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riad salamehDespite the years-long Syrian conflict spilling over its border and in an attempt to create new jobs and lure young expatriates home, Lebanon is vying to become a Middle East technology and innovation hub.

At the heart of its effort to support its nascent start-up and digital culture is an initiative from the country’s central bank, dubbed Circular 331. Launched in August 2013, the project aims to provide support to select Lebanese start-ups, including $400 million in funding.

At a conference in Beirut last week, central bank Governor Riad Salameh explained that the initiative includes measures to encourage banks to take equity investment in technology companies. “The central bank guarantees 75% of the investment,” he added.

The country is also building infrastructure to incubate homegrown start-ups, largely through tech bootcamps and the opening of shared workspaces.

But, unlike their counterparts in Berlin, Dubai and other fledgling digital start-up hubs, the key players in Beirut’s scene admit they face an uphill battle against a daunting array of obstacles.

Two of the challenges make life particularly difficult for a tech-focused start-up: Beirut is infamous for its daily power outages and Internet speeds are notoriously poor.

The average Lebanese consumer’s download speed in Lebanon, according to Ookla, a global broadband testing company, was 3.9 megabits per second. The average download speed worldwide is almost 24 megabits per second.

Regional strife is taking a toll, too. More than one million refugees have flooded across Lebanon’s border since the Syrian civil conflict began in 2011. Tourism has cratered and the country’s economic growth has slumped from 8% in 2010 to an expected 2% in 2015, according to the Central Bank.

Fadi Bizri, ‎managing director at Bader Young Entrepreneurs Program, said the challenges facing Lebanon should not discourage entrepreneurs. “Part of being an entrepreneur is finding a way either around the challenge—or piercing through it,” he said.

WSJ

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