Lockdown Economy Lebanon

Country Report

Watch Lockdown Economy Lebanon interviews here.

14 Entrepreneurs: 1 small businesses; 7 micro businesses, 6 self-employed

Geography: Beirut, Jouret El Ballout, Qornet El Hamra, Zouk Mikael

Timelines: November 2020 - July 2021

Sectors: accommodation and food service, arts, manufacturing, design, waste management, retail trade

Since the start of the COVID-19 pandemic, millions of jobs have been lost, which increased the number of people worldwide living in poverty [1]. Lebanon is currently going through complex challenges namely, the impact of COVID-19, the explosion at the Port of Beirut, and the economic crisis [2]. The country’s GDP fell from US$55 billion in 2018 to an estimated US$33 billion in 2020 The COVID-19 pandemic has especially affected micro and small businesses [2].

Small businesses in Lebanon are the main drivers of the economy. With 95% of all the companies in the country being made up of small and medium-sized enterprises (SMEs), they provide 50% of the country’s employment [3]. They provide sources of income and earnings from exports [4]. An assessment by the International Labour Organisation (ILO) of the impact of COVID-19 on vulnerable workers and small businesses in Lebanon revealed that COVID-19 worsened the financial crisis for entrepreneurs with a reduction in sales and increased loss of revenue [5].

This article examines the outcomes of Lockdown Economy, the field research by Think Tank AlterContacts on the impact of COVID-19 on small businesses in Lebanon [6]. Four main problems faced by small businesses in Lebanon during the pandemic are highlighted, followed by a call to action and recommendations for policymakers, local government, and international organizations to help small businesses.

Finance and Funding

The Lebanese government responded to COVID-19 by issuing a fiscal policy, such as assistance to enterprises and business owners who were struggling to access loans to pay off their debts and salaries to their employees [7]. Research shows that accessing finance and funding is one of the biggest obstacles that small businesses face in Asia and the Middle East [8]. The owners interviewed by Think Tank AlterContacts shared that they had difficulty in accessing funding for business expansion [6].

Small businesses face more barriers in accessing funding because banks and other financial institutions struggle to assess their paying capability and credit history, which depends on a number of factors, including the size and age of the company [9]. The majority of Lebanese small businesses interviewed were two years old or less [6]. The International Monetary Fund and World Bank estimate that despite small businesses in the Middle East and North Africa creating over 50% of the region’s employment, they only receive 7% of credit facilities, with the rest being awarded to bigger companies [10].

Call to Action: Improve Financial Reporting and Digitalization of Business Records

A survey on the impact of COVID-19 on vulnerable workers and small businesses in Lebanon by the International Labour Organisation revealed that only 18% of all businesses in the survey were aware of measures of support provided by the government and other actors [5].

One way for local governments to assist small businesses in accessing funding, especially in countries that are experiencing economic challenges, is by improving the financial reporting of small businesses. Young and small businesses can access financing from banks by improving the quality of their accounting and financial reporting [9]. When communication between banks and businesses is improved, trust and rapport are created hence the bank’s positive perception of the business is increased which leads to less reluctance by the bank to give the business some funds for growth. Lebanese government could set up advisory, services, seminars, and online courses for small businesses on how to lead transparent financial reporting in order to access funds [8].

The digitalization of account payables and receivables by small businesses could assist lenders in monitoring and assessing credit risk in real-time [10]. The government could increase access to digital tools for small businesses to do their financial reporting.

More Collaborations with Local Artists and Businesses

The interviewed small business owners expressed a desire to work with other local businesses and artists [6]. A systematic literature review on how small enterprises use relation-based collaboration to operate in rural areas in 2021 revealed that relation-based collaboration and networking encourage the growth of small businesses [16]. Networking and collaborating have several advantages for small businesses including exploring new markets and new intelligence, for example, current trends and awareness of the competition.

Call to Action: Information Sharing and Engaging Key Stakeholders

It is important for small businesses to share information and to have a culture of openness and interactions because it leads to intra-organizational understanding which leads to product innovation and problem-solving [17]. For example, in the study by Think Tank AlterContacts, a small business owner who hand-paints recycled glass bottles expressed her desire to collaborate with fellow Lebanese artists [6].

The government could encourage the collaboration of small businesses by connecting key stakeholders, such as clients, suppliers, supply chain partners, other businesses, schools, universities, and research institutions. For example, when small businesses and universities interact, a wide range of opportunities is created including applied research, the recruitment of graduates, training, development of technology, and most importantly, exposure of the business and access to funds [16].

However, the collaboration also comes with challenges including the need for resources, planning, and a lack of financial and commercial insurance [18]. Small enterprises usually operate on limited financial resources. Allocating funding for collaboration, especially in a country going through economic turmoil such as Lebanon can be difficult. In addition, the governments can gather experts and stakeholders in different industries in workshops for small businesses to discuss new trends, innovations and explore new business models [18].

Marketing and Brand Exposure

Restrictions of the COVID-19 pandemic changed the way people communicate. There is an increase in online shopping, the use of social media, and teleconferencing. That creates new opportunities for small businesses to utilize digital tools when marketing their products [1]. However, a survey on the impact of multiple crises on businesses and the labor market in Lebanon by the World Bank revealed that the adaptation to online operations by businesses in the country was low and that larger firms are likely to increase remote work better than small forms [2].

Call to Action: Adapt to Digital Business Operations and Crisis Response Strategies

The small businesses interviewed by Think Tank AlterContacts already had an online presence on social media platforms such as Instagram. However, only a few had official business websites and they were not utilizing other digital tools to increase brand exposure. There is a need for the development of digital marketing channels and less dependence on offline transactions [19]. Digital marketing strategies enable consumers to spread messages about customer service, branding, and products of the business. Small enterprises can market themselves online by opening a fan page, creating giveaways, and conducting market research by creating small-scale surveys to receive feedback from customers [20].

The government and international organizations could create initiatives to support the digitalization of businesses and reduce the negative impacts of COVID-19 by improving connectivity, e-learning, electronic payments, and access to finance and government support [21].

Lack of Reliable Supply Chain Partnerships

The COVID-19 pandemic presented challenges to the supply chains of small businesses in Lebanon. In the Lockdown Economy interviews, seven businesses reported delays in getting their production materials from suppliers, the lack of reliable suppliers in the country, and late deliveries of products to customers. Disruptions in supply and demand cause problems such as loss of profits, increased costs, and reputational risk [23]. Trust plays a big role in information sharing, the accuracy of forecasting, and matching supply and demand.

Call to Action: Joint Decision Making

Small business owners, suppliers, and other key local stakeholders need to commit to collectively work towards creating a reliable and responsive supply chain that meets consumers’ demands. Other policies that local governments can implement in improving supply chain partnerships include applying ethical codes between businesses and contractors, the use of information technology to increase communication between suppliers and businesses, building trust and long term relationships between enterprises and suppliers, and the sharing of information about requirements from customers [24]. Local and global supply chains need to be kept fluid and lines of trade need to be kept free of disruptions [13].


This field research by Think Tank AlterContacts has shown that despite facing adversity, small business owners in Lebanon kept a positive can-do attitude [6]. Many of them have future projects and product innovations they are working on and they are keen to continue with their businesses despite the COVID-19 crisis. International organizations play a key role in assisting the country for example, in June 2021, the International Monetary Fund announced the possible allocation of $900 million to Lebanon in August [7]. The country's economic recovery will take time and responses that are effective to the economic and health effects of COVID-19 will require continued collaboration between the government, local communities, and international organizations.

Written by Mellissa Musonza, a recent Health and Social Care and Management Policy graduate and she also has a degree in Psychology and Sociology.

Edited Shruti Kumari

Editor-in-Chief - Julia Skupchenko


1 - United Nations Conference on Trade and Development (2020). Impact of the COVID-19 Pandemic on Trade and Development, Transitioning to a New Normal, [online]. Available at https://unctad.org/webflyer/impact-covid-19-pandemic-trade-and-development-transitioning-new-normal [Accessed on 21/10/2021].

2 - The World Bank (2021). Lebanon Economic Monitor, Lebanon Sinking (To the Top 3), [online], pp3-5. Available at https://www.worldbank.org/en/country/lebanon/publication/lebanon-economic-monitor-spring-2021-lebanon-sinking-to-the-top-3 [Accessed on 21/10/21].

3 - Matta J.M. (2017). SMEs in Lebanon: Status, Strategy and Outcomes, Ministry of Economy and Trade [online]. Available athttps://www.unescwa.org/sites/default/files/event/materials/johnny-matta-small-medium-enterprise-lebanon-en.pdf [Accessed on 21/10/21].

4 - Farran, I. and Fawaz, M. (2018). Role of SMEs in Lebanese Economy. Journal of Economics and Management Sciences, [online] 1(2), pp.4. Available at https://www.researchgate.net/publication/327918417_Role_of_SMEs_in_Lebanese_Economy [Accessed on 21/10/21].

5 - International Labour Organisation (2020). Impact of COVID-19 on Vulnerable Workers and Small-scale enterprises in Lebanon, [online]Available at https://www.ilo.org/beirut/information-resources/factsheets/WCMS_747074/lang--en/index.htm [Accessed on 22/10/21].

6 - Think Tank, AlterContacts, Lockdown Initiative, Lockdown Economy in Lebanon, [online]. Available at https://www.youtube.com/c/AlterContacts/videos [Accessed on 15/10/21].

7 - International Labour Organisation (2021). COVID-19 Country Policy Response: Lebanon, [online], pp13. Available at https://www.ilo.org/global/topics/coronavirus/regional-country/country-responses/lang--en/index.htm [Accessed on 22/10/21].

8 - Malaeb. O. (2018). Small and Medium Enterprises in Lebanon:Obstacles and Future Perspectives, Arab Planning Institute Kuwait, [online]. Available at https://www.arab-api.org/images/publication/pdfs/458/458_ex55.pdf [Accessed on 18/10/21].

9 - Erdogan, A.I. (2016). Determinants of Perceived Bank Financing Accessibility for SMEs: Evidence from an Emerging Market. Economic Research Journal, [online] 32(1), pp 690-699. Available at https://www.tandfonline.com/doi/full/10.1080/1331677X.2019.1578678 [Accessed on 15/10/21].

10 - Dornel, A.,Slimane, M.A.A. and Mohindra. K. (2020). Improving SME Access to Trade Credit and Financing. The World Bank, [online], pp3. Available at https://openknowledge.worldbank.org/handle/10986/34898 [Accessed on 15/10/21].

11 - The Organisation for Economic Cooperation and Development (2021). One Year of SME and Entrepreneurship Policy Responses to Covid-19: Lessons Learned to Build Back Better. Tackling Coronavirus (COVID-19): Contributing to a Global Effort, [online], pp17. Available at https://www.oecd.org/coronavirus/policy-responses/one-year-of-sme-and-entrepreneurship-policy-responses-to-covid-19-lessons-learned-to-build-back-better-9a230220/ [Accessed 17/10/21].

12 - Naude, W. and Cameron, M. (2021). Identifying Opportunities for Export-Driven Industrialization. United Nations Industrial Development Organisation: Industrial Analytics Platform, [online]. Available at https://iap.unido.org/articles/identifying-opportunities-export-driven-industrialization?_ga=2.128943308.1968454611.1634402292-1349755907.1630515330 [Accessed on 17/10/21].

13 - International Chamber of Commerce (2021). A Call to Action to Save Our SMEs: ICC COVID-19 Response, [online], pp2-3. Available at https://iccwbo.org/publication/call-to-action-to-save-our-smes/. [Accessed on 22/10/2021].

14 - OECD (2018). Fostering Greater SME Participation in a Globally Integrated Economy. SME Ministerial Conference, [online], pp15. Available at https://www.oecd.org/cfe/smes/ministerial/documents/2018-SME-Ministerial-Conference-Plenary-Session-3.pdf. [Accessed on 13/10/21].

15 - Prasnikar, J., Redek, T. and Drenkovska, M. (2017). Survival of the Fittest: An Evolutionary Approach to an Export-Led Model of Growth. Economic Research Journal, [online], pp 184, 30(1). Available at https://www.tandfonline.com/doi/full/10.1080/1331677X.2017.1305796 . [Accessed on 13/10/21].

16 - Beckmann, M., Garkisch, M. and Zeyen, A. (2020). Together We Are Strong: A Systematic Literature Review on how SMEs Use Relation-Based Collaboration to Operate in Rural Areas. Journal of Small Business and Entrepreneurship, [online]. Available at https://www.tandfonline.com/doi/full/10.1080/08276331.2021.1874605 [Accessed on 19/10/21].

17 - Mei, L., Rentocchini, F. and Chen, J. (2021). Antecedents of Strategic Ambidexterity in Firms’ Product Innovation: External Knowledge and Informal Knowledge Sharing. Journal of Small Business Management, [online], pp 7. Available at https://www.tandfonline.com/doi/full/10.1080/00472778.2021.1944635 . [Accessed on 10/10/21].

18 - The Nuclear Decommissioning Authority Estate SME Steering Group North(2014). Guide to SME Collaboration, [online], pp 17. Available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/475681/Guide-to-SME-collaboration2014.pdf . [Accessed on 21/10/21].

19 - Guo, H., Yang., Z. Huang, R. and Guo, A. (2020). The Digitalization and Public Crisis Responses of Small and Medium Enterprises: Implications from a Covid-19 Survey. Frontiers of Business Research In China 14(19), [online], pp 7. Available athttps://fbr.springeropen.com/articles/10.1186/s11782-020-00087-1 .[Accessed on 21/10/21].

20 - Pentina, I. and Koh, A. (2015). Exploring Social Media Marketing Strategies in SMEs. Marketing, Dynamism and Sustainability: Things Change, Things Stay the Same, [online], pp 3. Available at https://www.researchgate.net/publication/314611673_Exploring_Social_Media_Marketing_Strategies_in_SMEs . [Accessed on 21/10/21].

21 - OECD (2020). Policy Options to Support Digitalisation of Business Models During Covid-19: Annex. Report for the G20 Digital Economy Task Force, [online], pp 4-5. Available at https://www.oecd.org/sti/policy-options-to-support-digitalization-of-business-models-during-covid-19-annex.pdf [Accessed on 21/10/21].

22 - United Nations Industrial Development Organisation (2020). Responding to the Covid-19 Crisis: Pathway to Business Continuity and Recovery, Guidance for Micro, Small and Medium Enterprises (MSMEs), [online], pp 3. Available athttps://www.unido.org/sites/default/files/files/2020-06/MSME_Recovery.pdf . [Accessed on 21/10/21].

23 - Bier, T., Lange, A. and Glock, C.H. (2019). Methods for Mitigating Disruptions in Complex Supply Chain Structures: A Systematic Literature Review. International Journal of Production Research, [online] 58(6), pp 1835. Available at https://www.tandfonline.com/doi/full/10.1080/00207543.2019.1687954 . [Accessed on 10/10/21].

24 - Ma, K., Pal, R. and Gustafsson, E. (2018). What Modelling Research on Supply Chain Collaboration Informs Us? Identifying Key Themes and Future Directions Through a Literature Review. International Journal of Production Research, [online] 57(7). Available ahttps://www.tandfonline.com/doi/full/10.1080/00207543.2018.1535204 [Accessed on 21/10/21].

In 2020 Think Tank AlterContacts launched the Lockdown Economy, an international non-profit grassroots social-economic and educational initiative to help small businesses and self-employed professionals overcome the challenges of the pandemic and reactivate the economy. It is registered by the United Nations as an Acceleration Action for SDG. From May 2020 until July 2021 we have been collecting insights from small business owners and self-employed professionals from different business sectors and countries to see how the COVID-19 pandemic affected their business, their life, and future. This article is based on the field research of the Lockdown Economy.