Lebanese IT industry revenues touch US$380 million

A new report from the Professional Computer Association (PCA) of Lebanon, claims the country’s IT industry revenues has doubled over the past four years to stand at US$380 million, owing to increased exports of IT to regional markets.

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By  Maddy Reddy Published  September 29, 2004

A new report from the Professional Computer Association (PCA) of Lebanon, claims the country’s IT industry revenues has doubled over the past four years to stand at US$380 million, owing to increased exports of IT and related solutions to regional markets such as the Gulf Cooperation Council (GCC) area. Similarly, a recent Madar Research report says the Lebanese domestic IT industry is set to grow exponentially over the next four years from an estimated US$316 million in 2004 to US$480 million in 2008. The growth is attributed to the domestic computer equipment and IT services market whose combined value was estimated at US$190 million at the end of 2003 and an export oriented software development sector. The Lebanese IT industry, which comprises of 500 software companies employ nearly two thirds of an estimated 6500 workers in the IT industry as technical staff is clearly driven by an export oriented software sector, with a large number of firms being involved in the development of software products in the five main domains: banking, retail, education, logistics and general trade. According to the PCA, more than 95% cent of firms involved in software production identified the GCC countries as their lead market for export, generating 75% of all receipts. Europe comes in a close second to the Middle East region with France being a leading consumer of Lebanese IT products. Although the numbers in the report indicate a strong growth rate over the past two years, as much as 12.5% cent a year, the industry first has to overcome some major obstacles. After unfavorable economic conditions brought on by two decades of instability, only now Lebanon is now streamlining its economy. Despite the progress made, software piracy is still rampant curtailing domestic revenues. Furthermore, attracting or even retaining specialised IT personnel is a challenge, considering the ‘brain drain’ of graduates to Europe, America and GCC region. In addition to this, Lebanon’s educational system is not attuned to the needs of the sector as it barely churns out 1200 technical graduates an year — way below the industry demand. The industry is also heavily dependent upon local entrepreneurial capital and assistance from banks in terms of loans, such as the Kafalat to fund small and medium businesses, as venture capitalists and large banks giving loans to IT companies is still a rarity in the investor space. Competition at home is also heating up as countries such as Jordan eye the same markets for lucrative export revenues. For instance, the domestic revenues of Jordan's ICT sector reached US$226 million, achieving a growth of 20% compared to 2002. As for the export revenues, it achieved 74% growth compared to 2002, reaching a total of US$69 million. However, PCA believes with a worldwide network of Lebanese emigrants with strong connections and high literacy rates with most of the population being trilingual (English, Arabic and French) and armed with a technical university degree, Lebanon will maintain the edge over other Middle Eastern countries. But the biggest driver of the IT industry appears to be the government. In 2001, the Lebanese national and regional technical centre started its operations to provide assistance and regulation in opening technology companies in Lebanon. Tariffs on hardware and software imports were taken off making IT products cheaper and to attract foreign buyers. To faciliate e-transactions, a digital signature law has been passed. The government is also setting up IT free trade zones, similar to Dubai such as the Beirut Emerging Technology Zone (BETZ) and working on an e-government framework with the help of the United Nations development programme (UNDP).

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