Lebanon’s Insidious 2021 Crisis
January 11, 2021, 5:21 pm

James Denseiow

Not all emergencies have a clear and recognised trigger or starting point. Natural disasters do and conflicts can usually be traced back to a particular violent incident. Perhaps the most insidious crises are those that lack a starting point but rather are the result of a steady increase of overlapping and interconnecting issues reaching a boiling point.

In Lebanon the country lacks the bombs and bullets of neighbouring Syria, but its economic, social and political challenges are worsening and metastasising daily. The small country already plays host to hundreds of thousands of Palestinian refugees who’ve had their welfare services reduced by cuts to UNRWA, meanwhile the reduction in support to the estimated 1.5 million Syrian refugees in the country has meant that nine out of 10 Syrian refugee families in Lebanon are living in extreme poverty.

This is just part of the backdrop to Lebanon’s own economic crisis caused by a constellation of domestic issues combined with regional factors like sanctions on Syria and the departure of significant Gulf money from the country. The massive devaluation of the currency and the rise in the cost of living may be about to get significantly worse providing a moment of clear stress test for the country.

Lebanon's central bank has warned it could run out of money to pay subsidies on basic goods by early 2021. The removal of subsidies from a variety of goods from bread to petrol has proven a contentious and risky business across the region over the years. The Lebanon of the past few years is no stranger to public protests, some of which have turned violent, but this could be of a different scale.

Indeed, the UN has issued warnings of a looming “social catastrophe” around the removal of the subsidies. Prime Minister Diab confirmed at the start of the year that there was only $2bn in foreign reserves left for subsidies. There is already talk of cutting subsidies whilst supporting the poor, which may seem initially a bit of a paradox but there is a good argument that the system is in need of reform regardless of the backdrop.

One proposal is to replace the current subsidies with ration cards given to some 600,000 of Lebanon’s poorest families to help them through this period, although there is no obvious light at the end of the tunnel. The World Bank rebuked the Lebanese Government for not charting a way forward but it is hard to see how the country’s fragile political leadership can be strategic when they are having to prioritise tactical firefighting.

The fact of the matter is that allowing Lebanon’s crisis to get worse before addressing it will only make the challenge harder. The time to act is now and the right messages were heard in December by U.N. Secretary-General Antonio Guterres who announced the creation of a fund handled by the World Bank, the U.N. and the European Union to provide support for Lebanon, including food, healthcare, education and the reconstruction of the Port of Beirut.

Guterres was fully on message when he explained that; “we can, together, help the Lebanese people move beyond the emergency phase and onto the path for longer-term recovery and reconstruction”. Yet unless Lebanon can get its political house in order then humanitarian support will just keep the wolves from the door rather than addressing core and systemic issues.

The contraction of the global economy that has been triggered by Covid-19 and shows no sign of ending, will inevitably place a greater premium on donor money to help a world beset by emergencies. Towards the end of 2020 the UN put out its global humanitarian overview setting out that there are 235.4 million people in need and $35.1 billion needed from donors to help them.

Lebanon will have to compete for these funds with other emergencies and its divided body politic will arguably make it harder to attract donors. The challenge of a legacy of unresolved issues hangs over the country, most obviously the fact that last year’s massive Beirut port explosion has yet to be resolved with any genuinely accountability.

On top of all of this tinder box is the fact that Lebanon may be about to enter another period of Covid-19 lockdown, with first responders saying they have been transporting nearly 100 patients a day while hospitals report near-full occupancy in beds and ICUs. Lebanon’s gathering storm of crisis’s are gathering pace and the world must stay engaged and not just be observers to the country’s suffering.

James Denselow

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BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).

Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.