Lebanon Fintech ecosystem
With a population of more than 6.8 million people, Lebanon is one of the countries with the best intertwined strengths in the MENA region, highlighting its strategic location, its favorable tax system and free zones, its entrepreneurial spirit, its talent pool. local and an educated and well-educated multilingual population.
However, the Covid -19 pandemic hit really hard Lebanon, bringing many consequences like the drop of the Lebanese pound (loss of 80 percent of its value since October 2019) and a rapid increase in inflation. Moreover, on August of 2020 , a huge explosion at the Beirut seaport devastated the city and impacted Lebanon’s food supply, as Lebanon imports 85 percent of its food, and the port previously handled around 70 percent of the country’s imports (Human rights watch, 2020). Also, Lebanon’s severe economic and financial crisis led to a projected 19.2% decline in GDP for 2020, triple-digit inflation and a projected increase in poverty to 45% and extreme poverty to 22% (World Bank, 2021).
On the other hand, SMEs, particularly micro-enterprises, are Lebanon’s main economic engines. They make up 95 percent of businesses and account for 50 percent of employment. Nevertheless, access to finance its still a major limitation since 42 percent of Lebanese SMEs struggle to obtain financing, according to the 2014 World Bank Business Survey. Moreover, only 17.5 percent of SMEs have access to Bank loans (Executive, 2019).
Lebanon Fintech ecosystem
According to the 2019 MENA Fintech Venture Reporting, out of all Fintech startups in the Middle East and North Africa (MENA), Lebanon ranked third place with 9% of the total number of fintechs, after the UAE and Egypt. As of 2020, there were 28 Startups in Lebanon (Findevgateway, 2020). Moreover the region’s fourth most serviced market by Fintech companies (Fintech times, 2020) and as of 2020, Lebanon ranks 65th in the Fintech country ranking. Also, Beirut is the fifth main Fintech city in the MENA region; however, the city ranks 175th worldwide (Findexable, 2020).
Furthermore, there was an important increase in the Lebanese population adaptation to financial technology innovations since as of 2017, 54% of people with a bank account had adopted digital banking in Lebanon, an important increase from 38% in 2016 (Invest in Lebanon, 2018).
Fintech also represents an important opportunity to reduce or even eliminate barriers to financial inclusion. In 2017, Lebanon was ranked 85th globally for its Bank Account Penetration Rate of 44.8%, lower than the world average of 67.1%, mainly due to geographic restrictions or lack of adequate banking services.
On the other hand, Lebanon Fintech strengths are digital banking, lending and trading (Invest in Lebanon, 2018)
Lending Fintech
The Fintech space is not subject to specific Fintech legislative and regulatory provisions in Lebanon. In case of online lending activities, this are not explicitly regulated in Lebanon neither, but they must be subject to the laws and regulations governing lending in general, including the Code of Money and Credit and BDL regulations (Mondaq, 2020).
Digital Lending platforms are increasing over the years. In fact, one of the most important lending platforms in Lebanon is Let’s Grant and as of 2021, it has 2.7 million dollars of total funding (Crunchbase 2021).
Sectors such as Fintech lending can be very helpful in the recovery of the country’s economy, which was severely affected during the covid-19 pandemic. This sector could help both to provide a boost to SMEs and individuals and thus reduce existing gaps.
