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The October 2022 issue examined why rural entrepreneurship had failed to take root in Lebanon and how it could be financed after the banking collapse. Post-war development had concentrated population, infrastructure and services in Beirut, Tripoli, Saida and Zahle, leaving villages neglected and driving youth migration to the cities and abroad. The authors argued that rural enterprise would generate employment, narrow urban–rural income gaps, curb the growth of slums, use under-utilised rural power grids, protect national heritage and diversify systemic risk.
The barriers identified were extensive: scarce and geographically concentrated funding, red tape and an entirely paper-based company registration process, weak roads, internet and energy supply, a shortage of skilled workers, absent training and advisory services, narrow local markets and a cultural preference for salaried employment. Banks, in the authors' account, had practised an internal de-risking of rural areas, leaving rural SMEs to rely on self-financing, local moneylenders and rare, heavily collateralised loans.
The issue proposed tax-advantaged municipal industrial parks, special schemes for start-ups relocating to rural areas, a national promotion campaign, a digital one-stop shop for company formation and subsidised technical assistance. On financing, it set out crowdfunding, microfinance, seed and venture capital, specialised rural and energy funds, export expansion boards and, within the banking restructuring, a dedicated rural development bank channelling donor and investor funds.
Key findings
- An OFS study in 2017 found a median rural monthly salary of LBP2,280,000 (US$1,520) against LBP2,820,000 (US$1,880) in urban areas.
- At 30 June 2021, 55% of the Kafalat guarantee portfolio was concentrated in Beirut and Mount Lebanon and only 12% in the South and North.
- Kafalat guarantees for rural corporate loans reached up to US$400,000, but lending decisions remained with the banks.
- Banks lent to rural SMEs only on rare occasions, typically for exporters with collateral exceeding 2:1.
- The most promising rural activities identified were agri-food, textiles, handcrafts, IT and software, engineering workshops and eco-tourism.
Archive: written in Oct 2022; figures and assessments reflect conditions at the time of writing.Summary of the paper; the full analysis is in the PDF.