Lebanon: up to the task as Prime Minister
The richest man in Lebanon takes on Lebanon’s toughest job.
Among the big beasts that roam the business world in Lebanon, none is bigger than Najib Mikati. The richest man in Lebanon, the 65-year-old Sunni from Tripoli founded the M1 Group investment company and made his fortune in mobile telephony. The multi-billionaire is well known in Lebanese politics, having previously served as Prime Minister from 2011 to 2014.
After 13 months of feuds within the Lebanese political elite, he is back as prime minister with broad support.
Lebanon is “likely to be in the top 10, perhaps the top three, of the most severe economic crises since the mid-19th century,” according to the World Bank. The situation in the country has been worsened by willful inaction and continued internal political struggles. Donors are reluctant to intervene until the country reschedules its debt and reorganizes the banks and the bankrupt national electricity company, Electricité du Liban, which cannot keep the country’s lights on. The World Bank estimates that GDP contracted by 20% last year, with triple-digit inflation. Other estimates for both are even higher.
“Even before the pandemic, Lebanon was contracting, and the combination of Covid-19 and the Beirut explosion made the economic pain worse. … GDP could have fallen by as much as 40% last year, ”said James Swanston, MENA economist at macroeconomic research firm Capital Economics.
Lebanon must restructure its debt before the International Monetary Fund – or others – offer cash support. Swanston says the pound must be devalued, its complex exchange rate simplified, and the banking system restructured. Not to mention the fight against endemic and devastating corruption in the country.
“At least Mikati succeeded where [former prime minister] Saad Hariri had failed in trying to form a government; and he was proactive in establishing an action plan to tackle the issues, ”Swanston said.