The main factors contributing to this growth were the rising income, declining device prices, the modernization initiatives and the improvements in the telecommunications infrastructure.
According to the IT Fact Sheet released by IDAL hardware sales reached USD 262.2 million in 2016 and are expected to further grow at a CAGR of 8.3% over the period of 2016 and 2019. The hardware market is far from saturated as demand for computers and notebooks remains high across the various industries.
The software development segment’s market value has reached USD 40 million in 2016 and it is expected to further grow at a CAGR of 10.1% over the following years. Software development has grown over the past years due to the enforcement of intellectual property rights, the reduction of software piracy and the improvement of the ICT infrastructure.
The ICT services sector witnessed a growth as well and reached a value of USD 134,2 million in 2016. This growth I forecasted to continue over 2016-2019 with a CAGR of 12.3%. This growth is due to the continuous increase in spending on e-services by governments, businesses and telecom companies.
The Lebanese ICT sector comprises around 800 small and medium sized businesses. Most of these companies are distributors and sellers, however the sector is steadily moving into innovation and content generation.
Software development & services companies employ around 5000 individuals and operate across three major groups.
According to IDAL 48% of the Lebanese ICT companies is engaged in the development of software products for vertical industries (mainly for healthcare, education and banking sectors); 38% is engaged in Web Solutions Services such as web hosting, web design and e-services and 14% accounts for mobile services and applications development.
Lebanon is emerging as a leading ICT exporter in the region. 80% of the ICT software development firms are engaged in exports. They mainly export vertical software and mobile applications. The Gulf Region is their number one export destination, while other Middle East countries rank second and African countries as third. As per Idal’s fact sheet ICT related exports accounted 23.2% of the total services exports in 2015.
Due to its geographical location, Lebanon and the Lebanese ICT companies have the opportunity expand and to serve the rapidly growing ICT market in the MENA region.
According to IDAL’s IT fact sheet, the number of internet users in the Middle East is expected to reach 226 million by 2018 and the mobile industry is expected to reach USD 164 billion by 2020. The African market has a promising potential as well, especially for software developers and mobile applications.
Lebanon has a supportive ecosystem with regards to ICT. Growth of the sector is among the government’s top priorities. Therefore, numerous initiatives and incentive schemes have been introduced which are available for both, established businesses and for start-ups.
The Investment Development Authority of Lebanon (IDAL) has introduced two incentive schemes as well, one for larger investment projects and one for SME-s operating in 8 economic sectors – including the ICT sector -, with a set of investment incentives. To learn more about IDAL’s incentive schemes, please read our respective article.
A number of venture capital firms, providing funding support to small businesses and start-ups have operations in Lebanon. Berytech Fund, Cedrus Ventures, MEVP and LEAP Ventures are some of the regional VCs.
The Central Bank of Lebanon supports the start-up ecosystem as well. The bank has issued a Circular No. 331, encouraging banks to invest in start-ups, incubators and accelerators. These investments are 75% guaranteed by the Central Bank of Lebanon.
There are also other financing options, such as the Kafalat Ioan guarantee scheme.
Well established incubators and accelerators provide training, technical and financial assistance for start-ups and existing businesses. The main 8 incubators and accelerators are:
According to IDAL the current market dynamics signal investment opportunities in the following areas:
Please do not hesitate to contact us if you wish to be guided with your Lebanon-related projects and business.
Source: IDAL (Investment Development Authority of Lebanon)
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