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Technology firms reel under economic crisis

A general view of Beirut, Aug. 22, 2019. (The Daily Star/Mohamad Azakir)

BEIRUT: As Lebanon’s economic crisis deepens, technology companies are being forced to creatively respond to the challenges of maintaining their staff, finding new customers abroad and obtaining vital imports while capital controls remain in place.

The technology sector had been experiencing a positive few years, with the IDAL predicting that the sector would grow by 9.6 percent between 2016 and 2017.

Sami Abou Saab is the CEO of Speed Accelerator, a company which invests in technology startups in Lebanon, he told The Daily Star that “companies with a focus on domestic customers will be taking much bigger hits, unfortunately, its normally smaller technology companies that rely on the domestic market who will struggle to survive, the good news is they are in the technology space and can expand much easier than in any other business.”

The company Cherpa supports Saab’s analysis. The firm was founded in January 2018, only has 5 permanent employees and lost significant revenue in recent months as most of their customers are Lebanese schools, many of whom can no longer afford Cherpa’s programs.

However the CEO of Cherpa Bassel Jalaleddine remained optimistic, speaking to The Daily Star from Dubai, where he was meeting new clients, he said “the crisis affected us negatively but it also helped us to think in a different way and motivated us to expand into new markets.” Jalaleddine told The Daily Star that Cherpa was successfully expanding into the United Arab Emirates and Saudi Arabia's markets.

While Cherpa is increasingly reliant on international customers Jalaleddine has no intention to relocate the business abroad stating “the creativity you can get out of people in Lebanon is why we want to stay.”

While the Cherpa example highlights how the products produced by the Lebanese technology sector can often be shifted into new markets, Saab believes companies like Cherpa may struggle to retain highly skilled workers saying “in the medium term the top talent is leaving the country.”

Jawad Fakih, CEO at Tyconz, a company founded in 2011, is struggling to hold back this flight of skilled workers, telling The Daily Star that some of his 80 strong team in Lebanon were looking to permanently emigrate or were asking to be re-located to one of the companies eight other offices in the Middle East.

Maroun Chammas the CEO at Berytech, a hub where many Lebanese technology companies are based, said that based on his experience with tech companies he works with, many are struggling because of capital controls that are making it difficult to import equipment and pay for subscriptions.

While Chammas believes that Lebanon’s technology industry is going through a difficult period he was not aware of any company that had folded.

All three CEOs who spoke to The Daily Star expressed a sentimental attachment to Lebanon and a desire to continue being at least partially based in the country. Even if expanding their workforces in Lebanon was not currently desirable.

“Between 2011 and 2014 it was easy for Lebanese works to get yearlong work visas in the gulf, now 80 percent to 90 percent of our visa applications to the Gulf States are rejected, how can we continue to hire Lebanese people when our main customer base is in the Gulf,” Fakih told The Daily Star, highlighting why the challenges in recent months for Lebanese companies are diverse and are holding back further investment.

Despite these challenges there was a consensus from the interviewed CEOs that Lebanon still had enough highly skilled workers and emotional attachment to keep them based in Lebanon, even if in the immediate future most of their products would be sold abroad.

Rabih Nasser, CEO of Scriptr.io, succinctly described the situation facing Lebanon’s technology sector saying “if you have an international customer base you’re fine if don’t then you’re screwed.”

 
This article was amended on Saturday, March 07 2020

A previous version of this story mistakenly identified Maroun Chammas as the CEO of Beirut Digital Tech when he is the CEO of Berytech.

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