Lebanon Has a Chance to Rebuild a Private Sector Centered on Women
As we hit four years of socio-economic and political freefall, the burdens at the tips of our noses are making us effectively cross-eyed.
As we close the third quarter of 2023, business owners, entrepreneurs, investors, and funders worldwide are considering what is next for 2024. In Lebanon, most business and organization leaders are unable to plan for the next month, much less the following year. Global peers are adopting forward-looking mindsets, excited about a year with the promising potential to slow down inflation, reduce costs, and unblock supply chains.
Our local peers cannot predict the supply of US dollars against the collapse of the Lebanese Pound, ensure access to competitive talent amidst accelerated brain drain, or count on assurances of rule of law. As we hit four years of socio-economic and political freefall, the burdens at the tips of our noses are making us effectively cross-eyed.
As the economy collapsed, Lebanon’s four-year cumulative GDP contracted over 37% between 2018 and 2021. The labor market shriveled. Job losses displaced and eradicated the middle class, replacing monthly income with high dependencies on remittances that reached 38% of total GDP in 2022. GDP per capita fell 37% in 2020 alone, despite a brain drain that resulted in a population contraction of 2% that same year. Hyperinflation hit a new global height of 171% in 2022, and food inflation reached a year-on-year maximum of 483% year-on-year in January 2022.
We have normalized our multi-layered crises that have institutionalized multi-dimensional poverty in Lebanon, reaching 84% of the total population in 2020 (with no updates on this indicator since). Women have it especially hard, with Lebanon ranking 132 out of 146 countries in the World Economic Forum Global Gender Gap Index in 2023. We have little data to size how dangerous and deep our problems are new globally in these tough times.
So, what do we know? While employees crashed, so did employers. But rather than invest in a new private sector, we made two very wrong decisions:
First, we sprinted into a chronic myopic crisis mode that many of us knew from the onset would be neither sustainable nor impactful in the long term. In the last four years, the heavy and undiversified focus on short-term and conditional humanitarian aid in the previous four years built a non-profit sector of international and local NGOs that were incentivized to deliver on urgent needs. We did not give a chance for community-based organizations to outlive their grants and instead gave them death sentences. With no capacity to look beyond rigid funding cycles that are allergic to overheads, NGOs could neither build long-term teams nor become a sector of competitive talent. And now, international aid and investment in development are drying up fast, and with an insufficient track record, many donors have begun to recuse their pledges to Lebanon.
A wave of layoffs is beginning to kick in as teams and short-term project consultants, many of whom are women, hired to make change, are being let go. Many of these contracts are not employment agreements with access to benefits and social safety nets. Laid-off employees will not have due process to demand end-of-service indemnities, fair notice periods, and labor market opportunities to pivot onto the next career move. With no rebuilt private sector to turn to, many breadwinners will also become entrapped in the vicious cycle of remittance dependencies.
Second, and quizzically, despite lessons from our terrible national track record, we continue to ostracize and isolate the meaningful participation of women in the economy. Over 51% of Lebanon’s population is female. Vulnerable households need dual incomes more than ever before, but women are not able to enter the job market: first, because there are few jobs, second because some families and communities continue to obstruct female economic autonomy; and third, because many do not have the skills needed to take on jobs that are paid in US dollars. We continuously fail to ignite a new national economic engine utilizing the unrealized half of our human capital.
A new private sector vision
As funding dries up and the NGO sector braces itself for possible collapse, it has never been so critical to have a responsible and empowered private sector that takes it upon itself to be women-centered and ethical. However, we will have to self-regulate as private-sector actors. Lebanese law does not inspire responsibility or innovation. Neither citizens nor consumers can hold us accountable. With limited rule of law and few incentives to innovate and take healthy risks, private sector leaders can easily adopt and prolong abusive and opportunistic business models. Many continue to take shortcuts with unfair pay, pay salaries in a destroyed local currency, and some even pay monthly compensation in lollars (a term coined during the crisis for US dollars that fell under capital controls and lost their financial value) when most outlets and sectors no longer accept it as currency. This will not rebuild society, economy, or country.
Less than 10% of SMEs in Lebanon are owned or co-owned by women. The Zovighian Partnership, a family business I built over the last ten years, is both women-led and women-centered. We never stopped paying 100% of team salaries in US dollars with full benefits since the crises began because our young team members became breadwinners far too young and with too little notice. We teach financial literacy and how to save in tough times. Our team members work with relentless productivity, each doing their part. At critical national milestones, we invite them to advise us and make key – and sometimes tough – decisions together. They trust us as business owners. And we deeply trust them, too. In a collapsed economy, society, and political system, I am rest assured that our family business is in good hands.
In Lebanon, it has never been so strategic to be deeply ethical. Will less funding on the table push organization leaders to rethink their models and do better? As business owners, will we step up and plan for new multi-dimensional poverty levels? Will we have honest discussions with the international donor community to plan an exit that has a softer landing? And will we apply forceful pressure on an absent and irresponsible public sector to not make matters worse than they already are out of negligence and doing too little too late? In Lebanon, it has always been harder than it needs to be. Answering these questions is now primordial and urgent. Without collective answers, we will all have a continued collective fall – a fall that should not be normalized, because rebuilding this country is not mission impossible.
About the Author
Middle East Program
The Wilson Center’s Middle East Program serves as a crucial resource for the policymaking community and beyond, providing analyses and research that helps inform U.S. foreign policymaking, stimulates public debate, and expands knowledge about issues in the wider Middle East and North Africa (MENA) region. Read more