BEIRUT: Lots of people can be considered as enterprising, because they are creative, innovative, or continually trying new ideas. Our definition of entrepreneurship is much stricter – those who are starting or running a new business. This article will address two important questions. What is the level of entrepreneurship in Lebanon, and how does Lebanon compare to other countries?
For the past four years, and managed by the UK Lebanon Tech Hub in Beirut’s Digital District, Lebanon has participated in the Global Entrepreneurship Monitor (GEM), a collaborative international research project designed to measure levels of entrepreneurial activity in a consistent and systematic basis across different countries and in different years.
Each country participating in GEM in a given year undertakes two important surveys: the Adult Population Survey of at least 2,000 working age adults, carefully sampled to be representative of the country as a whole in terms of age, gender and location, and the National Expert Survey of at least thirty-six identified national experts.
More about the expert survey tomorrow– it is the Adult Population Survey that allows us to identify and compare levels of entrepreneurial activity in each country. Entrepreneurship means being active in starting or running a new business – not just thinking about it, but by committing resources to this, which could be time, effort, money, premises etc.
In order to measure any variable, it must be specified. GEM defines Total early-stage Entrepreneurial Activity (TEA) as being actively engaged in starting or running a new business that has not yet paid wages or salaries for 42 months or more. After paying salaries for 42 months or more, a business becomes established rather than new. In 2018, nearly one in four adults in Lebanon was starting or running a new business, while just over one in five were running an established business.
Adding these together, (and taking out any double counting), more than four in ten of the adult population were either starting or running a new business, or running an established business. There are many reasons for this very high level of entrepreneurship, some positive (an open and supportive culture, the availability of start-up funding), and some not so positive (the lack of employment opportunities and the shortage of income alternatives). We will explore these reasons in later articles this week.
So how does Lebanon compare to other countries? Figure 2 below answers this question by comparing Lebanon to seven other Middle East and North Africa countries participating in GEM, and therefore conducting the same Adult Population Survey, in 2018. In 2018, Lebanon had by far the highest levels both Total early-stage Entrepreneurial Activity and Established Business Ownership of these eight countries. Almost one in four adults in Lebanon were starting or running a new business, compared to just one in seven in Turkey and one in nine in the UAE.
Lebanon also has the highest level of Established Business Ownership at just over one in five adults, compared to one in eight in Iran and one in twelve in Turkey. Each of Egypt, Saudi Arabia, Morocco, the UAE and Qatar had less than one in twenty adults running an established business. So now that the level of entrepreneurship in Lebanon in 2018 has been defined, measured and compared to other countries, Lebanon can be viewed as very entrepreneurial, much more so than her neighbors.
Tomorrow we will begin to unpack these bold statements, beginning with the environment for enterprise. Does that environment help the business start-up, or get in the way? You will not be too surprised by the answer: a bit of both!
This article was written by Professor Stephen Hill, GEM Expert and UK Lebanon Tech Hub Consultant. The GEM report has been published by the UK Lebanon Tech Hub with the support and funding of the British Embassy in Beirut.
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