The construction sector in Lebanon is in full swing but the jobs it creates are short-term manual labour. Joseph Eid / AFP
The construction sector in Lebanon is in full swing but the jobs it creates are short-term manual labour. Joseph Eid / AFP

Lebanon has gifted people but can't keep them at home



The other day I met a taxi driver who told me he was a professional musician in his spare time, the sort one might see accompanying popular singers on Lebanese TV. At one point in our journey he turned up the volume to listen to news reports of fighting in Tripoli before switching off in disgust.

"Things will never change for Lebanon," he said. "In that Zeytouni Bay [in Beirut], people are eating and drinking and having fun, while young Lebanese boys are killing each other in Tripoli."

We drove on in silence for a while. Then he said: "My brother is in Canada. He comes here once a year to kiss his mother, show his family Lebanon, eat some good food and then he go home to his job. We have become a country for our men to visit. What does that say about us who remain?"

I gave my usual response about living in the West not being all it is cracked up to be, but he just got more agitated. "Yes, but over there … there is a system. There are opportunities. Here there is nothing but crime and dirty politicians."

I remembered his words when I heard the glamorous Republican businesswoman Lady Lynn Forester de Rothschild talk on Sky News about the British private sector's obligation to create jobs, what she described as "inclusive capitalism".

Earlier, while speaking in London at the launch of this initiative, she quoted the Harvard economist Lawrence Katz, who famously compared the American economy to a large apartment block in which the penthouse was all fine and dandy but the further down the building you went, the housing got progressively worse. In Mr Katz's apartment block, the elevator - the metaphor for mobility - had broken down. He could have been describing Lebanon.

I am sure that the de Rothschild initiative is in part a bid to restore public confidence in a private sector - banking and finance especially - that has in recent years been defined by greed and fat-cat bonuses and which in part probably contributed to the riots in London and elsewhere last summer.

Again, there are parallels in Lebanon where the business community would do well to listen to her proposals, which include tackling an acute skills shortage, supporting small to medium enterprises and moving away from short-termism.

Like Mr Katz's apartment block (an apt metaphor given that Beirut is today defined by hundreds of new high-rises), the Lebanese economy is also top-heavy. The banks do what they have done for decades and lend to the government but not to small businesses.

The construction sector is in full swing but the jobs it creates are short-term manual labour, mainly for foreign workers. Only the hospitality industry offers any sort of training, but even there, young men and women eventually head off to the Gulf, where salaries are more competitive. Ditto those who work in the media and for regional multinationals.

I suspect my children will also choose to emigrate, despite being born and raised here.

It is a situation to which I am resigned. There are neither the opportunities nor the work environment for this generation, one that wants to embrace a fast-flowing global culture like no other generation before it.

For those who leave school with no meaningful qualifications, fast-food delivery, messenger work or waiting tables beckons. For them, entrepreneurship means opening a mobile-phone-recharge kiosk. No wonder the brotherhood of the militia, with the instant respect that an AK-47 can provide, retains a certain allure.

As the disaffected youths of Tripoli shoot and mortar each other, consider these words from an Australian diplomat with whom I had dinner last month: "You Lebanese are the most gifted people I have ever come across. Imagine if you all came back and lived here. Lebanon would be one of the greatest countries on Earth."

In the meantime, the musicians are driving the taxis.

Michael Karam is associate editor in chief of Executive, a regional business magazine based in Lebanon

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Ahmed Raza

UAE cricket captain

Age: 31

Born: Sharjah

Role: Left-arm spinner

One-day internationals: 31 matches, 35 wickets, average 31.4, economy rate 3.95

T20 internationals: 41 matches, 29 wickets, average 30.3, economy rate 6.28

MATCH INFO

Uefa Champions League semi-final, first leg

Barcelona v Liverpool, Wednesday, 11pm (UAE).

Second leg

Liverpool v Barcelona, Tuesday, May 7, 11pm

Games on BeIN Sports

Small Victories: The True Story of Faith No More by Adrian Harte
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Profile Periscope Media

Founder: Smeetha Ghosh, one co-founder (anonymous)

Launch year: 2020

Employees: four – plans to add another 10 by July 2021

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Yadoo’s House Restaurant & Cafe

For the karak and Yoodo's house platter with includes eggs, balaleet, khamir and chebab bread.

Golden Dallah

For the cappuccino, luqaimat and aseeda.

Al Mrzab Restaurant

For the shrimp murabian and Kuwaiti options including Kuwaiti machboos with kebab and spicy sauce.

Al Derwaza

For the fish hubul, regag bread, biryani and special seafood soup. 

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Started: 2016

Founders: Hussein Nasser Eddin, Laila Akel, Tayeb Akel 

Based: Ramallah, Palestine

Sector: Technology, Security

# of staff: 13

Investment: $745,000

Investors: Palestine’s Ibtikar Fund, Abu Dhabi’s Gothams and angel investors

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Name: Infinite8

Based: Dubai

Launch year: 2017

Number of employees: 90

Sector: Online gaming industry

Funding: $1.2m from a UAE angel investor