The Marketplace Middle East team took a helicopter tour of Beirut while in Lebanon on special assignment. That tour took us over Solidere, the downtown zone being rebuilt after years of on/off conflict.
While there are still pockets of empty land, this skyline has filled up quickly and it is safe to say there is more to come.
Unlike the rest of the world which is trying to gather its footing after the three-year shock of the global crisis, financial assets and deposits surged in Lebanon during 2007 and 2009.
The numbers are staggering. This population of just over four million citizens has a banking system with deposits of $100 billion dollars. During that three-year window, $55 billion flowed into the country, just over 40 percent of that money in the form of remittances.
I combed over these numbers with Freddie Baz, the Group Chief Financial Officer and Strategy Director of Bank Audi and the leading economist in this small but vibrant country. I mentioned to Baz after being in Lebanon for a week, people from different generations speak of the “brain drain,” where the country’s youth go abroad for university and never come back.
Depending on who you talk to - particularly the mothers of these young adults - you get a fairly emotional response – the most predictable being that the government is not providing enough opportunity for all its talent.
But upon a closer look at the numbers, a different reality emerges. Lebanon is doing what it does best - exporting top-flight human capital to the world.
For Lebanon, it is a gift that keeps on giving back to the country’s bottom line. The per-capita income is just below $10,000, the highest amongst 22 countries in the Middle East for a non-oil based economy and that according to Baz with Lebanon running at only 70 percent of real capacity.
Herein lies the challenge for the country. Right now, it has limited capacity to absorb all its talent. Finance Minister Raya Al Hassan told me that the government is spending an extra $1.5 billion in this year’s budget to build out the fraying infrastructure - especially roads and telecommunications networks.
If Lebanon wants to specialize in services beyond banking, the basics need to be brought up to speed.
That handsome sum was also seen as politically essential to get the budget through the complicated coalition that is all part of the political mix.
But, Minister Al Hassan is in the camp that believes the country’s best resource remains its human capital and that infrastructure spending should promote those sectors that can leverage talent.
The capital flows coming back into Lebanon are giving the finance minister and her government some breathing room for extra spending. The budget deficit remains in double digits and the long-term debt of nearly 150 percent of GDP tops Greece, which went to its European neighbors for a bailout.
One does not get such a sense of concern from either the government or its financial brass. I toured a new apartment building designed by Foster & Associates called “3 Beirut,” just off the waterfront downtown.
Sixty of the 150 units are already sold despite a delivery date of 2014 and prices range from $7,500-$10,000 a square meter. What we are looking at here is a scenario where downtown Lebanon is on-par price-wise with West London or mid-town Manhattan and nobody blinks an eye.
In typical Lebanese fashion people live for the moment, whether it is a superb lunch at a French brasserie, one of the beach lounges or fabled nightclubs. The people here have been frontline witnesses to nearly everything, where conflict is all part of the equation and survival.
Again, the numbers tell an interesting story. After the tragic death of Prime Minister Rafic Hariri and the 2006 war, some $3 billion left the country each time, but not for long. Within a period of 18 months, that sum and more came back into the banking system.
The country and its people dust themselves, regroup and move forward - with the help of their number one export all along the way, which continues to give back.
CNN