Litsen To The Article
If the economy seems to restart, as seen in the few available data and empirical observations, that doesn’t mean the boom is assured.
The World Bank and the IMF, who enjoy playing the wise owls, have already alerted: “These signs of an economic revival are misleading and do not constitute a solid basis for the future.” They’re not entirely wrong. Firstly, nothing has been done regarding monetary gaps, reforms, and debt.
Then there are two essential components of the economic life that are still missing, the State and the banking sector. A country cannot survive for long without them.
The State has always been somewhat virtual in Lebanon. But it had the merit of (barely) existing before gradually deteriorating. And just when you think it’s hit rock bottom, you don’t know how, but it always finds a way to sink even deeper into the mess. It’s remarkably creative.
As for the banking sector, it is what it has become. We’re not going to revisit the whys and hows. That’s not our point. Nevertheless, we regret it because, at least, it was quite useful for decades.
So, what can be done while waiting for the banking sector to return to the economic stage? Because to effectively revitalize economic activity, two linked imperatives are necessary: having sources of credit and investing. For the former, there’s currently no solution, unless you want to be burdened with Al-Qard-Al-Hassan; then you’ll get a bonus colonoscopy at Rassoul-Al-Aazam…
In the absence of credit, the only way to invest remains by tapping into your own resources. Many have done so, but it is still risky, and others don’t have enough means. At the same time, over 200,000 fresh dollar accounts, totaling two billion dollars, are lying dormant in banks, earning nothing at all. Besides the billions that lie in domestic safes, even though you’ve already spotted signs of mold on a small stack. How can these two categories be matched for the benefit of both?
In a normal country, there’s the stock market, which provides this opportunity to finance businesses, and for ordinary people to grow their money. However, our stock market has been comatose for a long time, for reasons we’ll elaborate one day.
So, we’ll turn to another window, more like a skylight. These are the ‘investment funds’. What are they? Let’s take a group of financiers or managers, armed with an MBA from Harvard, who decide to invest in a given field but have limited financial resources of their own.
The group takes the initiative of creating an ‘Investment Fund’, to which anyone can contribute by putting $1000, or $10,000, or more, or less, as the case may be, on the table. The Fund, managed in the most professional manner by a credible committee, will invest in projects in Lebanon, make money, and give you your share of the profit.
That’s the general principle. In the details and nuances, these funds can vary infinitely. You can create real estate funds, specialized in this sector: buy land, develop houses, stores, rent them, resell them…
Then there are tourist funds, if you’re as excited as the minister who paces through the airport every morning to count the luggage. Funds that operate hotels, open restaurants and rooftops, establish guest houses, acquire amusement parks, and so on.
Or industrial funds, now that the local industry is starting to replace some imports and has a competitive advantage for exports. And so on.
You can also diversify your investments by mixing a bit into each fund. You can even imagine a multi-country fund, which invests 50% in Lebanon, 20% in Cyprus, and 30% in France. This is in case you’re a cat that’s been scalded and still feels the burn of August 4th on your skin in your shop in Gemmayzeh.
A fund can also be permanent or created just for a project; building a shopping center, for example. And even if they are permanent, investment funds always have a possible exit for those who need their cash back. Your share might have also gained in value.
Such an idea is a classic in other countries. And even here, there have been similar cases, but it was for the super wealthy. It seems that the legislation already exists, but it needs to be dusted off.
All what’s missing, then, is an instigator, a trigger. One could have thought of the vice-governors to kick off their term – except they’re still hesitating about the color of their tie.
