economist.org edition – Print edition
ON A recent flight from Beirut to Addis Ababa, Lebanese businessmen were swapping stories. “Business is excellent in Angola,” declared one. “I hear it’s good in Ghana?” inquired another. Flights out of Lebanon buzz with optimism. For Lebanese businessfolk, the juiciest opportunities are abroad.
More people of Lebanese origin live outside Lebanon than in it (perhaps 15m-20m, compared with 4.3m). Many have done well. Carlos Slim, a Lebanese-Mexican telecoms tycoon, is the richest man in the world. Carlos Ghosn, a French-Lebanese-Brazilian, is the boss of both Renault (a French carmaker) and Nissan (a Japanese one). Nick Hayek, a Swiss-Lebanese, runs Swatch, the biggest maker of Swiss watches.
Lebanese people have long had wanderlust. Ancient Phoenician merchants roamed the Mediterranean, setting up cities such as Carthage and Cadiz. In the past century and a half, waves of Lebanese have left for the Americas and west Africa. Lebanon’s long civil war prompted many more to pack. Some 7m Lebanese and their descendants now live in Brazil, 3m in the United States and at least 250,000 in west Africa. They do everything from running restaurants to dealing in diamonds. By and large, they find business easier elsewhere than back in their fragile motherland.
Fadi Nahas, for example, has lived in Turkey since the late 1980s, when Lebanon’s war was still smouldering. He runs 15 companies that store and transport fruit and other perishables. Like many Lebanese, he is multilingual, speaking Arabic, Turkish, English, Italian, Spanish and French. “We’re like the Swiss with the number of languages we speak,” says Mr Nahas. “But tell me the last time they had to deal with a bomb or a power cut?”
Mr Nahas began by moving bananas from Ecuador (a Latin American country with a hefty Lebanese population) to Turkey when the Turks opened their economy, later expanding across the Levant and the Caucasus. He reckons the head of Chiquita, an American fruit producer, gave him the deal to transport its bananas in the 1980s, when he was in his 20s, partly because he is good at schmoozing. “You have a great time with the Lebanese: you eat well with them and have fun doing business,” he says. “That is helping the country’s products find a market too.”
Coming from a nation that can go from peace to war in a couple of hours, Lebanese entrepreneurs have learned to be flexible and resilient. Once, when Mr Nahas was doing business in Azerbaijan, a dozen “taxmen” armed with Kalashnikovs came to audit his books. Mr Nahas calmly carried on with his work as they rifled through his papers. After a couple of weeks they went. Mr Nahas calls this “a Lebanese reaction”.
Wherever they are, Lebanese traders typically remain in touch with their kin. Belonging to a global diaspora allows them to swap information and learn about new opportunities. Zeinab Fawaz, the author of a book on Lebanese business owners in America, argues that “good education, adaptability and networks” are the keys to their success. The median Lebanese household in America makes $67,000, comfortably above the norm.
Back in Lebanon, however, making money is harder. Take Christine Sfeir, a businesswoman who runs 35 restaurants: the American Dunkin’ Donuts franchise and two of her own local restaurant chains. She cites two advantages of working in Lebanon—well-educated employees and a central location—before reeling off a list of difficulties.
Small, costly and overregulated
First, the market is tiny. Lebanon’s GDP is about $42 billion, less than Rhode Island’s. Second, it is unstable. Conflict with Israel in 2006 temporarily shut down many of Ms Sfeir’s restaurants; the takeover of parts of Beirut by Hizbullah militants in 2008 disrupted them once more. Today, the civil war in neighbouring Syria scares tourists away from Lebanon, too. “I honestly can’t remember a six-month stretch without a problem here,” she says.
Third, Beirut is expensive. A survey last year by Mercer, a consultancy, ranked it as the second-costliest city in the Middle East. Rents can be as much as $1,200 per square metre. Frequent power cuts force firms to fork out for generators. Yet local purchasing power is modest. At Green Falafel, Ms Sfeir’s new eco-friendly themed fast-food restaurant, sandwiches sell for $2.
As if that were not enough, the Lebanese government chokes businesses with red tape. On average it takes 219 days to obtain a construction permit—assuming nothing goes wrong—and 721 days to enforce a contract in a Lebanese court, according to the World Bank. Patronage is pervasive and the internet is sluggish.
Last year Ms Sfeir decided to expand outside Lebanon. Today a fifth of her 500 employees are abroad; by the end of the year she hopes to have 200 manning new restaurants in northern Iraq, Saudi Arabia and the Gulf. “I looked at conditions at home and realised it was time to focus outside,” she says. “It’s not always easy to work in those places either, but rents are cheaper and people have more money so the returns are bigger.” Lebanon is not the only small nation in the region with a successful diaspora, but its people’s resilience is nonetheless impressive.
