A city with staggeringly slow internet service, a severe economic slow­down and perpetual po­litical stalemates does not seem to be a likely place for a burgeoning tech sector. Beirut, however, is defying expectations by emerging as a tech gateway for the Middle East. In the past three years, Beirut has developed many of the elements necessary to become a regional tech powerhouse: Greater access to funding, government support and a growing number of accelerators and incubators.

A database compiled by Arab­net, a start-up incubator and media company, indicates that Lebanon boasts nearly 200 start-ups. A re­port by the group put Lebanon in second place regionally, after the United Arab Emirates, for the num­ber and value of investments in its tech sector. Beirut has also become a regional hub for tech conferences and semi­nars. It is one of four cities to host the annual Arabnet conference, the region’s leading forum on digital business. Lebanon’s BDL (Banque du Liban) Accelerate conference last year was one of the ten biggest tech conferences in the world.

Only six years ago, limited fund­ing opportunities and little govern­ment support made development of Lebanon’s tech industry difficult for emerging start-ups, said Omar Omran, a Paris-based tech entre­preneur who in 2011 founded Leba­non’s first mobile app development company. “Back then, it was not easy to find investors or receive support from Lebanese banks. We were funding everything,” Omran said during a Skype interview.

Omran, who has developed soft­ware to detect malaria through im­age analysis and who co-founded at least three tech start-ups in the last six years, said the best hope for an entrepreneur at that time was to seek funding outside the country. In August 2014, that changed when BDL announced the Circular 331 programme, which would in­ject as much as $400 million into the Lebanese enterprise market. Under this plan, local banks would receive a 7-year interest-free credit from BDL, which could be invested in treasury bonds with an interest rate of 7%. In return, the bank com­mitted to invest in the knowledge economy.

Local banks could invest up to 3% of their capital in start-up sup­port entities, funds or directly into start-ups. BDL guaranteed 75% of the investment, limiting risks by mitigating potential losses.

“Circular 331 was definitely a game changer… It removed the big­gest obstacle, which was funding,” said Nadim Zaazaa, director of the UK-Lebanon Tech Hub (UKLTH), an incubator, co-working space and training academy established by the British government and BDL.

The 331 initiative, Zaazaa said, increased venture capital funds in the last three years and encouraged banks and companies to invest in start-ups and innovation sectors.

“By the virtue of this 3-year track record with 331, we are developing expertise that could position Leba­non to become a market leader for the region,” he said.

The increase in funding was sup­ported by Arabnet data that show how investment in Lebanon’s tech sector rose from ten deals in 2013 to 34 two years later. The rise in in­vestments is “partly driven by the Central Bank’s Circular 331 guar­anteeing $400 million of start-up investments,” the Arabnet report said.

Beyond providing funding for start-ups, Circular 331 also fostered a budding tech ecosystem through sponsored initiatives such as UK­LTH, which has helped local entre­preneurs achieve a global footprint.

Salma Jawhar, co-founder of Play My Way application, an educa­tional learning app that tries to give smartphone addictions an educa­tional twist, is an example of how the new tech environment in Leba­non is yielding results.

“I must give credit where it is due,” said Jawhar, whose app was the second most downloadedin Britain in the last three months of 2016. “If I didn’t join the UK Leba­non tech hub I wouldn’t have made it to this point. I would have never reached the second most down­loaded app in the UK.”

A report from UKLTH said Leba­non was poised to become a tech powerhouse.

The report identified three sec­tors for growth: Financial technol­ogy; the well-being sector, which includes technological innovations and ideas contributing to greater health and well-being; and the retail visualisation sector, which reimagines consumers’ shopping experiences via new channels of purchasing, such as e-commerce.

If Lebanon focuses its efforts around these sectors, the report said, the country would become one of the top ten entrepreneurial countries and would have created an additional 25,000 jobs by 2025.

- Hashem Osseiran is a reporter based in Beirut.

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