BEIRUT: We have already seen this week that in 2018 almost one in four Lebanese adults were actively engaged in starting or running a new business, while more than one in five were running an established business. These figures come from the Global Entrepreneurship Monitor (GEM), an international research project that in 2018 saw 49 countries across the globe each interviewing a random sample of at least 2,000 adults in each country in an Adult Population Survey (APS).
The Adult Population Surveys look at perceptions as well as behaviors. Whether and how you see opportunities, how you see your own capabilities and your attitude towards failure are important influences on whether you start your own business or not. GEM addresses these perceptions directly by asking:
• Do you see good opportunities to start you own business locally?
• Do you have the skills and experience to run your own business?
• Do you see good opportunities, but would be deterred by fear of failure?
• If not already doing so, do you intend to start a business in next three years?
More than four in ten Lebanese adults saw good opportunities to start a new business locally, ahead of Egypt, Morocco and especially Iran, but below Turkey and Qatar and way behind the UAE and Saudi Arabia. The Lebanese are not lacking in confidence, with more than two-thirds seeing themselves as having the skills and experience to run their own business, bettered only by Saudi Arabia with more than four out of five.. Less than one in four of those Lebanese adults who saw good opportunities to start a business would be deterred by fear of failure, the lowest proportion both regionally and globally. Of those not already doing so, three out of ten adults in Lebanon intended to start a business in the next three years. This is lower than some of the other MENA countries, but, as we can see below, Lebanon already has much higher proportion of people already starting or running their own business.
Some of the consequences of past intentions are set out in Figure 2, showing the proportion of adults in each country survey actively engaged in starting a new business (nascent entrepreneurs), running a new business (new business owners) or running an established business (established business owners), each category carefully defined by GEM to ensure consistency and comparability.
Lebanon ranked third highest in the region in terms of nascent businesses, but by far the highest in terms of new business owners, Total early-stage Entrepreneurial Activity (TEA = nascent plus new business minus any doing both) and in established business ownership. Lebanon (24%) had a level of Total early stage Entrepreneurial Activity almost ten percentage points greater than the next highest (Turkey 14 percent), as well as levels of new and established business ownership that were more than twice as high as any other country in the region. This is clear evidence that Lebanon is by far the most entrepreneurial of the MENA countries surveyed, and indeed ranked fourth of 48 countries globally.
This was the fourth consecutive year that Lebanon has been part of GEM, allowing a detailed picture of the level of entrepreneurial activity in the country and its evolution over time. Table 1 shows that evolution in terms of Total early-stage Entrepreneurial Activity (TEA) and Established Business Ownership. In GEM, TEA includes all those reporting that they were starting or running a new business, while Established Business Owners were running a business paying wages and salaries (including to the owner) for 42 months or more.
After falling in 2015/16, the level of Total early stage Entrepreneurial Activity in Lebanon increased in 2017 and has been stable, at just under one in four adults, since then. The level of established business ownership has been more volatile, reaching just over one in five adults in 2018. Taken together, these figures show almost one in two adults in Lebanon in 2018 either starting or running a new or established business.
This sounds like good news! However we will see tomorrow that more than half of these new businesses expect to employ no one but the owner in five years time, perhaps because most of these new businesses are in Retail or Personal Services, and likely to be fighting for shares of current spending rather than developing new markets.
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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