• Jean AbiNader

Lebanon Facing Economic Crunch Time To Free Up Much Needed Funds; With Right Conditions, Lebanon’s S

Finance Minister Khalil warns of negative economic effects of slow government formation. In an article posted on Al Arabiya.net, Finance Minister Ali Hassan Khalil made a strong case for accelerating the process of government formation. He believes that Lebanon needs to establish a government quickly to maintain confidence in the country and get to work on reforms to help an ailing economy. “It is important for political forces to be aware that time is not on our or anyone’s side. Therefore we urgently need to accelerate...the formation of a new government,” Khalil said in a statement from his office that was quoted in the post.

Although he has not be designated as a member of the incoming cabinet, he is highly regarded as a specialist in financial and economic affairs and is a senior representative of Amal in the caretaker government. He said that ““We have not seen serious movement in forming a government so far. As finance minister I repeat my warning and stress the need to speed it up so that the new government can get to work on the source of the problems and work on fixing them.”

It is a clear condition in all three international donors conferences, Rome, Brussels, and Paris, that support from the donor community is contingent upon Lebanon enacting reforms that will reduce public spending, the national debt, and increase transparency at all levels of government.

His concerns were echoed by Alain Bifani, the director general of the ministry who pointed to Lebanon’s public debt, currently at more than 152% of GDP, may rise 1% or more in 2018. This compounds the expected decrease in the growth rate to 2.3%, which will result in a fiscal deficit of 8.3% of GDP in 2018.

“If we continue to have a primary surplus of 3 trillion Lebanese pounds over the coming years, definitely we will see positive developments in public debt,” Mr Bifani said. “To have this primary surplus, we need to limit [public sector] hiring in some departments. We need to have structural reforms to lower spending.” No small challenge when the government has lacked discipline in reforming its spending habits, tackling corruption, and rationalizing national and local budgets.

Dell sees opportunities in Lebanon with the ICT market poised to reach over half a billion dollars in 2019. The media outlet Intelligent CIO spoke with Kamal Othman, General Manager, Levant, Dell EMC, to better define Lebanon’s potential for digital transformation initiatives. His remarks are very helpful to those who are unfamiliar with how businesses in the country are using technology to transform themselves and their operations.

Briefly, digital transformation is the change that companies undergo when they adopt technology to advance their operations and services, from customer interface and product delivery, to advanced services for research & development, collaboration, pioneering products and services, and all types of internal communications and project management.

Since the ICT high technology sector relies primarily on computing power and innovative and skilled programmers, the entry costs are relatively low compared to bricks and mortar facilities. Yet, at some point, applications have to be tested, proven, and replicated even before marketing and distribution take place. Aside from equipment, licensing, and government regulations, entrepreneurs all over the region face similar challenges as described by Mr. Othman.

“Limited financial resources are the most prominent barrier organizations in Lebanon face in their journey to become a successful digital business.” He notes that it takes collaboration between government agencies, financial institutions, and the firms to build a digitized and innovation-focused economy. Othman then said that “This is closely followed by lack of reliable data that is important to facilitate speedy decision-making. New avenues of business and revenue cannot be identified in the absence of accurate data and lack of knowledge management.”

The government has a proactive role to play in advancing the environment for digital transformation by enacting “flexible rules and regulations that govern the public sector and organizational structures and mechanisms” so as to not “thwart efforts channeled towards automation and digitization.” Compounding this is the issue of workforce readiness – are the skilled personnel, attitudes, and vision align to work collaboratively and quickly to implement needed changes to remain competitive?

Without a relatively clear and shared vision as to the company’s goals, it will not adapt technology effectively and waste resources trying multiple solutions without adequate insights into how to reach the right solutions. As Othman pointed out, “Digital transformation isn’t only about implementing new mobile applications or technologies. It is more about transforming an organization to leverage possibilities provided by new technologies. However, organizations do make heavy ICT investments, but do not adopt technology as a strategic means to an end. Therefore, they are unable to yield desired business outcomes at a faster pace.”

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