J.1a_SOO Annex 1_USAID Lebanon Economic Growth Assessment.pdf

NOVEMBER 2018 (REVISED FEBRUARY 2019)

This publication was produced for review by the United States Agency for International Development. It was prepared by Social Impact, Inc. in collaboration with Rachel Bahn, Gabriel Bayram, and Hicham Abou Jaoude.

ECONOMIC GROWTH ASSESSMENT

FINAL ASSESSMENT REPORT

Performance Management and Support Program for Lebanon

PHOTO CREDIT: USAID/LEBANON WEBSITE

ACKNOWLEDGEMENTS

The authors wish to acknowledge the contributions of the following people who supported this assessment: William Butterfield, Director of the Economic Growth Office; Walter Doetsch, Program Office Director; Joe Orfaly, Contracting Officer’s Representative; Lea Korkmaz, Monitoring and Evaluation Specialist; and the team at the Economic Growth Technical Office of the United States Agency for International Development (USAID) in Lebanon for their inputs and support at various stages of the assessment design, research, and reporting process. Social Impact’s local research team consisting of Rana Taher, Tamara Nassereddine, and Amer Haddad contributed to all stages of the assessment, notably data collection, analysis, and revision. SociaI Impact’s Sr. Gender Specialist, Najwa Andraos, provided input relevant to gender considerations throughout the assessment process. Social Impact also supplied additional inputs on research design and was responsible for quality assurance, logistics, and data collection management, under the direction and supervision of its Chief of Party, Harvey Herr, and Deputy Chief of Party, Carine Khoury. InfoPro, a subcontractor to Social Impact, was in charge of additional data collection.

The team is also grateful to the key informants, whose input made this assessment possible, and to the Government of Lebanon.

i | Economic Growth Assessment – Final Assessment Report USAID/Lebanon Performance Management and Support Program for Lebanon

ECONOMIC GROWTH ASSESSMENT

Final Assessment Report

Contracted under AID-268-C-15-00001 Performance Management and Support Program for Lebanon (PMSPL II) for USAID/Lebanon

This document is not available in printed or online versions. Documents are also made available through the Development Experience Clearinghouse (dec.usaid.gov). Additional information can be obtained from:

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DISCLAIMER

The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

mailto:info@socialimpact.com ii | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

TABLE OF CONTENTS

Table of Contents ii

Acronyms and Abbreviations vi

Abstract 1

Executive Summary 2

Introduction 5

Assessment Background, Objectives, and Purpose 5

Assessment Questions 6

Methodology 7

Assessment Design and Methods 7

Data Collection 7

Sampling 13

Tool Translation 13

Ethical Review and Informed Consent 13

Analysis and Report 14

Assessment Design Matrix 16

Assessment Phases 21

Phase 1 – Inception Report and Desk Review 21

Phase 2 – Fieldwork and Analyses 21

Phase 3 – Reporting 21

Critical Assumptions 24

Assessment Management 24

Team Composition 26

Final Work Plan 27

Past and Current Challenges for USAID/Lebanon Economic Growth Programming – Findings and Conclusions 28

RQ1.a Findings and Conclusions 28

Trade and Investment Facilitation 28

Workforce Development 28

Business-Enabling Environment (BEE) 30

Gender and Youth Empowerment and Engagement 30

Technology Transfer and Business Innovation 31

Agriculture and Agri-Food Industry 31

Tourism and Hospitality 32

Environment/Clean and Renewable Energy 32 iii | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

Technology/ICT 32

Financial Sector 33

RQ1.b Findings and Conclusions 33

Opportunities for Future USAID/Lebanon Economic Growth Programming – FIndings and Conclusions

RQ2. Findings and Conclusions 37

Trade and Investment Facilitation 37

Workforce Development 48

Business-Enabling Environment 57

Gender and Youth Empowerment and Engagement 58

Technology Transfer and Business Innovation 62

Interventions for Future USAID/Lebanon Economic Growth Programming – Findings and Conclusions

RQ3.a & b Findings and Conclusions 65

Trade and Investment Facilitation 65

Workforce Development 70

Business-Enabling Environment 74

Gender and Youth Empowerment and Engagement 78

Technology Transfer and Business Innovation 79

RQ3.c Findings and Conclusions 79

RQ3.d Findings and Conclusions 80

Past and Current Challenges for USAID/Lebanon Economic Growth Programming – Recommendations 81

RQ1.a Recommendations 81

Trade and Investment Facilitation 81

Workforce Development 81

Business-Enabling Environment 81

Gender and Youth Empowerment and Engagement 81

Technology Transfer and Business Innovation 81

Agriculture and Agri-Food Industry 81

Tourism and Hospitality 82

Environment/Clean and Renewable Energy 82

Technology/ICT 82

Financial Sector 82

RQ1.b Recommendations 82

Opportunities for Future USAID/Lebanon Economic Growth Programming – Recommendations 84

RQ2. Recommendations 84 iv | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

Trade and Investment Facilitation 84

Workforce Development 85

Business-Enabling Environment 85

Gender and Youth Empowerment and Engagement 85

Technology Transfer and Business Innovation 85

Interventions for Future USAID/Lebanon Economic Growth Programming – Recommendations 86

RQ3.a & b Recommendations 86

Trade and Investment Facilitation 86

Workforce Development 90

Business-Enabling Environment 93

Gender and Youth Empowerment and Engagement 94

Technology Transfer and Business Innovation 94

RQ3.c Recommendations 95

RQ3.d Recommendations 95

Lessons Learned 97

Annex A: Assessment Scope of Work 98

Annex B: Bibliography and List of Documents for Further Review 99

Annex C: Data Collection Instruments 115

KII Guides - General Language for Introduction and Consent 115

Comprehensive View: Public / Donor / NGO 116

Comprehensive View: Private Sector 119

Sectoral View: Agriculture and Agri-food Industry – Public / Donor / NGO 122

Sectoral View: Agriculture and Agri-food Industry – Private Sector 125

Sectoral View: Tourism and Hospitality – Private Sector 128

Sectoral View: Industry, Construction, or Manufacturing – Private Sector 132

Sectoral View: (Insert Program and Industry) – Implementing Partner 136

Comprehensive View: (Insert Program and Industry) – Implementing Partner 139

Annex D1: List of Stakeholders 142

Annex D2: Distribution of Private Sector KIIs Conducted by InfoPro 143

Annex E: Desk Review Reports 144

Annex F: MySay Online Polling Results 145

Annex G: Findings, Conclusions, and Recommendations Matrix 150

Annex H: Concept Idea – Trade and Investment Facilitation Strategy 151

Background 151

Strategic Approach 151

I. Better Targeting of Sectors and MSMEs that Promote Economic Growth 152 v | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

II. Improving MSME Performance 153

III. Improving Sector-Level Performance 154

IV. Better Lebanese Brand 156

Illustrative Activities and Sub-Activities 158

Illustrative Activity 1: Trade and Investment Facilitation Hub (Overreaching) 158

Illustrative Activity 2: Economically Productive and Competitive Value Chains 158

Illustrative Activity 3: MSME Business Competitiveness (Sector Agnostic) 159

Illustrative Cross-Sectorial Sub-Activities 159

Illustrative Sector-Level Performance Sub-Activities 160

Annex I: Concept Idea – Workforce Development Activity 163

Background 163

Activity Approach 163

I. Improving Use of Labor Market Data and Information 163

II. Improving Vocational Educational Training Quality 164

III. Better Access to Vocational Educational Training Opportunities 166

IV. Improving Access to Quality Employment Opportunities for Lebanese. 166

Annex J: Donor Activity Mapping 168

Annex K: Film Industry Value Chain 179

Annex L: USP-LAU Beneficiary and Graduation Data 180

Annex M: InfoPro KIIs – Supplemental Data Analysis 185 vi | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

ACRONYMS AND ABBREVIATIONS

AFD Agence Française de Développement AI Artificial Intelligence ALI Association of Lebanese Industrialists AMCHAM American Lebanese Chamber of Commerce AUB American University of Beirut BdL Banque du Liban BDS Business Development Services BEE Business Enabling Environment BIAT Business Incubation Association in Tripoli BTA Beirut Traders Association CCIA Chamber of Commerce, Industry, and Agriculture CDCS Country Development Cooperation Strategy CEDRE Conférence Economique pour le Développement, par les Réformes et avec les Entreprises CIP Capital Investment Programme CLA Collaborating, Learning, and Adapting CSO Civil Society Organization DFID Department for International Development EBRD European Bank for Reconstruction and Development EdL Electricité du Liban EGA Economic Growth Assessment ER Emergency Room FAO Food and Agriculture Organization of the United Nations GCC Gulf Cooperation Council GDA Global Development Alliance GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH GOL Government of Lebanon HACCP Hazard Analysis and Critical Control Points HEP Higher Education Project HR Human Resources IBRD International Bank for Reconstruction and Development ICT Information and Communications Technology IDAL Investment Development Authority of Lebanon IFC International Finance Corporation ILO International Labor Organization IM Implementing Mechanism IMF International Monetary Fund IoT Internet of Things IR Intermediate Result iSME innovative Small and Medium Enterprise program ISO International Organization for Standardization KFW Kreditanstalt für Wiederaufbau KII Key Informant Interview KPI Key Performance Indicator LAU Lebanese American University LCEC Lebanese Center for Energy Conservation vii | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

LLWB Lebanese League for Women in Business LED Lebanon Enterprise Development Project LFA Lebanese Franchise Association LIFE Livelihoods and Inclusive Finance Expansion Project LII Lebanese Investment Initiative Project LINQ Lebanon Investment in Quality Project LIVCD Lebanon Industry Value Chain Development Project LMFA Lebanese Micro Finance Association LMT Lebanese Mountain Trail LRI Lebanon Reforestation Initiative LVCPEA Lebanese Venture Capital and Private Equity Association MEA Middle East Airlines MENA II Middle East North Africa Investment Initiative in Lebanon Project MEPI Middle East Partnership Initiative MFI Microfinance institution MICE Meetings, incentives, conferences and exhibitions MOA Ministry of Agriculture MOE Ministry of Environment MOET Ministry of Economy and Trade MOEW Ministry of Energy and Water MOF Ministry of Finance MOI Ministry of Industry MOT Ministry of Tourism MSME Micro-, Small-, and Medium-Sized Enterprises NEERA National Energy Efficiency and Renewable Energy Action NEO National Employment Office NGO Non-Governmental Organization OPIC Overseas Private Investment Corporation PAD Project Appraisal Document PEA Political Economy Assessment PMSPL II Performance Management and Support Program for Lebanon Two PPP Public-Private Partnership PSD Private Sector Development Project PV Photovoltaic RQ Research Question SI Social Impact SLFI Syndicate of Lebanese Food Industries SME Small- and Medium-Sized Enterprises TVET Technical and Vocational Education and Training USP University Scholarship Program UNDP United Nations Development Programme UNIDO United Nations Industrial Development Organization USAID United States Agency for International Development VC Venture Capital/Venture Capitalist

1 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

ABSTRACT

This economic growth assessment (EGA) was prepared by Social Impact, Inc. for USAID/Lebanon to inform decisions on continuation, scale-up or scale-back, and exit points for ongoing efforts and to identify potential program areas and development initiatives for the next five years. Drawing mainly on data collected through key informant interviews, a desk review, and an online polling survey, the EGA examines select economic sectors through five thematic areas: trade and investment facilitation, workforce development, business-enabling environment, gender and youth empowerment and engagement, and technology transfer and business innovation. The EGA’s major recommendations are for USAID to maintain its current portfolio of economic growth programming but with minor revisions and to consider developing standalone activities focused on trade and investment facilitation and workforce development. The EGA also identifies contextual factors affecting current and future programming, as well as entry points and pitfalls for the proposed activities. Finally, the EGA presents questions for further exploration under a planned political economy assessment to inform activity design and implementation.

2 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

EXECUTIVE SUMMARY

In 2018 the United States Agency for International Development (USAID)/Lebanon asked Social Impact to conduct an economic growth assessment (EGA) to analyze areas and sectors of USAID involvement, considering changing conditions and needs, complementarity with U.S. Embassy objectives, coordination with other donors, and Government of Lebanon (GoL) goals; look for potential program areas over the next five years; recommend continuation, scale-up or scale-back, and exit points for ongoing efforts; and suggest new development initiatives and potential areas of involvement.

The EGA focused on trade and investment facilitation, workforce development, business-enabling environment, gender and youth empowerment and engagement, and technology transfer and business innovation. The EGA used these themes to explore ongoing and potential interventions in select economic sectors, taking into account key objectives of the current Country Development Cooperation Strategy (CDCS) and economic growth–related project appraisal documents (PADs), including the Private Sector Development Project (PSD) and Higher Education Project (HEP) (both geared toward workforce development. The EGA examined sectors where USAID has provided support in past years as well as promising new sectors; it also identified opportunities for new program areas, including some that were identified in the CDCS mid-course stock-taking exercise.

Furthermore, the EGA explored opportunities for partnerships with local stakeholders. Key intended users of the assessment are the Program Office and Economic Growth Office of the USAID Mission in Lebanon.

The EGA addressed the following key research questions (RQs) and related subquestions:1

Past and Current USAID/Lebanon Economic Growth Activities and Challenges

RQ1. How has USAID’s current portfolio contributed to CDCS and EG PAD objectives?

a. What types of activities (in alignment with thematic and sectoral priorities) should USAID continue to fund, scale up, scale down, or discontinue to fund?

b. What contextual factors are affecting USAID program success and what do these factors imply for future programming?

Opportunities for Future USAID/Lebanon Economic Growth Activities

RQ2. What sectors and industries offer USAID the greatest potential to meet CDCS and EG PAD objectives (including PSD and HEP)?

a. What sectors and industries have the greatest impact opportunities?

1 The SOW issued by USAID indicated eight research questions within the economic growth assessment. These research questions were retained in their substance but reorganized into three research questions and supporting subquestions. To this there is one exception: The original assessment question RQ8 was not structured as a question, but the implication was that issues of gender, youth, and social stability should be applied across all preceding research questions. Accordingly, this instruction has been addressed within the methodological approach to the work rather than as a separate research question.

3 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

b. To what extent has USAID been engaged in these sectors and industries?

c. What sectors and industries should USAID prioritize for intervention over the next five years?2

d. Should USAID focus on promising approaches and opportunities regardless of sector?

Intervention Recommendations for Future USAID/Lebanon Economic Growth Activities

RQ3. What types of intervention should USAID consider over the next five years?

a. What type(s) of interventions (activities, target groups, other) should USAID consider over the next five years?

b. Do local private partnerships or so-called global development alliances (GDAs) present a viable activity implementation method? If so, how? What private firms would make good candidates for such a partnership?

c. What are the entry points and potential pitfalls for these recommendations?

d. What entry points and potential pitfalls should be explored further within the scope of the planned political economy assessment (PEA)?

The EGA drew mainly on data collected through key informant interviews (KIIs). Other data sources included project documents, secondary documents, and datasets identified during a desk review.

Most of the data is qualitative, though where possible the assessment team also drew on quantitative assessments and studies conducted by other donors and research firms. The KIIs covered all sectors within the assessment’s scope. Key informants were identified primarily from USAID, implementing partners, other donors, government bodies, syndicates and associations, chambers of commerce, and private firms. A consultancy firm conducted most of the KIIs with private firms, and the assessment team conducted the KIIs with the remaining stakeholders. During and following fieldwork, the assessment team systematically coded and analyzed the data to answer the assessment questions and prepared a presentation to share preliminary findings, conclusions, and recommendations with USAID.

Based on the field data collection and desk review observations, recommendations were developed to respond to all RQs, supported by detailed findings and conclusions. The EGA’s major recommendations are for USAID to maintain its current portfolio of economic growth programming with minor revisions and to consider developing standalone activities focused on trade and investment facilitation and workforce development.

Under the proposed activities, USAID should target select sectors according to its development objectives, with a focus on economic growth on one hand and on workforce development and job creation on the other.

● To facilitate trade and investment, USAID should target the following sectors: agriculture (avocado, small-ruminant dairy) and agro-processing (processed and packaged food);

creative industries (film, television, advertising); clean and renewable energy (solar photovoltaic [PV], energy efficiency); technology/ICT (software development, ICT services);

and tourism/hospitality (rural tourism and ecotourism). While allowing for approaches that

2 RQ2.c was listed in the inception report as RQ3. a. It was decided to reorder this to RQ2.c, as it effectively represents the recommendation that builds on the findings and conclusions identified in RQ2.a and RQ2. b.

4 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon address cross-sectoral trade and investment needs, USAID should target priority sectors and points along sectoral value chains. USAID should focus on value proposition and value for money to consumers by targeting specialized, high-quality, niche products and services.

USAID should also consider working with firms that align with activity objectives. The report recommends a range of targeted interventions and suggests potential partners for these interventions when appropriate.

● To promote workforce development, USAID should target the following sectors: agro-processing and agro-industry; creative industries (film, television, advertising);

environment/clean and renewable energy (solar PV and solar water heater);

industry/manufacturing; health care/medical (nursing); real estate/construction (energy efficiency); technology/ICT; and tourism/hospitality. The report also identifies some promising subsectors for either job creation or skills enhancement. USAID should target both priority sectors and cross-sectoral skill-sets (e.g., customer service, sales/marketing, soft skills). Efforts to promote a sector or subsector’s growth should also contribute to job creation. The report also recommends targeted interventions, some cross-sectoral and some sector-specific, and suggests potential partners for these interventions when appropriate.

Conversely, USAID should not pursue standalone activities to promote business-enabling environments, gender and youth empowerment and engagement, or technology transfer and business innovation. Instead, interventions (cross-sectoral or sector-specific) addressing these areas should be woven into ongoing and proposed activities targeting trade and investment facilitation and workforce development.

USAID should be prepared to adapt its activity design and implementation in response to impacts of contextual factors such as the potential resolution of the Syrian crisis and the planned injection of substantial donor funds under the CEDRE program (Conférence Economique pour le Développement, par les Réformes et avec les Entreprises). USAID has the opportunity to support and lead donor coordination efforts and data sharing for more effective economic growth programming.

To facilitate program success under its forthcoming CDCS, USAID should collect and analyze data available through its implementing partners on small and medium-size enterprise sectoral trends and workforce development/job creation. USAID should also expand public relations and communications efforts around its activities to raise stakeholder awareness and amplify the impact of U.S. development assistance.

The EGA also presents questions for further exploration under the planned PEA that was initiated in late 2018 to inform activity design and implementation.

5 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

INTRODUCTION

Approximately 27 percent of the population in Lebanon was poor as of 2011/12, the date of the most recent household budget survey performed by the Central Administration of Statistics. The highest poverty rates were in the North Lebanon and Bekaa governorates, and the largest poverty count was observed in the populous Mount Lebanon governorate. Poverty rates were significantly higher for informal workers in the construction sector, who are paid weekly or daily. Employment growth has been concentrated in low-productivity activities, as those involving higher productivity have fewer opportunities. In the absence of significant structural reforms in either revenue or spending, Lebanon’s public finances are projected to remain weak. Lebanon is confronting a multitude of protracted shocks, each of which can fundamentally alter the country in the short to medium term, including security spillovers and economic challenges of the war in Syria; prolonged domestic political impasses and institutional paralysis; and hosting the largest per-capita refugee population in the world, most of whom arrived over only two to three years. The sense of urgency is reinforced by a deterioration in the quality of public services, institutions, governance, and the business climate.

The United States Agency for International Development (USAID) is promoting economic opportunities for Lebanese citizens, especially in vulnerable communities – that is, those that are already poor and underserved and are trying to cope with large numbers of refugees. USAID is targeting low-income rural households in these affected areas using modest agriculture and livelihood interventions that raise incomes and mitigate tensions through small grants and finance and skills training. The USAID economic growth program emphasizes job creation, particularly by providing business development services to small- and medium-size enterprises (SMEs). It also supports younger entrepreneurs with startup enterprises through its work in the venture capital sector. Finally, because a strong and sustainable economy requires a green economy, it also supports the environment sector, with an emphasis on forestry. Cross-cutting support is also provided to improve the business-enabling environment and policy reforms, mainly through work with private sector associations.

To address income disparity, improve productivity, and strengthen the business environment, USAID’s economic growth activities focus on boosting technical skills, improving business-enabling conditions, and increasing production capabilities and market access in sectors with high growth potential. By building on current and past investments and linking programs to the Middle East and North Africa Investment Initiative (MENA II), USAID helps increase business and employment opportunities, especially for youth (ages 15–29) and women in rural and urban areas; enhance the competitiveness of Lebanon’s high-value productive sectors; expand access to finance for micro- and small-scale enterprises; and promote business startups. Support to these enterprises will increase sales, create jobs, and contribute to Lebanon’s overall economic growth. Boosting private sector competitiveness will promote the entry and expansion of high-value sectors into international markets. Promoting partnerships between the private sector and technical and vocational education and training (TVET) institutions will advance workforce development.

ASSESSMENT BACKGROUND, OBJECTIVES, AND PURPOSE

In 2018 USAID/Lebanon asked Social Impact to undertake an economic growth assessment (EGA) of USAID areas and sectors to analyze changing conditions and needs, complementarity with U.S.

Embassy objectives, coordination with other donors, and Government of Lebanon (GoL) goals. This EGA aims to assess USAID/Lebanon’s current portfolio; recommend continuation, scale-up or scale-

6 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon back, and exit points for ongoing efforts; and identify program opportunities and necessary interventions for economic growth. The EGA also seeks to detect potential issues for further consideration within a political economy assessment (PEA) that will be undertaken after the conclusion of the EGA and that may more deeply explore politically relevant challenges to economic growth.

The EGA provides recommendations for USAID on all economic development initiatives being implemented under the CDCS development objective of Inclusive economic growth enhanced and its related results, IR 2.1: Increased private sector competitiveness and IR 2.2: Increased access to finance, especially for business startups and women entrepreneurs. The EGA also considers program coherence under the EG PADs, including PSD and HEP, for identified workforce development initiatives. The EGA makes recommendations for new or scaled-up program areas and approaches, detailing what an effective program design would include and proposing how interventions can be selected. Consideration is given to overall strategy (e.g., supporting the business-enabling environment and/or working directly with the private sector). Recommendations address project-and activity-level interventions that are most likely to strengthen economic growth.

The assessment is intended for the USAID Mission in Lebanon, specifically the Program Office and Economic Growth Office, and other stakeholders at the Mission’s discretion.

ASSESSMENT QUESTIONS

The Statement of Work for this EGA contained eight assessment questions. These questions have been reorganized into three research questions and supporting subquestions to facilitate data collection and analysis. The original assessment question RQ8, addressing gender, youth, and social stability, has been incorporated into the approach to the other assessment questions.

The assessment addresses the following questions:

Past and Current USAID/Lebanon Economic Growth Activities and Challenges

RQ1. How has USAID’s current portfolio contributed to CDCS and EG PAD objectives?

a. What types of activities (in alignment with sector and thematic priorities) should USAID continue to fund, scale up, scale down, or discontinue to fund?

b. What contextual factors are affecting USAID program success and what do these factors imply for future programming?

Opportunities for Future USAID/Lebanon Economic Growth Activities

RQ2. What sectors and industries offer USAID the greatest potential to meet CDCS and EG PAD objectives (including PSD and HEP)?

a. What sectors and industries have the greatest impact opportunities?

b. To what extent has USAID been engaged in these sectors and industries?

c. What sectors and industries should USAID prioritize for intervention over the next five years?

d. Should USAID focus on promising approaches and opportunities regardless of sector?

7 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

Intervention Recommendations for Future USAID/Lebanon Economic Growth Activities

RQ3. What types of intervention should USAID consider over the next five years?

a. What type(s) of intervention (activities, target groups, other) should USAID consider over the next five years?

b. Do local private partnerships or so-called global development alliances (GDAs) present a viable implementation method? If so, how? What private sector firms would make good candidates for such a partnership?

c. What are the entry points and potential pitfalls for these recommendations?3

d. Which entry points and potential pitfalls should be explored further within the scope of the planned PEA?

Assessment findings and recommendations are organized by theme— trade and investment facilitation, workforce development, business-enabling environment, gender and youth engagement and empowerment, and technology transfer and business innovation. The CDCS cross-cutting theme of gender and youth engagement and empowerment, an integral part of USAID’s messaging and project activities, informs the assessment of all economic sectors.

Within this thematic organization, the findings and recommendations explore diverse economic features, including products and services, job opportunities, workforce skills, market opportunities and challenges, investment opportunities, access to finance, and opportunities for or barriers to growth. The assessment focuses on sectors where USAID has been heavily involved in recent years, such as agriculture and the agri-food industry, tourism and hospitality, and the environment. It also provides recommendations and suggests potential development opportunities in other sectors such as industry and manufacturing, clean/renewable energy, and information and communications technology (ICT).

METHODOLOGY

The assessment used mixed methods, incorporating primary and secondary data collection. Primary data collection generated mostly qualitative data. Secondary data collection gathered both qualitative and quantitative data.

ASSESSMENT DESIGN AND METHODS

DATA COLLECTION

Data collection methods included document review, key informant interviews (KIIs), and an online polling survey.

3 The wording of the previous RQ7 was as follows: “What are the new entry points and potential pitfalls for

USAID with respect to the above recommendations, particularly in light of the political economy assessment that was recently completed?” During a meeting held with USAID/Lebanon staff on August 23, 2018, it was confirmed that the political economy assessment would not be completed until after the completion of the EGA.

Accordingly, the second clause has been converted into a subquestion that acknowledges the shift in timing of the political economy assessment.

8 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

Document Review

The document review served two purposes: to inform the development of the data collection tools to be used for primary data collection and to identify relevant secondary data that the EGA team could not collect through primary data collection but that could be used to inform findings and recommendations.

The team conducted the document review – a desk study and situation analysis – during the early phase of the assessment, before commencing fieldwork. The review helped the team identify the types of intervention most likely to stimulate and/or accelerate economic growth in Lebanon and the factors driving or constraining development in USAID/Lebanon’s CDCS program areas. The desk study and situation analysis emphasized workforce development, trade and investment, and business-enabling environments in each of the identified economic sectors.

During the data analysis and report-writing phases, the data from the document review were triangulated with primary data collected through fieldwork.

The document review began in August 2018 and concluded on October 12, 2018. Documents were from Performance Management and Support Program for Lebanon (PMSPL II); USAID/Lebanon, namely USAID documents, including program and activity reports relevant to the economic growth portfolio; other development organizations operating in Lebanon; and web-based searches of publications, studies, and quantitative data sets from the GoL, relevant ministries, and other development organizations. Annex B lists the documents reviewed as part of the EGA. Quantitative data providing recent, detailed information on Lebanon’s workforce and labor market, trade and investment flows, access to finance, and sector-specific information relevant to the agri-food sector and tourism and hospitality sectors were retrieved from published documents, the InfoPro databank, and Lebanon Opportunity research and articles. Given the scope of the assessment and the time available, large-scale quantitative data could not be obtained through primary data collection; instead, the desk review identified both qualitative and quantitative data to complement the primarily qualitative data generated by the primary data collection.

All documents were reviewed for the key thematic priorities related to this EGA. Findings from the document review were summarized according to these thematic priorities and further organized according to sectoral and cross-sectoral priorities.

Thematic priorities:

● Trade and Investment Facilitation

● Workforce Development

● Business-Enabling Environment

● Gender and Youth Engagement and Empowerment

● Technology Transfer and Business Innovation

Sectoral priorities:

● Agriculture and Agri-Food Industry4

4 Includes animal husbandry and dairy, meat, and poultry production and processing.

9 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

● Tourism and Hospitality5

● Energy and Environment6

● Emerging Sectors and Industries (e.g., Real Estate/Construction, Industry/Manufacturing,7

Technology/ICT, Financial Services, Health Care/Medical)

Key Informant Interviews (KIIs)

The assessment drew mainly on primary data collected through KIIs from September 10 to October 12, 2018.

KIIs were semi-structured interviews conducted with key informants or stakeholders who could speak to the thematic and sectoral issues and topics mentioned in the scope of the assessment and identified in the research questions. KIIs typically lasted about an hour and were conducted by a team of no fewer than two interviewers. A prepared KII guide was used to provide structure within the KII and help ensure that the interview generated relevant data. Annex C contains the KII guides prepared for use within this EGA and tailored according to the informant(s) to be interviewed. The interviewers administered the guide, with one or more persons taking turns to pose the prepared questions in addition to supplemental or clarification questions that arose during the interview.

Another interviewer recorded notes of the interview, using a computer (Word document or similar) when possible and a notepad and pen when electronic transcription was not possible (e.g., within the U.S. Embassy grounds). KIIs were conducted in English or in Arabic, dependent upon the preference of the informant. Following each KII conducted in Arabic, notes were translated into English to streamline the data analysis.

KIIs were conducted by the EGA team indicated under the section “Team Composition” below. All members of the team are fluent in both English and Arabic and able to administer a KII in either language, with the exception of the Team Leader (English only) who was assigned to conduct KIIs only where there was a clear prior understanding that the key informant was an English speaker.

Key informants were drawn primarily from USAID, implementing partners, other donors, government bodies, chambers of commerce, industry syndicates and associations, and private firms.

Key informants were divided into 10 stakeholder groups, as illustrated in Exhibit 1. The rationale for including these key informants and the type of data expected to be collected through these KIIs is as follows:

● USAID/U.S. Embassy: KIIs were conducted with the USAID Program Office, Economic Growth

Office, and Middle East Partnership Initiative (MEPI) teams to generate qualitative data on the current portfolio of USAID economic growth programming, their comparative performance against CDCS goals and objectives across activities, and practical considerations around future programming.

5 Hospitality industry includes travel, accommodations, food service, clubs, gaming, attractions, entertainment, and recreation.

6 Energy and Environment are defined as the grouping of all producers of energy and environmental products;

these consist of cleaner technologies and products, pollution management services, oil and gas production, and resource management.

7 For example, light industrial equipment, furniture.

10 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

● Implementing Partners: KIIs were conducted with USAID EG implementing mechanisms

(LIVCD, MENA II, LIFE, LED, LRI, USP) to generate qualitative data on the current portfolio of

USAID economic growth programming, their comparative performance against CDCS goals and objectives across activities, guidance on potential key program partners, lessons learned, and opportunities for future programming.

● Government of Lebanon: KIIs were conducted with government entities (e.g., ministries) to generate qualitative data on perceived opportunities and barriers for economic growth and job creation in Lebanon as well as on GoL’s priorities and current or planned interventions in these areas – generally, specific to a thematic priority or sector of interest.

● Quasi-Government: KIIs were conducted with quasi-government entities (e.g., Banque du

Liban (BdL); Kafalat; and chambers of commerce, industry, and agriculture [CCIA]) to generate qualitative data on perceived opportunities and barriers for economic growth and job creation in Lebanon as well as on their ongoing or planned interventions within these areas.

● Donors: KIIs were conducted with donors to generate qualitative data on perceived opportunities and barriers for economic growth and job creation in Lebanon as well as on donor priorities and current or planned interventions in these areas – generally, specific to a thematic priority or sector of interest – including best practices and lessons learned.

● NGOs: KIIs were conducted with NGOs to generate qualitative data on perceived opportunities and barriers for economic growth and job creation in Lebanon, as well as on the NGOs’ current or planned interventions in these areas – generally, specific to a thematic priority (specifically gender and youth engagement and empowerment) or sector of interest

– including best practices and lessons learned.

● Academic/Research Bodies: KIIs were conducted with academic and research bodies to generate qualitative data on perceived opportunities and barriers for economic growth and job creation – generally, specific to a thematic priority or sector of interest.

● Microfinance Institutions (MFIs): KIIs were conducted with MFIs to generate qualitative data on perceived opportunities and barriers to access to finance, particularly by small and medium-size firms and traditionally underserved populations such as women and youth.

● Syndicates and Associations: KIIs were conducted with syndicates and associates, some of which were sector-specific, to generate qualitative data on perceived opportunities and barriers for private sector development, economic growth and job creation, as well as on the current and expected needs of their members. As their membership is principally drawn from private sector firms, speaking to syndicates and associations allowed the EGA to gather input representative of private sector firms beyond those included in the primary data collection.

11 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

● Private Sector: KIIs were conducted with private sector firms to generate qualitative data on perceived opportunities and barriers for economic growth and job creation, on their current and expected needs, and on potential private sector development activities around thematic priorities.

A total of 151 interviews were conducted during the data collection period. This figure exceeded the planned number of KIIs, as the PMSPL II team conducted 72 KIIs, compared with the 40 KIIs planned.

A consulting firm, InfoPro, conducted 79 KIIs with private sector firms. The PMSPL II team conducted a small number of KIIs (7) with private firms as well as all the KIIs (65) with all other stakeholder groups (Exhibit 1).

Exhibit 1: Informant Interview Tally

Stakeholders # KII Conducted # Interviewees

PMSPL II

Team

InfoPro Team

Total

USG 3 3 8

Implementing Partners 8 8 17

Donors 12 12 24

NGOs 7 7 11

GoL 9 9 11

Quasi-Government 3 3 6

CCIA 5 5 12

Academic / Research Bodies 2 2 2

Syndicates and Associations 14 14 20

Banks / MFIs 2 2 2

Private Sector 7 79 86 92

Total 72 79 151 205

Of which, female: SI: 28% InfoPro: 15%

Annex D1 lists all key informants included in the data collection, in addition to the main points of contact, decision makers, and/or activity managers from each organization, supplemented with stakeholders identified during the desk review.

SI recruited a consulting firm, InfoPro, to support the desk review, execute data collection with most of the private sector firms, and provide initial analysis of private sector–specific data.

● The consulting firm built upon the desk review to inform the final methodology and field data collection tools (English language original and Arabic language translation), specifically used with informants from private firms, and prepared a corresponding assessment workplan for the field data collection. During this phase, the consulting firm initiated the requested situation analysis on the identified sectors. The aim of this segment was to provide an economic overview of the priority sectors (agriculture and agri-food, tourism and hospitality, etc.) in addition to the emerging sectors by compiling information on each sector’s main economic indicators (such as growth, trade, value of investment, volume of production, regulations, and key players). To develop the sectoral situation analysis, the consulting firm relied on published studies and its own primary sources of information.

12 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon

● The consulting firm conducted 79 KIIs with private sector firms working in the priority sectors mentioned above, disaggregated as outlined in the final approved methodology and with more focus on sectors where USAID has been involved. Based on its own listing of private sector firms and/or publicly available lists such as those published by the CCIAs, the consulting firm submitted a list of proposed private sector firms for inclusion in the KIIs. The list of selected firms was reviewed and approved by SI as part of the methodology. KIIs were required to include a mix of small, medium, and large firms. A summary matrix with the proposed list of companies ensured reasonable sampling according to size, sector, and geographic distribution of companies across Lebanon. Informants interviewed by InfoPro are indicated within Annex D1. The distribution of informants interviewed by InfoPro is tabulated by sector and firm size in Annex D2.

● The consulting firm synthesized and analyzed the data gathered through the desk research process and the KIIs to provide Social Impact’s assessment team with a series of sectoral data analysis reports (Annex E). The reports highlighted the performance of the sectors under study, sectoral interventions/opportunities that might drive economic growth, in addition to factors driving or constraining development in USAID/Lebanon’s CDCS program areas. The reports addressed trade and investment facilitation, workforce development, and the business-enabling environment. Data analysis and sectoral background did not exceed

15 pages for each identified sector, and the reports highlighted all references and data sources used.

To ensure the quality of data collection conducted by the consulting firm, the PMSPL II team took several steps. First, they provided InfoPro with a draft data collection tool (KII guide) for use during the KIIs and reviewed and approved the final KII guide before its application to ensure that data collection would respond to the RQs. Second, the PMSPL II team conducted spot-checks of the KII conducted by InfoPro by having team members participate in selected KIIs led by the consulting firm.

As the appropriate standards of data collection were being applied, no remedial action was taken by the PMSPL II team. Third, the consulting firm made an audio recording of all KIIs conducted (subject to the agreement of the key informants interviewed) to allow the PMSPL II team to review and validate the data collected and preliminary analysis conducted by the consulting firm. Fourth, the consulting firm provided written transcripts or notes (Word format, in English) for all KIIs conducted, regardless of whether a PMSPL II team member participated in the interview.

Online Polling Survey

An online polling survey was conducted through the MySay application to solicit quantitative information on questions identified during data collection as needing supplemental data.

Specifically, the polling survey was used to solicit broad opinion-based information on Lebanese employment preferences and perceptions among the unemployed and underemployed from a wider audience than could be reached through the KIIs.

The survey was conducted through 12 unique, close-ended questions with a defined number of answers. A total of 3,000 Lebanese from across the country responded to the survey, including male and female youths and older adults. Responses were analyzed by gender and age, as MySay reports output across these identifiers. Online polling is biased in favor of younger, tech-savvy respondents

13 | Economic Growth Assessment – Final Assessment Report USAID/Lebanon of higher socioeconomic status with access to smartphones and the internet. The results of this survey are not considered to be representative of the Lebanese population and are only illustrative (Annex F).

MySay is the leading online polling application in Lebanon, with more than 95,000 users from all Lebanese governorates and an average of 7,000 daily users (figures as of August 1, 2018).

SAMPLING

The EGA team used purposive sampling for the selection of key informants for interviews. The sample size (i.e., the total number of KIIs) was designed to maximize data collection (within the data collection period) and address all the sectors and areas of interest identified within the EGA’s scope.

The selection of government, donor, NGO, and non–private sector actors within the KIIs was based on their legal authority, their relevant expertise, and/or their engagement in the sector or industry of interest. Such informants were initially identified by the EGA team, guided by USAID staff input, with scope to include actors referred by other informants.

The selection of private sector firms for inclusion in the KIIs was open to all eight governorates of Lebanon to capture the widest possible range of perspectives on economic growth opportunities, barriers, and needs across the country. The sampling of firms for this EGA was based on three criteria: (1) the sector or industry in which the firm operates; (2) the firm’s size (small, medium, or large); and (3) the firm’s geographic location. Data were collected from 87 private sector informants.

The assessment team worked to ensure a balanced representation of stakeholders by gender as far as information and availability permitted.

TOOL TRANSLATION

All interview tools were developed in English. When needed, bilingual members of the EGA team interpreted them into Arabic for use in KIIs in which data collection was conducted in Arabic. PMSPL II’s editor and translator listened to recorded interviews, translated the Arabic discussion into English, and filled out the KII transcript forms accordingly.

ETHICAL REVIEW AND INFORMED CONSENT

All interview tools included an informed consent statement that incorporated a confidentiality clause. Every effort was made to ensure that KIIs were conducted in locations that provided complete privacy or where the respondents felt fully comfortable. At the start of each interview, respondents were assured confidentiality and asked whether they consented to participate in this EGA. With the respondents’ permission, the KIIs were recorded in written and (when possible/permitted) electronic formats.