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Lebanon This Week 545

July 21, 2018
Lebanon This Week 545
Greenfield FDI Outflows from Lebanon to Arab Countries* (US$bn)

*between 2003 and 2017
Source: fDi Markets, Byblos Research

  • Lebanese Greenfield foreign direct investment in Arab countries at $9bn between 2003 and 2017, Iraq attracts 43% of the total
    Figures compiled by fDi Markets show that the cumulative amount of Lebanese Greenfield foreign direct investment (FDI) in Arab countries totaled $8.7bn between 2003 and 2017. Lebanon was the seventh largest source of inter-Arab Greenfield FDI among 19 Arab countries during the covered period, behind the UAE ($164.8bn), Kuwait ($40.2bn), Bahrain ($38.8bn), Qatar ($31.2bn), Saudi Arabia ($28.1bn) and Egypt ($13.8bn). The FDI figures cover cross-border Greenfield projects that lead to the direct creation of jobs and capital investment. 

    The hydrocarbon sector in Arab countries attracted $3bn in Greenfield FDI from Lebanon, or 34.7% of the total, between 2003 and 2017. The food & tobacco industries followed with $2.66bn (30.7%), then the real estate sector with $1.22bn (14.1%), the financial services industry with $1.18bn (13.6%), the information technology sector with $171.7m (2%), the telecommunications industry with $150m and the textiles sector with $146.1m (1.7% each), while other sectors attracted $126.5m, or 1.5% of the total. 

    In parallel, there were 144 Lebanese Greenfield FDI projects in Arab countries between 2003 and 2017. The UAE was the destination of 30 Greenfield FDI projects from Lebanon, or 20.8% of the total, followed by Egypt with 19 projects (13.2%), Iraq with 18 projects (12.5%), Syria with 17 projects (11.8%), Jordan with 16 projects (11.1%), Saudi Arabia with 10 projects (6.9%), Qatar with seven projects (4.9%), Algeria with six projects (4.2%), Kuwait and Sudan with five projects each (3.5% each), Bahrain and Oman with four projects each (2.8% each), and Libya, Morocco and Tunisia with one project each (0.7% each). Overall, Egypt, Iraq and the UAE were the recipients of 46.5% of the number of Lebanese FDI projects in Arab countries and of 86.2% of their value.
     

  • Lebanon ranks 96th globally, 11th among Arab countries in terms of well-being
    The Boston Consulting Group's (BCG) 2018 Sustainable Economic Development Assessment (SEDA) ranked Lebanon in 96th place among 152 countries globally and in 11th place among 16 Arab countries in terms of well-being. It also ranked Lebanon in 33rd place among 40 upper middle-income countries (UMICs) included in the survey. Lebanon ranked in 99th place globally and in 11th place in the Arab world in the 2017 survey.

    The SEDA measures a country's current level of overall well-being through 10 dimensions grouped into three fundamental elements that consist of Economics, Investments and Sustainability. The Economics element includes income, economic stability and employment; while the Investments element covers the quality of education, healthcare and infrastructure. Also, the Sustainability element covers the income equality, civil society, governance, and environmental dimensions. The survey assigns a score to each country from zero to 100, with 100 reflecting the highest level of well-being. 

    Globally, Lebanon has a higher level of well-being than Bolivia, the Philippines and Botswana, and a lower level than Paraguay, Morocco and Algeria among economies with a GDP of $10bn or more. Also, Lebanon's level of well-being was higher than that of Egypt, Iraq, Yemen, Mauritania and Sudan among Arab countries. Lebanon received a score of 44.8 points, lower than the global median score of 48.5 points, the UMICs' median of 50.5 points and the Arab region's median score of 47.25 points. Also, Lebanon's score was lower than the Gulf Cooperation Council (GCC) countries' median of 64.8 points, while it was higher than the median score of 44 points for non-GCC Arab countries. In parallel, Lebanon's score fell by 1.5 points between the 2009 and 2018 surveys, which shows a decline in the country's well-being. Globally, Ukraine, Cyprus, the Bahamas, Greece, Venezuela and Yemen were the only countries to post a steeper deterioration than Lebanon in their well-being.

    Further, the BCG provided the wealth-to-well-being coefficient, which compares a country's SEDA score of well-being with the potential score of well-being in relation to the country's gross national income (GNI) per capita. As such, the coefficient provides an indicator of how well a country has converted its wealth into well-being for its population. Lebanon's coefficient came at 0.92 points, which means that Lebanon has delivered a lower level of well-being than what would be expected given its GNI per capita level. Countries with a coefficient of one are generating well-being to their population in line with what would be expected given their income levels. Countries with a coefficient greater than one deliver higher levels of well-being to their society than would be expected given their GNI, while counties with a coefficient below one deliver a level of well-being to the population lower than would be expected given their wealth levels. Lebanon's coefficient is the 41st lowest globally, the sixth lowest among UMICs and the eighth lowest among Arab countries. Globally, Lebanon's coefficient of conversion of wealth is similar to that of Bangladesh, Italy, Kenya, Qatar and the United Kingdom.
     

  • Nine Lebanese banks among Top 1000 banks in the world
    In its 2018 survey of the Top 1000 banks in the world, The Banker magazine included nine Lebanese commercial banks on its list, down from 10 banks in the 2017 survey. None of the nine Lebanese banks ranked among the top 25 banks in the Middle East in the 2018 survey, in line with previous surveys. The rankings are based on the banks' Tier One capital in US dollars at year-end 2017. The Banker uses the disclosed Tier One capital for banks that began implementing the Basel III framework, as the latter clarified the rules about capital calculations that previously varied across banks and jurisdictions.

    The aggregate Tier One capital of the nine Lebanese banks reached $15.12bn at the end of 2017 and grew by 6.1% from $14.26bn at end-2016. In comparison, the Tier One capital of the Top 1000 banks increased by 11.7% year-on-year, while that of banks in the Middle East rose by 6.2%. Byblos Bank's Tier One capital-to-assets ratio was 7.45% at the end of 2017, outperforming the Top 1000 banks' aggregate ratio of 6.7%. In addition, Byblos Bank's Capital Adequacy Ratio (CAR), a measure of the Bank's financial strength, reached 17.8% at the end of 2017, the second highest such ratio among Lebanese banks included in the 2018 survey and compared to the average CAR of 16.5% of the eight Lebanese banks with available CAR figures.

    Further, the cumulative pre-tax profits of the nine Lebanese banks reached $2.54bn in 2017, down by 3.4% from $2.62bn the preceding year, compared to a rise of 15.6% in the gross earnings of the Top 1000 banks and an increase of 5.3% in the pre-tax income for banks in the Middle East. Also, the ratio of pre-tax profits-to-Tier One capital of the Lebanese banks reached 16.8% in 2017, down from 18.4% a year earlier, and relative to 13.5% for the Top 1000 banks and 13% for banks in the Middle East. 
     

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