Increasing Enterprise Growth and Jobs in Lebanon
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INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON OPTIONS TO INCREASE SME GROWTH AND JOBS ASIA & MIDDLE EAST ECONOMIC GROWTH BEST PRACTICES PROGRAM Students at a Lebanese vocational school learn how to create garment patterns through a specialized training program in Beirut. 1 MAY 2015 Students at a Lebanese vocational school learn how to create garment patterns through a Thisspecialized publication training was producedprogram in for Beiru reviewt. by the United States Agency for International Development. It was prepared by Douglas Muir, Janet Gohlke-Rouhayem, and Craig Saltzer of Chemonics International, Hayley Alexander of Banyan Global, and Henri Stetter of the Pragma Corporation for the Asia & Middle East Economic Growth Best Practices Program contract no. AID-OAA-M-12-00008. INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON OPTIONS TO INCREASE SME GROWTH AND JOBS ASIA & MIDDLE EAST ECONOMIC GROWTH BEST PRACTICES PROGRAM Contract No. AID-OAA-M-12-00008 Contracting Officer Representative, William Baldridge [email protected] (202) 712-4089 The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CONTENTS EXECUTIVE SUMMARY ................................................................................................ 1 SECTION I: INTRODUCTION ......................................................................................... 6 A. Purpose of Assessment............................................................................................... 6 B. Methodology .............................................................................................................. 7 C. Special Considerations ............................................................................................... 8 SECTION II. POLICY AND REGULATORY CONSTRAINTS FOR SME GROWTH AND INSTITUTIONAL CAPACITY TO ADVOCATE FOR CHANGE ........................ 9 A. Overview of Policy and Regulatory Constraints to SME Development .................... 9 B. Findings: Policy and Regulatory Constraints to SME Growth .................................. 9 C. Findings: Non-Regulatory Barriers to SME Growth ............................................... 11 D. Findings: Institutional Capacity for Advocacy ........................................................ 16 E. General Recommendations to Support Regulatory Reform ..................................... 19 SECTION III. ENHANCING PRIVATE SECTOR GROWTH THROUGH BUSINESS DEVELOPMENT SERVICES ......................................................................................... 22 A. Overview of Business Development Services in Lebanon ...................................... 22 B. Supply-side Findings: In-Country Capacity to Provide Specialized Technical Assistance and Business Development Services to Improve Competitiveness ............ 22 C. Demand-side Findings: SME Needs for Business Development Services in High- Growth Sectors and Value Chains ................................................................................ 28 C1. SME Technical Assistance Needs .......................................................................... 28 C2. SMEs in Sectors with High Growth Potential ........................................................ 30 D. General Recommendations for Technical Assistance to Enterprises....................... 32 SECTION IV. TRADE AND EXPORT LINKAGES ...................................................... 36 A. Overview of Trade and Exports in Lebanon ............................................................ 36 B. Findings: Trade and Exports .................................................................................... 37 C. General Recommendations: Trade and Exports ....................................................... 41 SECTION V. ENHANCING PRIVATE SECTOR GROWTH THROUGH WORKFORCE DEVELOPMENT ................................................................................... 44 A. Overview of Workforce Development in Lebanon .................................................. 44 B. Findings: Workforce Development .......................................................................... 45 C. General Recommendations: Workforce Development to Enhance Private Sector Growth .......................................................................................................................... 50 iv INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON SECTION VI. SPECIAL ECONOMIC ZONES .............................................................. 54 A. Overview of Special Economic Zones and Industrial Parks in Lebanon ................. 54 B. Findings: Special Economic Zones and Industrial Parks ......................................... 56 C. General Recommendations: Special Economic Zones and Industrial Parks ............ 58 Section VII. YOUTH AND GENDER CONSIDERATIONS ......................................... 60 A. Youth Considerations ............................................................................................... 60 B. Gender Considerations ............................................................................................. 63 SECTION VIII: PROGRAM RECOMMENDATIONS AND OPTIONS ....................... 66 A. Program Recommendation 1: Firm-Level Technical Assistance to Enterprises ..... 67 B. Program Recommendation 2: Export Promotion Assistance ................................... 71 C. Program Recommendation 3: Workforce Development and Job Placement ........... 73 Annex A. References ........................................................................................................ 76 Annex B. List of Interviewees .......................................................................................... 79 Annex C. SME Profile Tiers ............................................................................................. 87 Annex D. Tunisia Business Reform and Competitiveness Program Approach................ 88 Annex E. Overview of Mauritius Business Growth Scheme ............................................ 90 Annex F. Lebanese Import and Export Customs Data Over the Last 5 Years by Sector . 91 Annex G. Qualifications of Business Advisors ................................................................ 93 Annex H: North Lebanon SME Competitiveness and Job Creation Concept Note ......... 94 Annex I. Assessment Scope of Work ............................................................................... 99 INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON v ACRONYMS ACC-VET Advisory and Coordinating Committee for Vocational Education and Training steering committee ADR Alternative Dispute Resolution AMEG Asia Middle East Economic Growth Best Practices Program AOU Arab Open University AUB American University of Beirut BEE Business Enabling Environment BT Baccalaureate Technique CAD/CAM Computer-aided Design / Computer-aided Manufacture CCIAT Chamber of Commerce Industry and Agriculture of Tripoli CIT Centre International Des Sciences Techniques CNAM Centre régional associé au Conservatoire national des arts et métiers DGVTE Directorate General for Vocational and Technical Education DS Dual System EBRD European Bank for Reconstruction and Development EU European Union ETF European Training Foundation FDI Foreign Direct Investment GIZ Gesellschaft für Internationale Zusammenarbeit (German Society for International Cooperation) GoL Government of Lebanon ICSID International Center for the Settlement of Investment Disputes ICT Information and communications technology IECD European Institute for Cooperation and Development IDLO International Development Law Organization IFC International Finance Corporation ILO International Labour Organization IMF International Monetary Fund IPR Intellectual Property Rights ITC International Trade Center of the WTO IQS Indefinite Quantity Services MEHE (Lebanese) Ministry of Education and Higher Education MoET (Lebanese) Ministry of Economy and Trade NEO National Employment Office NGO Non-governmental Organization PPD Public-Private Dialogue PPP Public Private Partnership SEZ Special Economic Zone SME Small and Medium Sized Enterprise TVET Technical / Vocational Education and Training UNCTAD United Nations Conference on Trade and Development vi INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON UNDP United Nations Development Programme UNIDO United Nations Industrial Development Organization USAID United States Agency for International Development VAT Value Added Tax WFD Workforce Development WTO World Trade Organization INCREASING ENTERPRISE GROWTH AND JOBS IN LEBANON vii EXECUTIVE SUMMARY In January 2015, USAID engaged the USAID Asia and the Middle East Economic Growth Best Practices Project (AMEG) to examine impediments to private sector growth — particularly the growth of small and medium sized enterprises (SMEs) — and opportunities for USAID to remove or alleviate these impediments in the future. The assessment examined enterprise development challenges and opportunities across five areas to propose recommendations to support: 1. Advocacy for an improved business enabling environment 2. Demand-driven business development services (BDS) 3. Increased trade and export linkages 4. Enhanced workforce development 5. Opportunities for growth in special economic zones. The assessment examined the needs of SMEs and high-growth lead firms within key sectors and value chains to identify specific bottlenecks to growth as well as to identify strategic interventions to support SMEs developing goods and