Lebanon: Helping Businesses Overcome Challenges

IFC is making a special effort to support reconstruction in conflict-affected countries. We are active in more than 20 such countries, working with governments, donors, and clients to rebuild the private sector through investments and advisory services.

In Lebanon, despite political instability and security concerns, IFC is making tangible progress. We have provided advisory services and invested about $280 million since the end of the summer 2006 conflict, with a focus on investment climate reform, smaller businesses, and infrastructure.

A Better Investment Climate

IFC began an investment climate project in Lebanon as a first step in implementing reforms that were identified in the 2006 IFC-World Bank Doing Business report. The report ranked the country 95 out of 155 countries in the overall ease of doing business, and a subsequent survey found that for most entrepreneurs, starting a business was especially challenging due to the cost, time, and number of procedures. Thanks to IFC's advisory services, the effort to simplify business registration took off in early 2006 as a joint project with the government.

The conflict that followed almost put the project at risk, but IFC and the government's commitment put it back on track. Despite turmoil that threatened legislative approval, IFC's approach to the reform did not require changes to existing laws, and it obtained Prime Minister Fouad Siniora's endorsement in late 2007.

"IFC was able to deliver a key investment climate reform product in a country that was still in conflict," says IFC team leader Frank Sader.

The new business registration process, which became effective in March, provides an incentive for local business owners to join the formal economy, where they can obtain bank loans, access the export markets that will enable them to grow, create jobs, and generate tax revenues. It has helped reduce the cost, time, and effort involved in business start-up procedures by about half. Doing business in Lebanon is now easier than ever. This is a big gain for smaller businesses and for private sector development throughout the country.

Helping Small Businesses

Small and medium enterprises are the main drivers of economic growth in Lebanon, and IFC has channeled more than $75 million for local banks to lend to these businesses. We are also providing an advisory services package to scale up Kafalat, a local company whose guarantees help smaller businesses obtain commercial bank loans.

In 2007, IFC signed investments in Lebanon worth $135 million, including the first four transactions in a package of lines of credit and lending incentives to the financial sector. Part of the World Bank Group's efforts on postconflict private sector development, the investment expands access to capital for about 1,500 local companies, mainly smaller businesses.

A Broader Program

The 2006 conflict destroyed infrastructure worth some $3.6 billion. IFC is helping the national utility company, Électricité du Liban, privatize a 435-megawatt plant and attract private investors to build another 450-megawatt plant. IFC is also supporting a World Bank power sector restructuring program to address severe power shortages in the country.

Our efforts in Lebanon include investments in the retail sector and in corporate governance programs, as well as in trade finance funding. Since 2006, IFC has supported $146 million in trade flows through guarantees provided to Lebanese banks under the IFC Global Trade Finance Program. We have also provided an $8 million loan to finance the completion of a private school for 1,700 students.

Donor countries that are active in Lebanon have widely acknowledged IFC's achievements. Many say IFC has demonstrated its commitment to development impact in conflict-affected countries as never before, and they are eager to partner with us in future projects.


For more information contact:

Riham Mustafa
IFC Communications Analyst
Middle East & North Africa
Phone: +202 2 461 9150 ext. 306
E-mail: rmustafa@ifc.org