weighted score 3.5 · ten dimensions
Sourcing Attractiveness Index · ten dimensions
Lebanon
Labour cost, supply base depth, logistics infrastructure, trade access, and innovation scores for Lebanon as a sourcing destination.
Labour cost competitiveness
6
Wages have collapsed in dollar terms due to currency crisis, making labour nominally cheap. However, this reflects economic dysfunction rather than genuine cost competitiveness — operational costs from power, logistics, and banking dysfunction offset wage savings.
Supply base depth
3
Narrow manufacturing base limited to food processing, pharmaceuticals, jewelry, and light manufacturing. No deep industrial clusters. Supply chain ecosystem severely degraded by economic crisis.
Logistics & infrastructure
3
Port of Beirut severely damaged in 2020 explosion — reconstruction incomplete. Chronic power outages (20+ hours/day). Water shortages. Road infrastructure deteriorating. Tripoli port limited capacity.
Workforce skills
6
Historically well-educated workforce with strengths in finance, pharma, and food processing. Severe brain drain since 2019 economic collapse — mass emigration of skilled workers undermining human capital base.
Scalability
3
Scaling production is extremely difficult given infrastructure collapse, banking dysfunction, and unreliable power supply. Small domestic market (~5.5 million including ~1.5 million Syrian refugees).
Ease of doing business
2
Banking system frozen since 2019. No functioning trade finance. Extended government vacuums. Pervasive corruption (TI CPI ~24). Regulatory framework effectively non-functional.
Trade access & tariffs
3
No EU FTA — MFN tariffs apply. GAFTA membership provides limited regional access. No significant preferential trade arrangements with major markets.
Sustainability baseline
2
Near-total reliance on diesel generators for electricity. No meaningful renewable energy deployment. Environmental regulation non-functional. Carbon intensity of operations extremely high.
Innovation & IP
4
Historically vibrant startup ecosystem and strong universities. Innovation capacity severely degraded by brain drain and economic collapse. Pharmaceutical sector retains some R&D capacity.
Quality standards
3
Pharmaceutical and food processing sectors maintain reasonable quality standards. Broader manufacturing quality variable. Audit reliability compromised by governance environment.
Labour & Cost Competitiveness
Labour & Cost Competitiveness
- Wage trajectory
- Lebanon's currency has lost over 95% of its value since the 2019 economic collapse. In dollar terms, wages have collapsed — minimum wage is effectively under USD 20/month at parallel market rates. This makes labour extremely cheap but reflects economic dysfunction, not competitiveness.
- Total cost of ownership
- Despite low nominal wages, total cost of ownership is elevated by unreliable power supply (diesel generator costs), logistics disruption from degraded port infrastructure post-2020 Beirut explosion, and banking system dysfunction that prevents normal trade finance.
- Labour market dynamics
- Lebanon has a historically well-educated workforce with strengths in banking, finance, pharmaceuticals, and food processing. However, the economic crisis has triggered mass emigration of skilled workers — brain drain is a critical concern for sourcing continuity.
- Cost-sensitive categories
- Food processing, pharmaceuticals, and jewelry remain active export sectors. Labour costs are low but operational risk (power, banking, logistics) substantially offsets wage advantages.
Supply Base & Infrastructure
Supply Base & Infrastructure
- Manufacturing breadth
- Lebanon's manufacturing base is narrow, focused on food processing, pharmaceuticals, jewelry, chemicals, and light manufacturing. No deep industrial supply chain clusters comparable to regional competitors like Turkey or Egypt.
- Port infrastructure
- The Port of Beirut was severely damaged in the August 2020 explosion. Reconstruction is ongoing but incomplete. Tripoli port handles some overflow but lacks capacity and infrastructure for major trade volumes.
- Power infrastructure
- Chronic power outages averaging 20+ hours per day in many areas. Businesses rely on private diesel generators, adding substantial cost and carbon intensity. State electricity utility (EDL) effectively non-functional.
- Risk note
- Infrastructure degradation across power, water, ports, and telecoms represents a systemic barrier to reliable supply chain operations. Physical infrastructure scores reflect current operational reality, not historical capacity.
Trade Access & Business Environment
Trade Access & Business Environment
- EU trade relationship
- No EU FTA in force. MFN tariffs apply to Lebanese exports. Lebanon is part of the Euro-Mediterranean Partnership but preferential trade arrangements have not materialised into comprehensive free trade.
- Regional trade
- Lebanon is a member of GAFTA (Greater Arab Free Trade Area) but practical trade benefits are limited by the country's narrow export base and ongoing political instability.
- Banking system
- Lebanon's banking system has been effectively frozen since October 2019. Capital controls, inability to access deposits, and collapse of trade finance mechanisms make normal commercial transactions extremely difficult.
- Regulatory environment
- Extended periods without a functioning government (presidential vacancy 2022-2024) create regulatory uncertainty. Corruption is pervasive — TI CPI approximately 24, among the lowest in the MENA region.
Innovation, IP & Quality
Innovation, IP & Quality
- Innovation capacity
- Lebanon historically had a vibrant startup ecosystem and strong university sector. The economic crisis has severely degraded innovation capacity as talent emigrates and funding dries up.
- Pharmaceutical sector
- Lebanon has an established pharmaceutical manufacturing sector producing generics for regional markets. Quality standards in this sector are relatively well-maintained despite broader economic dysfunction.
- IP environment
- IP protection frameworks exist on paper but enforcement is weak due to judicial dysfunction and governance collapse. Practical IP risk is elevated for any buyer sharing proprietary designs or formulations.
- Quality standards
- Quality management systems in food processing and pharmaceuticals are reasonably established. Broader manufacturing sectors show significant variance. Audit reliability is compromised by the overall governance environment.