Original Source: The Daily Star
BEIRUT: Professor Louis Hobeika is urging his graduating students to set up shop rather than face an increasingly perplexing job market.
“Cost of living keeps rising and salary levels don’t change. This is a very depressing future to look at,” said Hobeika, a professor of economics at Notre Dame University.
“So I tell my students that entrepreneurship is the only way they can make it,” he added.
For some economists, entrepreneurship has been one of the major drivers of global growth recent years, one that has rescued many from the tatters of economic crises.
The Global Entrepreneurship and Development Index finds that there is a correlation between economic development and entrepreneurial activity, after piecing together data about government red-tape, ease of business financing and other factors that determine how enterprise-friendly an economy is.
Entrepreneurship is credited with being a primary vehicle of job market expansion. One U.S. think tank dedicated to entrepreneurship found that between 1980 and 2005 nearly all net job creation in the U.S. occurred in firms that were less than five years old.
In Lebanon, where unemployment rates coast between 12 and 14 percent, and where the youth bear the brunt of economic woes, economists and business leaders are now working to increase entrepreneurship .
“We’re now telling young people that instead of looking for a job, try to make jobs for yourselves,” said Tony Feghali, director of the Entrepreneurship Initiative at the American University of Beirut.
Feghali reckons that Lebanon went through “a tipping point” roughly a year and a half ago in terms of generating enterprising initiatives.
He reports that more than nine financial institutions in Lebanon are actively working to make Lebanon a healthier place for entrepreneurs, with up to $90 million in loans now readily available to small- and medium-sized businesses. He said those finances numbered in the “few millions” before this period.
Civil society organizations, governmental bodies and academic institutions have also coalesced around the issue. An ICT strategy body at the Council of Ministers, established in July 2010, has been working with young entrepreneurs as a way of increasing ICT capacities.
According to Feghali, most entrepreneurial initiatives in Lebanon have focused on ICT-intensive endeavors with a view to creating a more knowledge-based economy. The Entrepreneurship Initiative aims to spark a trend that would create 1,000 knowledge-based jobs.
The new ICT-based business models require a repackaging of finances and some groups are urging the government-subsidized lending agency, Kafalat, to push down minimum investment requirements.
ICT-based businesses do not need as much start-up capital as traditional businesses. New packages are expected to be released in coming months.
Still, entrepreneurs and economists believe that the public sector’s latest moves leave much to be desired.
“We’re still very embryonic in the way that we’re creating a healthy ecosystem for entrepreneurship to start,” said Gilbert Doumit, founder of the Beyond Reform and Development group, a social enterprise providing policy consultations to civil society groups and government.
Doumit is himself a seasoned Lebanese entrepreneur who sees large barriers to establishing enterprises in Lebanon. He believes that there is an inherent bias toward big business in Lebanon and argues that the government should issue tax incentives to start-up companies.
Capital requirements for loans in Lebanon are higher than in other regions of the world, Doumit points out, and Kafalat’s loans remain inaccessible to the vast majority of the population.
The entrepreneurs are pressing on with plans to expand the entrepreneurial environment, however, and they have resorted to building support from among the ranks of the private sector in order to do so.
Samer Karam of the Seeqnce group said that he has sought financial support from private international giants, such as Google, who are looking to gain a foothold in the region.
Seeqnce has supported 25 start-ups so far and maintains a working relationship with over 12 of these.
Karam said that Arab investors remain averse to investing in initiatives such as Seeqnce because they remain steeped in traditional models of business. However, he is confident that sustained contact with those investors will cause them to change their minds.
“We’ve built relationships with contacts around the region, and I think one year down the road they will change their thinking about start-up businesses,” said Karam.
There are indications that in coming years, entrepreneurship will become a necessity and not only a possibility to be entertained.
With turmoil taking root around the region, Lebanon may begin to see a sizeable inflow of Lebanese expatriates, raising questions about how the economy will be able to accommodate those individuals.
Seventeen thousand Lebanese are said to have returned from Egypt since the uprising began last month.
“Where do these expatriates get jobs? These are not just any Lebanese expatriates, they are educated and experienced – they are an active population” said Doumit. “If there’s the right environment in Lebanon, we would be able to build something important with this active population.”