on board as managers to guide the growth of Cookpad MENA.

Both parties are understandably excited about the amalgamation. “Cookpad only gives us more means to grow faster and more aggressively in our strategy,” says Labaki. “More technology, more experience in a lot of things: data, technology, user behavior, [user interface]. They have maybe one of the best [specialists] in [user interface/user experience] in Japan.” Both companies spoke of staff exchanges between the MENA team and the Japanese team, though Yasuda, when asked how that will be affected by the security situation, acknowledged “I don’t know, to be honest.”

Cookpad is set on the steady growth of Cookpad MENA. An investment from the parent company will help fuel Cookpad MENA’s growth in the region. While the Shahiya founders would not disclose the amount, Neuwirth said “it’s easily at par with [venture capital] funding.” He adds, “We always had ambitions about growing much larger than we are today but the difference now is that the partnership with Cookpad just came to the table and it came out that with Cookpad, we will be growing faster.”

Cookpad MENA is to turn into a subscription based business in line with its Japanese parent, whose managers are staunch believers in that model. “In terms of financials, as of today, subscription business [brings] major resources, and I think that’s what we should do … whether we can deliver enough value for the users, that’s the key,” says Yasuda. Subscription is the most profitable line of business for Cookpad in Japan.

For the Cookpad MENA team, as well as their Japanese parent company, regional expansion is the way forward. But this begs the question: since Lebanon and the Middle East have so many obstacles stifling business — the lack of credible capital markets, for one — would the kind of growth that Cookpad MENA is looking for be possible without the help of a larger, parent company? While Labaki has seen her fair share of obstacles, she was confident in the capability of Lebanese bred business. “With the right financing we could have become a very serious and annoying player,” she says.

The post Guess who’s coming to dinner? appeared first on Executive Magazine.

For many years Lebanon’s national tree, Cedrus libani, has been designated a beleaguered species whose numbers are lower than they should be. No such danger has ever faced our country’s premium financial species: the Lebanese bank. If there was any existential problem that our banks may have faced since national independence, it was overpopulation — too many bankers for a small country.

But this month the Lebanese are presented with the debut of yet another commercial bank that vies for their deposits — and this institution has borrowed its name from their national symbol. “Cedrus Bank will be specialized in [serving] commercial and retail clients. And we have an organic growth strategy,” says Fadi Assali, just having been elected chair–general manager of the new bank.

Executive visited Assali at Cedrus Invest Bank, a Beirut based wealth management provider where he is cofounder and chief executive. Itself hardly four years old, Cedrus Invest operates under a specialized banking license and is majority shareholder in Cedrus Bank with an 85 percent stake. Participating in the new bank for the remaining 15 percent stake is Nicolas Chammas, the head of Beirut Traders’ Association. He will be board member and vice chair of the bank.

Although Cedrus Bank is just rising from the starting blocks, it is not a greenfield establishment. It enters the market with the existing branch network, systems, asset, deposit and lending portfolios, and almost all the employees of the Lebanon operation of Standard Chartered Bank. As Executive went to print, Cedrus Invest’s acquisition of Standard Chartered was set to close with a final shares transfer scheduled for February 27. The Lebanese central bank had approved the takeover in the last quarter of 2014.

As Assali and Cedrus Invest cofounder Raed Khoury tell Executive, the acquisition equipped Cedrus Bank with a client portfolio of 12,000 accounts, 6,000 credit card relationships, assets and deposits of about $90 million and $75 million, respectively, and a loan portfolio “in the $50 millions.”

“But the plan is to grow the business quite substantially,” adds Assali. To digest all aspects of the acquired bank and prepare Cedrus Bank for growth, “What we are doing now, [as a] first step, is raising the equity of the acquired bank to be around $60 million,” he says.

Shooting in the green

The current equity boost comes after previous increases that saw Cedrus Invest’s capital more than double from $52 million in 2011 to $110 million last year.

According to Assali, the capital increase in 2014 amounted to about $47 million because the initial capital was already boosted by retained earnings. The increase was supported by all existing shareholders, including several prominent Saudi investors, but also entailed the addition of new shareholders who were mainly Lebanese.

“Under an agreement with our historical investors, we wanted to introduce new blood to the structure. So the capital increase was done in a way whereby two thirds of new funds came from existing and one third from new investors,” Assali explains. He acknowledges that the capital increase diluted the shareholdings by Assali and Khoury “a little” from their initial combined 8 percent shareholding.

Tracking many details

According to Assali, the confidence of Cedrus Invest shareholders and management in the expansion was founded upon growth experiences of about 25 percent per annum since 2011 in both assets under management and profits. The plan for Cedrus Bank is to reach profitability after two years of operations.

In local banking history, the launch announcement of Cedrus Bank on March 3 is actually the repatriation of this financial institution in a third life. It had been founded as an independent local bank under the name Metropolitan Bank in 1979 and was acquired by Standard Chartered in 1998, marking a rare investment by a foreign bank via takeover of an existing license.

From Standard Chartered’s perspective, this investment came at a time when the UK based institution — with specialization in emerging markets — was on a drive to expand its global footprint. Its decision to divest of the Lebanese unit, which became public knowledge in the last quarter of 2013, was apparently triggered by underperformances of Standard Chartered in complex global endeavors and important Asian markets, and was sold by the bank as a refocus on “priority markets” that entailed withdrawals from several countries.

While Assali would not confirm how much Cedrus Invest spent on the acquisition because of an agreement with Standard Chartered not to divulge the price, he admits that the $24–27 million range quoted in local papers was “not far off.” Standard Chartered did not comment on its sales decision and future strategy for its Lebanon presence when contacted by Executive on several occasions.

Assali explains that Cedrus Invest is walking away with Standard Chartered’s entire retail banking operations as well as some private banking clients, while Standard Chartered will maintain a representative office in Beirut to service a small corporate portfolio that it retained.

The takeover was a somewhat drawn-out process, because Standard Chartered had concerns over the future of the employees, and also because of issues which Assali describes as “logistics,” related to the transaction, such as usage of Standard Chartered’s proprietary systems during a transition period. Assali also notes the seller has paid particular attention to Cedrus Invest’s strategy going forward and that both sides agreed on entertaining a post-acquisition relationship.

As the Cedrus brand previously only stood for private banking and wealth management operations, their venture into retail business constitutes not only an asset acquisition, but also a talent buy. Assali claims they intend to keep about 85 percent of the acquired bank’s staff and selectively add new people where it did not have capabilities, such as housing finance. By end of the year, Cedrus Bank will have a headcount of 100 to 105, he says, compared with about 30 current employees at Cedrus Invest.

With an eye on the toughening of operational challenges for Lebanese banks and banking in general, Khoury acknowledges the presence of “clear pressure” on banking profitability in 2015, but argues that Cedrus Bank can take a long term approach because its shareholders are not seeking quick returns. “We will be happy to grow our balance sheet quickly in terms of multiples which will be very high, but in terms of absolute [numbers] we will be building our balance sheet very slowly and can pick and choose our clients according to risk conditions because we are starting from a small base,” he says.

Moreover, he argues, the tough times already have proven fortuitous for Cedrus. “All conditions have a positive and a negative aspect and because the conditions in the region and in Lebanon represented a higher risk for Standard Chartered than they were comfortable with, the opportunity was created for us to step in. If conditions in the region would have been very good, they would not have thought of selling or the price would have been much higher,” he says.

The governance proposition

Cedrus Invest Bank and Cedrus Bank will be run by two different boards and operate as separate entities dedicated to commercial and retail business at the latter and investment and private banking services at the former. Assali says, “The private banking arm is the Cedrus Invest Bank, so we have a very clear separation between the lines of businesses and the way they are run. But with complete synergy; [it will be] separation with synergy.”

According to him, the assets-under-management portfolio at Cedrus Invest, plus a small addition of private banking business via the acquisition, has expanded to being currently “very close to $500 million.”

The current Cedrus Invest board that was elected in 2014 for a three year term includes cofounders Assali and Khoury, with the latter holding the position of chair–general manager, plus three shareholders as non executive members and two or three independent members, among them Ghassan Ayache, a former vice governor of the central bank and previous chair of Cedrus Invest Bank.

The board of Cedrus Bank is starting out with five members headed by Assali as chair and by minority shareholder Chammas as vice chair, Assali says, and will be expanded very soon by adding at least one new member.

It is not intended for the group to stay at this stage for a very long time. While Cedrus Bank is starting out with three existing branches previously run under the Standard Chartered brand, the plan is to quickly utilize two additional existing branch licenses that had become disused. In the short term, the bank aims to have two to three new branches running within 18 months.

The organic growth strategy will involve further developing their retail banking services, beginning with new delivery channels and including a roster of new credit card and lending offerings focusing on what Assali dubs the “middle market” clientele. “We see a need for that niche of market to be well served,” he says. 

Reflecting the importance of expanded human advisory and automated service points such as electronic branches, the largest investment budgets of the rollout and refurbishing of the branches will be allocated to technology and human resources. The technology budget on its own will surpass $1.5 million per year for the next two years.

Strategizing for much more

In the medium to long term, however, Cedrus Bank is intended by both its investors and executive management to become a player that can benefit from the economies of scale required to make a mark in Lebanon’s banking sector. 

Over the coming five to six years, the young Cedrus Bank thus envisions expansions that could well go beyond organic into what Assali calls growing “organically and opportunistically–inorganically.” This, he adds, is “because in commercial banking, size matters. And you have to have a certain size in order to be able to compete.”

Ultimately then, Assali and Khoury aim at joining the top of the size league, the alpha group of banks which hold customer deposits of above $2 billion by current reckoning. As Khoury insists, however, “we are not obsessed with being alpha or beta. Alpha is not a target by itself but will be [a] natural consequence of what we want to do.”

While the two declined to divulge any specific plans for future mergers and acquisitions, both confirm that the new bank will need inorganic growth to achieve such dimensions. Citing lower valuations experienced by local banks when compared with 10 years ago, Khoury sees three reasons for new takeover opportunities to arise. “We feel that there is a future possibility of banks being sold because they are not able to maintain a good [internal rate of return]. Next, the central bank promoting mergers and acquisitions and third, many bank owners are no longer young and face succession issues so some might be interested in selling,” he says.

Noting these ambitions, and evolving conditions for the banking industry, it appears quite possible that the entry of Cedrus Bank into the market could become a factor in sector consolidation rather than adding just a new brand for corporate and retail banking.

The post Aiming for alpha appeared first on Executive Magazine.

Lebanon still has people, right? While this may sound like a dumb question, it was the only thing running through my mind after a 90 minute meeting with Parliament Speaker Nabih Berri on February 23. We were talking about Lebanon’s economic opportunities, but the speaker had a singular focus: natural resources. He talked about oil. He talked about gas. He even talked about exporting water. What he ignored was our most valuable asset: human capital.

Female Lebanese, for example, are being underutilized as agents of economic growth. Empowering them would boost both productivity and GDP. We know Lebanese women are well educated, so we simply must ensure they are better represented in the workforce for the benefit of the entire country. We have proof that, despite all the obstacles they face today, women can and do succeed in the Lebanese workplace. We need to help more women join the workforce by both offering them more legal protections such as laws against sexual harassment, in particular, and creating more job opportunities in the country, in general.

We’re a nation of creative minds and entrepreneurial spirits. We should have a larger and more dynamic knowledge economy in which both our men and women can prosper. Instead, we have an $80 million fiber optic backbone for internet traffic sitting unused. Simply turning on what we already have can spur innovation, growth and job creation. And it can be done quicker than waiting for politicians to agree on exploiting what may or may not be buried beneath the seafloor.

More than oil, gas or convoluted schemes to sell water we don’t even capture in a large enough quantity to meet our own demand, Lebanon needs hope and more investments in its human capital — things not even our politicians can steal.

The post It’s the people, stupid appeared first on Executive Magazine.

Every March 8 the United Nations marks International Women’s Day to highlight the progress women have made towards equality with men and drawing attention to the challenges women continue to face across the world — the societal pressures, prejudices and violence subjugating them. Executive set out to mark the occasion by exploring the sadly inadequate engagement of women in the Lebanese workplace, and identifying some who have broken past discriminatory laws and prejudices to rise to the top of male dominated fields.

The societal expectations prevailing within Lebanon and across the region, as well as the subjugation and violence women face, underline women’s rights as a critical issue, but one that is not often a priority. What is clear is that the women of the Middle East continue to live in patriarchal societies where at one end, the violence — including harassment, assault, mutilation, rape and murder — that women suffer drives them to further dependence on male guardians for protection, while at the other it is the systematic discrimination of women via civil or religious law that undermines their march towards equality.

Even when women are free of blatant subjugation, more subtle biases take over. Oftentimes these prejudices manifest in the office, where employers continue to see marriage and domestic obligations as a hindrance to productivity that blocks women from decisionmaking positions. Statistics can tell only part of this story. In Lebanon, where available data is sorely lacking, the numbers do not paint a good picture, and even in Western countries where for decades movements have advocated gender equality, statistics still show gaps between males and females in terms of wages, the number of female executives and board members, and in political representation.

Data deficiencies aside, Executive’s investigation reveals the prevailing pressures women confront on a daily basis in Lebanon and the region. Interviews with gender policy experts and women’s rights advocates, as well as personal anecdotes and a broad review of the literature documenting gender based discrimination and violence, all indicate the existence of an anti woman cultural norm stemming from the patriarchal leadership in the household — where the uncompensated work of raising children, maintaining the house and catering to the patriarch are the defining burdens that women are expected to bear.

This article is the introduction to Executive’s special report on women in the workplace. Read more stories as they’re published here, or pick up March’s issue at newsstands in Lebanon.

The post Women march on appeared first on Executive Magazine.

This article is part of Executive’s special report on women in the workplace. Read more stories as they’re published here, or pick up March’s issue at newsstands in Lebanon.

True story: Two candidates are applying for the post of development officer at a well established institution in Lebanon. Candidate A has two years working experience over candidate B, nine years in total, more international experience and enjoys a wider relevant network of key contacts, having chaired charities in the institution’s field.

While candidate A would seem like the obvious choice for the position, the institution still hired candidate B, a male. Why? As candidate A, a woman, later learned from an inside source, the hiring director feared that her gender made her an “unstable” investment: that, while both candidates were single at the time, she would get married and choose to quit her career.

Workplace discrimination comes in many forms, from racial, to age or sexual orientation, but discrimination against women in the workforce affects half the global population and therefore significantly impacts economies worldwide.

Discrimination against women in the workforce is not restricted to Lebanon, and the World Economic Forum’s Global Gender Gap 2014 index shows that the gender gap for economic participation and economic activity is 60 percent worldwide and would take 81 years to completely close, if everything else remains the same.

Beyond its human rights implications, the issue of women in the workforce is significant because studies show that there is a loss in economic productivity when women are weakly represented in the labor force. According to Unlocking the Full Potential of Women in the US Economy, a study conducted by McKinsey and Company in 2011, “the additional productive power power of women entering the workforce since the 1970s accounts for about a quarter of current GDP.”

While no such research exists in Lebanon, what is known from the Central Administration of Statistics’ (CAS) Living Conditions Survey of 2007 is that women make up only 25 percent of the Lebanese workforce. The country has several challenges to address within the workplace, and at the societal level, before it can begin to close the gap and improve its economy. “The entire national economy, the regional economy even, is suffering because you are losing half the talent and half the productivity that could come from women,” says Dima Jamali, professor of management and associate dean for faculty at the Sulieman S. Olayan School of Business at the American University of Beirut.

University years: a head start 

According to the Global Gender Gap 2014 report, which rates countries on four different sub indexes, including women’s educational attainment, Lebanon is in the top percentile when it comes to tertiary education. This is supported by CAS statistics which show that women constitute 55 percent of students in higher education.

Such an investment in education, which is also true for women in the Arab region, is not being translated in their careers. “Women in the Arab region are gaining more university education than a decade ago, but this is reflected neither in their employment nor into their advancement to higher level managerial positions,” says Jamali.

Early career days 

After graduating from university, both genders initially begin applying for posts in their chosen profession. According to Rana Salhab, partner at Deloitte & Touche and an advocate for women’s advancement, while the hiring process among genders is almost even in most professions, fields such as engineering are skewed to men. According to numbers from the Lebanese Order of Physicians (for all cazas except North Lebanon) male physicians far outweigh females with only 2,652 females doctors in Lebanon out of a total of 11,341.

According to Roula El-Masri, gender equality program manager at ABAAD, a Lebanese resource center for gender equality, hiring is not equal among both genders when some fields are perceived as “men’s work”, while others are the domain of women. “Women are mainly employed in the services industry, in advertising or public relations, or in the fields of education or nursing. This is a form of discrimination as not all careers opportunities are equally open to them,” says Masri. CAS’s 2007 Living Conditions Survey shows that 64 percent of working women are indeed employed in the services sector versus 34.2 percent of employed males.

The country’s political scene is dominated by men.“Even if we take [the 128 member] parliament as an example — there are four female parliamentarians. In a country where women are as educated and as present in public life as in Lebanon, it’s a very surprising statistic,” says Lama Fakih, the Syria and Lebanon researcher at Human Rights Watch (HRW). 

Educated women dropping off 

After the first few years of work, the number of women in the labor force begins to taper off. “When you move forward along the career path a little bit, women exit the workforce earlier than men. This is why the percentage of women in your organization pyramid, which starts off as almost 50/50, gets less and, globally, women in leadership positions are barely a handful,” explains Salhab.

As per CAS’ survey, only 29.8 percent of Lebanese women surveyed were economically active between the ages of 23 and 29. That percentage tapers off to 24.3 between the ages of 35 and 39.

The first age bracket correlates with the age where some people consider getting married and starting a family. While legislation in countries such as Sweden, Canada or the UK see child rearing as a shared responsibility — awarding both parents leave from work when their child is born — the Arab region, Lebanon included, does not. “A woman’s role is primarily perceived to be at home, raising the children and managing the household. If she is to work outside of the home, it is often viewed as secondary to her role at home or only to complement her husband financially when economic times are tough,” says Masri.

These responsibilities make maintaining a career difficult for most women. “There is a lot of pressure on them to be available for the role of mother and be available for motherhood and domestic roles, as opposed to productive roles in the workplace. Women feel and see this pressure and this is the primary explanation, from a cultural and social perspective, as to why women’s educational attainment is not reflected in their labor force representation,” explains Jamali. 

According to HRW’s Fakih, once women do opt out of their careers for marriage purposes — globally — it is not temporary. “Even in cases where women do divorce, they have a very difficult time getting back into the labor force after this prolonged absence,” she adds.

This early exit from women in the workplace could explain the low numbers for the representation of women in the labor force.

Not an easy path

Other women decide to balance both roles, despite the difficulties. All the women in top positions profiled by Executive for this report said that balancing their personal life with their careers is a challenging task, one that women at all levels struggle with.

Women are at a career disadvantage in that they have to also give time to their obligations as caregivers, within the context of Lebanese society, while men can focus only on their career. “Women who do remain in the labor force take on positions that allow them to balance their private responsibilities with their work responsibilities. So that means, in many cases and in many industries, not working long hours, not having travel commitments and not being at a senior position,” says Fakih.

Such consequences place women at a disadvantage when it comes to investing time and developing in their careers. “There is also a glass ceiling which we cannot deny and a certain bias in promotions mainly because the top levels of organizations are usually dominated by men who think and make promotions with conscious and unconscious biases. There are multiple factors we need to be aware of,” says Salhab.

As Salhab explains, these multiple factors include assuming that a leadership position requires a man or that an equally qualified woman would not be as committed as a man for a top management role because of her domestic obligations. In the Lebanese context, this would imply that a woman might get called to go home if a child is sick or she may not be able to travel and leave her children.

An associated challenge which women face in the workforce is the discrimination in pay between them and their male colleagues for the same job. This is a global issue — the pay gap in the United States for example is 80 cents to the dollar — and although there are no statistics for this in the Lebanese labor force, the CAS’ 2007 survey notes a 6 percent gender pay gap overall, exceeding 30 percent in some employment sectors.

So now what? 

In the face of such career obstacles and discrimination, it would be easy to give up on the advancement of women in the workplace but this attitude would not be conducive to change or growth in the economy.

The career women and experts interviewed agree that the basic step for change in Lebanon is the empowerment of women at all levels. This need for empowerment starts with laws that discriminate against women in their private life encroaching on their ability to fully perform in their public life, such as the personal status laws. “We continue to see an undermining of women’s autonomy, of women’s rights, in a way that interferes with their ability to engage in public life,” says Fakih giving a simple example of how women don’t have the authority to open a bank account for their children, which weakens their sense of empowerment and society’s view of them as leaders.

In the tangible sense, laws and policies supporting women in the labor force, at the government and corporate levels, need to be introduced into the system. Nayla Geagea, a lawyer specializing in human rights, explains that up until now, Lebanon doesn’t have a comprehensive legal system that ensures gender equality and it is difficult to create one because there is no real monitoring system that would lead to comprehensive and accurate figures on the workplace environment. This is exemplified by the fact that the most recent national study regarding women’s representation in the workforce, used in this article, is from 2007.

Some laws have been created, such as the law that extends maternity leave from 49 to 79 days which was passed in parliament in April 2014. There are two draft laws being prepared in the framework of women’s rights — one against sexual harassment in the workplace and another for allowing women to have their children and husband as their dependents under NSSF insurance.

Yet, Geagea warns against focusing only on changing laws at the macro level. “Of course we need to talk about a change in the legal framework but at the same time, we need to keep in mind how long it takes to achieve legal change. This means, other initiatives should start at the level of the corporations. Women who are working in these environments should impose standards and minimum conditions,” she says. 

Salhab suggests that corporations could adopt female friendly policies such as part time or flexible working hours to their own advantage, giving an example of how a dedicated and hardworking female colleague in Deloitte’s Lebanon office was promoted to director, despite her working part time hours.

A policy that helps ensure an equal representation of women in top management positions is the quota system, which guarantees a percentage of women in certain positions. It is a law in some countries like France and a voluntary corporate policy in others such as Germany. In Lebanon, suggests Salhab, gender quotas could be initiated at the level of the parliament and the ministries and in the form of targets in corporations (increase the number of women by x percent) as that would better take into account the situation in the country.

The path to an equal and fair representation of both genders in the workplace is long and progress has been slow both globally and in Lebanon. Yet, the fact that more people in Lebanon are publicly addressing issues of women’s rights, and recognizing the economic importance of increasing women’s representation in the workforce, is certainly a step forward on that journey.

The post An obstacle course appeared first on Executive Magazine.

Imagine that you are thrown into a fist fight against a fully abled opponent, but one of your hands has been tied behind your back. Your ability to compete would be reduced by at least half making your chances of winning pretty slim.

This analogy, with Lebanon as the fighter, illustrates the difficulty of having a competitive economy when a significant portion of the population is inactive in the labor force.

Today, in 2015, many countries still struggle with issues relating to the equal representation of women in the workforce. This is demonstrated by the World Economic Forum’s (WEF) Global Gender Gap 2014 report, which estimated that it would take 81 years to completely seal the gap.

Lebanon, which ranked 135 out of the 142 countries surveyed in the WEF’s report, is perhaps centuries from closing that gap, with women constituting only about 25 percent of those employed, according to a 2007 Central Administration of Statistics (CAS) report.

We now know that there is a correlation between the percentage of women employed in a country and that country’s GDP growth rates: Countries with a narrow gender gap have more economic productivity.

Faced with such a reality, women’s advancement in the workforce in Lebanon becomes more than a human rights issue or an issue of fairness: it becomes an economic imperative.

With the dire state of its economy, Lebanon must fully capitalize on all its resources, starting with its women.

What adds fuel to the fire is that Lebanese women are highly educated, with women constituting 55 percent of university students. The loss of productivity incurred when these educated women do not utilize these skills is inexcusable.

Many international studies have also linked a high representation of women in top management positions with better performances for those corporations placing them there, and for the country’s GDP in the final outcome. According to Credit Suisse’s CS Gender 3000: Women in Senior Management report, companies with a higher than average percentage of female board members outperformed those with fewer women on their boards by 30 percent.

In Lebanon, the number of women CEOs or women in top management positions is very small. Corporations in Lebanon should therefore wake up to the benefits of advancing women to top managerial positions for both themselves and for the country as whole. They would be wise to implement policies which would make the workplace a friendlier place for women, such as flexible working hours and parental leave where both partners could take paid time off work to rear their child, knowing their job is secure when they return.

The journey towards the global advancement of women in the workforce is admittedly long, more so in Lebanon where their representation is well below the average and where communal structures tend to hold women down and perceive their primary role as that of a mother while a career is always secondary (see “An obstacle course“), but we need to start somewhere.

The country as a whole needs to stop viewing this issue as merely a symbolic one raised once a year, on International Women’s day, and see it for the economic issue that it is.

Corporations can and should do their part, but major change must be driven by government initiative. A national strategy must be developed whereby women are encouraged to enter and remain in the workforce, and not forced to exit early when they are too pressured by society’s expectations of them as caregivers.

This strategy should include replacing laws that discriminate against women, such as the personal statuses law and the NSSF law, and enacting laws that protect women in the workplace and foster their sense of empowerment, such as laws prohibiting sexual harassment or ones that guarantee women equal opportunity in being hired.

As a country, starting from the individual, moving on to civil society, corporations and the government, we need to keep advocating the equal representation of women in the workforce until Lebanon’s women rise and the economy rises with them. Only then can Lebanon fully compete in the fist fight, maximizing the use of its full capacities.

The post Closing the gap appeared first on Executive Magazine.

This article is part of Executive’s special report on women in the workplace. Read more stories as they’re published here, or pick up March’s issue at newsstands in Lebanon.

Najwa Layan — Police officer

Journey and motivation

 Ever since she was a child, Najwa Layan has been attracted to military life. She says that three years ago she heard there was a call for women to join the Internal Security Forces, so she applied. There were specific criteria for entering, and she met them all.

Others’ perceptions

Layan notes that her entire family supported her decision, telling her she had a strong personality that would fit perfectly with the job. Her male colleagues have also been extremely supportive, helping her with training in the street and teaching her many things. 

Obstacles

Layan notes that in the past people were surprised to see a woman working as a police officer in the streets. Now, however, after the government began encouraging female applicants, the public has gotten used to the sight of a female police officer. She says that many people are actually happy to deal with a policewoman.

Future plans

Layan says she enjoys every moment spent on the job, and thus doesn’t imagine herself leaving it to do something else. She wants to work on developing herself and hopes to rise as far in the field as possible.

Advice

Layan encourages other women to join the ISF, saying that the job helps to develop a strong personality.

Elsy Abou Zeid — Mechanical technician at Volvo

Journey and motivation

Elsy Abou Zeid was raised with three brothers and 10 cousins, all boys. She grew up playing boys games in order to fit in and have a chance to spend time with them. As she grew older, her interest in things traditionally reserved for men only grew. 

After earning her baccalaureate degree she held several internships, but it was one she did at a garage that interested her most. This is why she decided to become a mechanical engineer and begin her studies at the Lebanese branch of the Conservatoire National des Arts et Métiers (CNAM). 

Others’ perceptions

As the only girl in her class, Abou Zeid felt like an intruder in the beginning, but things started getting better for her.

Her father, having seen where her interest lay from a young age, was supportive of her chosen career path. Her mother, however, was reluctant because she viewed the job as harsh. As for her colleagues, Abou Zeid notes the younger ones are the most accepting. 

Obstacles

The only difficulty Abou Zeid faces is the physical constraints. She explains, for instance, that it is hard for her to move a 100 kilogram engine. However, she strongly believes that being a woman sparks some welcome curiosity among employers’.

Future plans

Abou Zeid is intent on continually working to evolve in this job, and hopes to some day open her own auto repair shop.

Advice

To women still hesitating on whether to pursue this path, Abou Zeid says that if a woman has a passion for automotive work, she shouldn’t think twice.

Cynthia Bitar — Owner and executive chef at Nazira Catering

Journey and motivation

Cynthia Bitar’s mother, Nazira, was one of the first women to enroll in the hospitality school in Dekwaneh, graduating in 1967. Nazira then worked in the restaurant at Al Bustan Hotel in Beit Meri, and later gave cooking classes for years. Thanks to her mother, Bitar grew up immersed in the world of cooking.

In 1997, Bitar decided to study at the Institut Paul Bocuse in Lyon, a school specializing in culinary arts and hospitality. She came back to Lebanon in order to develop the family catering company, which Bitar explains was the first one in Lebanon.

Others’ perceptions

 Bitar says that in France, men are more accepting of women working as chefs, whereas in Lebanon she sees a lot more sexism.

Obstacles

According to Bitar, there are several obstacles for female chefs, compared to their male counterparts. First, there are the physical constraints, with the heavy lifting required and the long working hours. Women, says Bitar, need to work more and do more in order to prove their professionalism.

Future projects

Bitar has plans to begin working on her first book, as well as give cooking class. She also would like to expand her catering company outside of Lebanon.

Advice

Bitar believes that women should be confident and professional. For her,  cooking is not just an ordinary job, it’s a passion, and chefs should fully immerse themselves in their work.

Rola Hoteit — Pilot at Middle East Airlines

Journey and motivation 

While still a mathematics student at the American University of Beirut, a friend jokingly showed Rola Hoteit a newspaper advertisement for a pilot position at MEA. She took it as a challenge and she sat for the exam and passed.

Others’ perceptions

Hoteit believes that men’s perception of women pilots is changing with time, even though there are still less female pilots in the Arab world than in Europe. Twenty years after joining MEA, she is still the only female pilot in the company. She explains that some aircraft operators still call her “sir” when communicating with her.

Obstacles

 At first, Hoteit’s father disapproved of her career choice, hoping she would continue her mathematics studies. However, she eventually succeeded in convincing him it was the right choice and now he is very proud of her. As for her colleagues, Hoteit says that her first two years as copilot were difficult, as others weren’t used to seeing a woman in the cockpit.

Future projects

She plans to finish her master’s degree in philosophy, and hopes to open a bookstore in Lebanon.

Advice

Hoteit directs advice at men, saying, “Let women dream, they are capable of doing anything.”

Nancy Arbid — Aerospace engineer

Journey and motivation

While studying mechatronics at Hariri Canadian University, Nancy Arbid enjoyed her time as an intern with Middle East Airlines. So, after she finished her master’s degree, she applied to work there. Arbid is still the only female aerospace engineer at the company.

Others’ perceptions

Arbid explains that initially her parents did not know exactly what she was doing. Now, however, they are proud of her and her accomplishments.

Obstacles

She says that while it took some time for her male colleagues to accept her on the team, the work environment is currently much better and her colleagues now listen to her opinions.

Future projects

She hopes to obtain certification from the European Aviation Safety Agency.

Advice

Arbid says it’s a very challenging job, but male colleagues should be given some time to get used to women making their way in this work environment that is traditionally occupied by men.

Diana Salameh — Winemaker at Domaine Wardy

Journey and motivation

Growing up under her grandparents’ grape vines, it felt only natural for Diana Salameh to study oenology at the Institut universitaire de la vigne et du vin in Dijon, France. She received her bachelor’s degree in 1992, and later earned a specialized diploma in oenology.

Others’ perceptions

Salameh says that at first her parents thought she had chosen to study oenology in order to leave Lebanon indefinitely, because the wine sector was highly underdeveloped in the country at that time.

Obstacles

According to Salameh, winemaking as a career choice is still relatively new in Lebanon, so a preference has not developed for male winemakers, compared to France where she says it’s been considered a job for men for a long time. As for the agricultural sector in general, Salameh claims that men still have problems with being led by a woman.

Future projects

Salameh wants to work on bettering the quality of wine in Lebanon, while at the same time make it available to everyone.

Advice

She says that someone should only choose this career if they have a passion for it, because it’s physically very demanding.

Christelle Yared — General Manager at MSCA – M. Special Car Armoring

Journey and motivation

When Christelle Yared was finishing her bachelor’s degree in business and management at Saint Joseph University in Beirut, she took the challenge to relaunch her father’s vehicle armoring company in order to upgrade the car of one of her father’s previous clients. In two months, she succeeded in building a team, finding a location to carry out work, identifying providers for the car parts and delivering the car to the client. For two years, the company was only working on one or two cars a year, which made it possible for Yared to focus on developing herself and learning different techniques.

Others’ perceptions

Yared notes that the team initially had trouble being led by a younger woman. With time, however, they ended up accepting her. She explains that even the suppliers questioned what a woman was doing in this field. Clients now only have doubts for about five minutes, as they are quickly convinced by her professionalism and passion for her work.

Obstacles

Her biggest obstacle has been gaining her clients and providers’ trust. Yared worked very hard the first two years, which kept her away from her family, friends and social life. But she says that it was her way of showing everyone her determination to succeed.

Future projects

She wants to develop and expand the company into Africa.

Advice

Yared advises women to be determined in whatever they do. Women can do anything, she says, and can even be stronger than men in fields considered “traditionally male”.

The post In a man’s world appeared first on Executive Magazine.

For this month’s special report on women in the workforce, Executive chose to profile a selection of seven successful, upper managerial level, Lebanese working women. Some of these women work in the private sector, others are in the public sector, but for all the differences in their job titles and roles, they share some commonalities. They are all ambitious, hard working and were able to build up their careers despite the obstacles that most working women face. They were all raised in supportive families who fostered their ambitions, and they all now credit the family they have built, their husbands and children, and the motivation and support they offer, for helping them achieve this success. In these profiles, we ask them how they managed this balancing act, what drives them to succeed and what lessons they would give to the young women who are just entering the workforce.

Read more profiles as they’re published here, or pick up March’s issue at newsstands in Lebanon.

Above the desk of Mona Abdul Latif, the director of buildings at the Ministry of Public Works, is a drawing by her 10 year old daughter depicting her as a superhero. “It means a lot to me that my daughters are proud of my achievements and see me as a role model for their future career choices,” she says.

Abdul Latif, who has seven siblings, says her parents were very open minded compared to others of their generation in the 1960s. They insisted that all their children, regardless of their gender, get a competitive higher education and so she studied civil engineering at the Arab University. “There were very few women majoring in civil engineering at my time and when we graduated, we were among the first women engineers in the country. But today, there are many.”

Upon graduation, Abdul Latif joined the Ministry of Public Works as an engineer and says she proved herself through her hard work and perseverance, focusing on bettering her skills by taking voluntary computer and AutoCAD design courses. She rose up the ranks over the course of eight years until she was made director of buildings at the ministry, one of the few, if not only, “first level” female directors in the public sector.

To Abdul Latif, being a successful woman is all about balance. “It is not enough to only succeed in your personal life, in society and at home and be a failure when it comes to your career, nor is it enough to have an outstanding career but have your personal life in shambles. A balance is great.”

Key to achieving this balance, says Abdul Latif, is dedication and devotion in both the private and public spheres. “I always complete my work with the government to the best standards, complying with all policies and procedures at the risk of upsetting people. And I show this same dedication to my family life.” 

She also attributes part of her success to the partnership she has at home with her husband, which she compares to managing a company. “My husband, a general in the Internal Security Forces, and I collaborate in raising our three daughters. He takes on some tasks such as helping them with their schoolwork and driving them to school, whereas I take on other tasks such as cooking,” says Abdul Latif. She adds that, as a couple, they also encourage each other to move forward in their careers. 

Abdul Latif was among the 15 shortlisted for the Lebanese Outstanding Women Award 2012, a recognition which she says she was honored to receive. “This nomination meant that I was recognized for my achievements and that my career has a meaning to people, that I did not just pass by unnoticed.”

The post Mona Abdul Latif: A real life superhero appeared first on Executive Magazine.

For this month’s special report on women in the workforce, Executive chose to profile a selection of seven successful, upper managerial level, Lebanese working women. Read more profiles as they’re published here, or pick up March’s issue at newsstands in Lebanon.

For most of her academic life, from her years as a student to teaching as a professor, Nesreen Ghaddar, associate provost and Qatar Chair of Energy Studies at the American University of Beirut (AUB), has been the only woman around.

But Ghaddar has always viewed this as a learning experience. “Sometimes people are afraid of your success, especially when you are the only woman. People don’t know how to respond at the beginning and what to expect, but this changes with time when you prove yourself. You need to always keep your focus on the end goal.” 

Ghaddar received her bachelor of science degree in mechanical engineering from Kuwait University, in the country of her birth. She says her parents were supportive of her choice of major but the challenge was in convincing them to allow her to continue her studies at the Massachusetts Institute of Technology (MIT). “I was the first woman in my family to leave home to study abroad so my father was resistant but I convinced him by working out the funding on my own and by showing him the acceptance letter and scholarship together.’” 

Ghaddar went on to complete both her master’s and doctorate degrees in mechanical engineering at MIT in the 1980s. In 1992, she accepted the position of professor of mechanical engineering at AUB. She remembers that there was never more than one woman in mechanical engineering classes at the time, but when there was one, she was usually the top of her class.

Things started changing when Ghaddar became department chairperson in 2002. “First, [with me as chairperson] women had a role model in that field. At the same time, our labs became softer with more programming courses and connections to sustainability and environment issues, which are of interest to both genders. We started having more women in the department and though it is still the lowest [gender ratio] in the faculty, it is better than before,” says Ghaddar.

Ghaddar finds her experience as a chairwoman both difficult and enriching, and explained that she had targets and goals to achieve regardless of people’s reactions. “I had to make hard decisions and bear their consequences … but the culture changed and engineers changed.”

While Ghaddar admits that it is never easy to balance one’s personal life with work, she feels that living in Lebanon helps a lot. Here, she says, women can enjoy the invaluable support of their extended family when it comes to taking care of children. 

The post Nesreen Ghaddar: All alone at the top appeared first on Executive Magazine.

For this month’s special report on women in the workforce, Executive chose to profile a selection of seven successful, upper managerial level, Lebanese working women. Read more profiles as they’re published here, or pick up March’s issue at newsstands in Lebanon.

When Laure Sleiman was first appointed as director of the National News Agency (NNA) in 2008, the official news agency under the Ministry of Information, a criticism she heard was that “this job needs a man.” Eight years into the post, handling the broadcasting of many delicate political news items in a timely and efficient manner, Sleiman says: “I proved them wrong. I showed them that what this position needs is determination and hard work, regardless of gender.”

Within days of graduating from the Lebanese University’s faculty of media and documentation in 1992, Sleiman had landed a post at Voice of Lebanon as a news broadcaster and correspondent after having demonstrated her skills during an interview for a university project with then president of the Kataeb party, George Saadeh. She stayed in that post for three years while simultaneously working with the Al Markaziya News Agency, an independent news agency, and the Al A’mal newspaper, which later shut down. 

After getting married, Sleiman left these jobs and accepted a position in the NNA in 2004. “I preferred working with the NNA as it was a better position with more flexible working hours, which was important to me at that time,” explains Sleiman. She rose up the ranks in the NNA, getting promoted from secretary of the news division to the director of that same division. She was finally promoted director of the whole agency, becoming the only woman in the Arab region to be a director of a national news agency, according to her.

Sleiman explains that she often gets work related calls at night or during weekends when a newsworthy event occurs. Balancing a family life with that sort of pressure is not easy and “comes at the expense of my health and comfort,” she says. “I have three children and when I first started at NNA, in 2004, they were still at the age when I was helping them study at home. I put in a lot of effort to balance these two roles and didn’t get the time to rest even at night,” she says. 

Still, Sleiman says she loves her career and the thrill that comes with it and attributes part of the strength she has to move forward with her work to her husband and children. “It takes an open minded and flexible partner to bear all this.”

Sleiman advises young women to not look at their job as just a paycheck at the end of the month, as “success comes through dedication and motivation in what you do.”

The post Laure Sleiman: A news worthy woman appeared first on Executive Magazine.