In recent times, the people of Lebanon – and especially entrepreneurs – have seen a number of crises unfold. Economic slowdown combined with political deadlock to form an unprecedented financial disaster culminating in a sovereign default in March 2020. The impact of the Covid-19 pandemic and the catastrophic Port of Beirut blast that same year only exacerbated the situation. As a result, Lebanese entrepreneurs and small businesses today operate in a highly volatile environment with almost no public support.
The EBRD and its donors are helping these small enterprises, including sustainable fashion venture FabricAID, to rise up to these challenges and thrive in uncertain times.
The EBRD’s commitment to Lebanon
Since its inception in 2018, thanks to generous funding from the European Union and, more recently, the Republic of Korea through the Small Business Impact Fund* (SBIF), the EBRD has supported more than 150 small enterprises in Lebanon with business advice through its Advice for Small Businesses programme.
To date, and despite the exceptionally challenging environment, 43 per cent of the companies in Lebanon supported with advisory projects reported an increase in their turnover, 46 per cent grew their exports and 51 per cent increased their number of employees. These numbers, in addition to tailor-made activities designed to respond to the economic collapse, demonstrate the EBRD’s strong contribution to alleviating the multi-faceted crises the country is currently facing.
Furthermore, in 2021 the EBRD added Star Venture – a programme dedicated to supporting the growth of innovative, high potential start-ups – to its offerings in Lebanon. As the economic and financial crises continued to unfold, and the focus shifted to much-needed emergency support, the EBRD strengthened its support for the local entrepreneurial ecosystem, understanding how vital it is to revitalising the Lebanese economy.
Stars of Star Venture
Despite being new to the start-up space in Lebanon, the EBRD quickly recognised the high potential of the applicants to the Star Venture programme as they began to flow in. Among the five promising start-ups selected for the first cohort, FabricAID particularly stood out.
A social impact enterprise active in the sustainable fashion sector, FabricAID aims on the one hand to reduce the fashion industry’s environmental impact through its second-hand clothing collection channels, and on the other to ensure the affordability of clothing for the most vulnerable through inexpensive, targeted resale stores.
The company currently operates three retail concepts. Souk El Khlanj is a re-commerce store targeting marginalised communities with items sold at very low prices, yet through a dignified shopping experience in well-maintained shops with experienced vendors, neat displays and cleaned and ironed items ensuring high quality choices. At Souk Okaz, which targets iddle income communities, clients can buy and sell second-hand clothes at affordable prices. The Second Base concept offers vintage items targeting refashion enthusiasts from higher income groups, both online and through pop-up stores.
FabricAID: a success story
We are thrilled that FabricAID has recently closed one of the largest seed funding rounds in the region for a social enterprise, raising USD 1.6 million. We could scarcely agree more with Omar Itani, the company’s General Manager, when he says, “We can be profitable and have a substantial social impact at the same time.”
With the right mindset and priorities, FabricAID has proven that growth and impact can go hand-in-hand, and profitability can be in tandem with sustainability, even in one of the most challenging business environments in the world.
This example – one of many to come – demonstrates that there are opportunities in adversity. Khalil Dinguizli, the new Head of Lebanon at the EBRD, concurs: “I had high expectations coming to Beirut as the Lebanese entrepreneurial culture is famous well beyond the country’s borders. However, I am happy to admit that, five months in, Lebanese entrepreneurs continue to impress me despite the numerous challenges they are facing.”
Building on its expertise in supporting SMEs and start-ups and its growing knowledge of the ecosystem, the Advice for Small Businesses programme team in Lebanon will continue to support the private sector, one success at a time.
*Other donors to the Small Business Impact Fund include Italy, Japan, Luxembourg, Norway, Sweden, Switzerland, Norway, TaiwanBusiness - EBRD Technical Cooperation Fund and the USA.