Lebanon: Urgent Support Given to Crisis-Stricken Local Businesses

On August 4, 2020, the explosion in the Port of Beirut devastated part of the Lebanese capital. During this major crisis, exacerbated by economic stagnation, financial chaos and an alarming health crisis due to Covid, it was vital to launch an emergency response, tailored to the needs of a traumatized community. Due to the lack of resources supplied by the Lebanese government, civil society, NGOs and international aid associations were required to step in.

In the wake of the disaster, Agence Française de Développement (AFD), in partnership with the NGO Mercy Corps, created a fund to support very small and medium-sized enterprises (MSMEs) affected by the explosion. The fund, which amounted to a total of €1,000,000, took the form of an unconditional cash transfer, and was granted between September 2020 and the fall of 2021. The program enabled 254 incredibly vulnerable local businesses to remain in operation.

The financial support provided by AFD to small businesses left vulnerable by the crisis, has helped many of them to avoid bankruptcy, increasing the resilience of the local economy.

 

Najat Chemali runs a household goods store in the affluent neighborhood of  Ashrafieh. “For 25 years, my business was doing great. The explosion destroyed my house and my store.” Najat lost all her stock: “French cast iron pots, German pottery, Portuguese porcelain. The loss was estimated at over $4,000.” She was also unable to access money from the bank. So, Najat Chemali had to sell her jewelry to repair her house. “The government aid never arrived. The army came and drafted an assessment of the damage and then, that was it! The same goes for the insurance companies which are still waiting for the results of the investigation.”  

Najat Chemali received financial support of $2,800 in cash, which she used to pay for repairs to the storefront, renovate the shelving, and fill the holes in the walls. She also used a portion of the money from the sale of her jewelry to reopen her business. For the moment, however, importing new goods is not an option. “I’m trying to sell the remaining stock. Things are getting better, but I feel like our backs are still against the wall.”

Mona Lago runs a clothing store in Basta, a popular district in West Beirut. As a result of the financial crisis in 2019, the business where her husband worked ran into difficulties. The clothing store provided the family with a minimal income, until the port explosion destroyed everything. 

That particular day, Mona’s two young daughters were in the store. “They were unharmed, but they were emotionally traumatized. After the explosion, I was experiencing such mental fatigue that I wanted to leave my country.” There was not much left of her store: “Everything was damaged, the tables, the storefront, the clothes and accessories.” 

One day Mona saw a Mercy Corps team passing by, and she went to talk to them. “I couldn’t repair anything. I didn’t have any money or strength left. My hands were tied.” With Mercy Corps’ financial support, she was able to reopen her small business. “Prices started to skyrocket and the Lebanese pound was plummeting. I needed cash in a stable currency to get by. I used the AFD grant to replace the store window, tables, chairs and goods.”

Today, Mona has transformed her clothing store into an accessories store, the realization of a long-held dream.

Nada Khoury and her husband Freddie launched Neo Gourmet in 2013. With a prosperous high-end pastry, bakery and snack business, employing 26 staff, the couple had even been planning to open a franchise in Kuwait. However, because of the economic crisis, they were forced to downsize and returned to their Ashrafieh site in Beirut. On August 4, 2020, the company’s warehouses, store and kitchen were severely damaged by the explosion and Freddie was injured. Nada recalls that day: “The air conditioning wasn’t working. With temperatures of over 40°C, the food quickly spoiled and we lost three quarters of our stock. The economic situation made it difficult to restock and we had to close for a month.”

The Mercy Corps team came to assess the damage in this district, which had been severely impacted and deserted by its residents. “The NGO assessors were keen to try our croissants and bread... But even the bread cutting machine was broken”. After receiving a $2,000 grant, Nada and Freddie replenished some of their stock of raw materials, repaired the air conditioning and bought a new bread cutting machine. 

While customers have begun to return to the neighborhood, since early 2021, today Neo Gourmet’s main problem is the lack of electricity, which is strictly rationed, particularly at night. “We can’t prepare croissants for the next morning anymore. So, we’ve adapted to find a new business model.” To manage their electricity problems, the Khourys now operate their business with three employees and food is only made to order, online or by phone, 24 hours in advance. Here’s hoping that better days lie ahead.