Role of Diaspora In the Social Entrepreneurship Ecosystem: Insights from Lebanon

Time and again, studies have shown the positive role a diaspora can play in developing their home countries’ economies, particularly through remittances. However, remittances, which research has mostly focused on, are rarely channeled towards long-term initiatives. Social entrepreneurship is a promising sector for a diaspora to contribute to, as it combines financial returns with the long-term social development urgently needed in today’s world, especially in Lebanon.


Engaging the diaspora: the obstacles


Traditionally, the diaspora contributes to their home countries through remittances sent to families and community projects, as well as through sharing their skills and knowledge with their compatriots. For instance, Lebanon is blessed like no other country with its diaspora, which sent back home $7.9 billion USD in 2017. However, there are many areas for improvement in the process of engaging the diaspora, such as:

  • Most countries, including Lebanon, lack a clear definition of the concept ‘diaspora’.
  • The Lebanese diaspora is geographically dispersed and socio-economically and politically diverse. Therefore, it is difficult to create a unified framework for engaging it efficiently.
  • The Lebanese diaspora mistrust governmental institutions in the home country. They do not trust the not-for-profit sector either, given the lack of transparency.

Given these hurdles, a framework is needed to guide the government’s (and other institutions’) approach to recruiting the diaspora’s efforts in a systematic way.


The diaspora and social entrepreneurship


As governments and not-for-profits are failing to create sustainable solutions to the economic, social and environmental problems in today’s world, the need for the social entrepreneurship model that perceives these challenges as business opportunities is becoming greater than ever. The diaspora can play a significant role in promoting this sector in the Arab World, and specifically, in Lebanon.

Through our research, we study the involvement of the Lebanese diaspora in the social entrepreneurship ecosystem in Lebanon. We investigate the current context in which social enterprises and the diaspora are involved in order to better understand the perceptions of the actors in the ecosystem towards Lebanon. We have interviewed different types of actors in the Lebanese ecosystem, including social enterprises, a venture capital firm, a consultancy firm and a diaspora membership organization.


Findings


The Lebanese diaspora comprises a huge pool of well-educated, well-connected individuals that can contribute to the country’s entrepreneurship sphere, and can specifically boost the growth of the social entrepreneurship ecosystem. On the one hand, social enterprises can leverage the diaspora’s network to access new funding and market opportunities. On the other, the Lebanese diaspora can invest its money in companies that focus on social missions to develop the home country while generating financial returns. However, several challenges are hindering this collaboration. First, the diaspora shies away from investing in Lebanon in general because of the lack of transparency and the weak corporate governance at the institutional level, as well as the frail macroeconomic conditions which threaten any possible financial return on investment in Lebanon. Second, there is not enough exposure and no clear definition of the social entrepreneurship business model, which weakens the ecosystem. Another key challenge is the bureaucracy and complex legal and economic environment in Lebanon. This is further exacerbated by the fact that Lebanese social enterprises do not have a clear legal form or framework.

The participants we interviewed for our studies noted the urgent need to improve the credibility of Lebanese organizations in order to encourage the diaspora’s engagement. Though they need to cooperate with all possible stakeholders, nonetheless, social enterprises in Lebanon have to distance themselves from certain sectors that are deemed inefficient and corrupt. When observing other countries where diaspora engagement was fruitful, we see that the key elements of success were trust in the local institutions and a proactive, systematic approach in engaging the diaspora. We argue that social enterprises in Lebanon should follow a systematic framework; first, they need to identify the reasons for which they want to mobilize the diaspora, and then engage them in setting these goals. The diaspora and social enterprises in Lebanon have a lot in common, especially the willingness to put social impact before economic gains in order to play a positive role in Lebanon’s development. Second, a governmental body needs to track the diaspora’s geographical distribution and their skills and motivations in order to understand the extent of their willingness to contribute to the Lebanese economy. This is important since social enterprises in Lebanon are not interested exclusively in the diaspora’s economic support: more than that, they expect the diaspora to support them in opening new market opportunities and to help their compatriots benefit from their expertise and knowledge. Third, trust can be built with the diaspora through transparency, corporate governance, and platforms that detect and fight corruption.

The social entrepreneurship ecosystem in Lebanon is still budding; it should reach out more actively to the diaspora for help and guidance. Currently, with the Lebanese Social Entrepreneurship Association being formed, a positive message is sent to potential investors. The objective of this association is to accredit local social enterprises, ensure their transparency and measure their social impact. Despite all the challenges facing Lebanon, and despite the mistrust in its public institutions, social entrepreneurship is a very promising avenue for the Lebanese diaspora looking to invest in the home country.

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Hiba Chehade earned an MBA at the American University of Beirut (AUB). Her thesis is entitled ‘Involvement of the Lebanese Diaspora in the Social Entrepreneurship Ecosystem in Lebanon’.

Alain Daou is an Assistant Professor in entrepreneurship at the Olayan School of Business (OSB) at the American University of Beirut. Before joining academia, Alain worked for 10 years with several not-for-profit organizations as project manager, country manager, in-house advisor and consultant in Canada, Central America, and the Middle East and Africa.

Through his research, Alain tries to understand how certain types of enterprises such as social enterprises, not-for-profit, and small and medium businesses innovate, scale up and have a positive social and economic impact on stakeholders and society as a whole.


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