What we’re looking at: Digital payment lifelines for cash-strapped Lebanon, digital solutions to overcome COVID, fintech and the war in Ukraine

Digital commerce gives Lebanon a lifeline

Lebanon’s economy has imploded after decades of mismanagement. The currency has lost more than 90% of its value against the US dollar since 2019, and the banking sector is in shambles. As foreign capital dried up, the government enacted strict capital controls that prevented Lebanese from withdrawing dollar savings. This has led to mass demonstrations and even fake bank robberies – desperate bids by some to get hold of their own money. The International Monetary Fund has called on Beirut to reform its zombie banking sector to unlock bailout funds – but to no avail. As a result, many have turned to digital payments. Digital wallets such as Purpl and peer-to-peer money transfer apps that allow users to pay businesses directly have become a lifeline for the country’s 6.7 million people, many of whom depend on the 15 million-strong Lebanese diaspora to stay afloat. Dima Assad, a manager at Nada Debs, a Beirut-based interior design firm, said her company had to switch to a payment gateway called PayTabs, based in the United Arab Emirates, when credit card payments in US dollars were blocked. Moreover, fintech offerings have been a game-changer for the 55% of people in Lebanon who do not have access to bank accounts. The unbanked used to line up at Western Union—and pay hefty fees—to send and receive money, but now they can use smartphones or laptops (78% have internet access) to access funds while incurring lower transaction fees . The economic situation in Lebanon remains dire, but digital commerce offers a lifeline.

How COVID affected digital commerce

When the sudden appearance of a deadly new coronavirus in early 2020 began forcing political leaders to restrict the movements of unprecedented numbers of people, it didn’t take much foresight to predict a surge in e-commerce. The movement toward higher volumes of digital commerce had been accelerating for years, largely for economic and financial reasons, but the inability of businesses to accommodate customers or serve the needs of other businesses pushed the historic trend into overdrive. This is a phenomenon that billions of people have experienced firsthand over the past 32 months as their work and their buying habits have changed. In that sense, COVID has raised expectations of long-term economic gains as pandemic-related necessities became mothers of invention.

But there are disadvantages we must consider. This acceleration ensures that the “creative destruction” that fuels all great macroeconomic gains—the collapse of some industries and businesses as more efficient and profitable ones take their place—has disrupted the lives and livelihoods of many more people in less time than any other. economic phenomenon from recent times.

And the digital divide, both within and between countries, may well have widened as those with access and expertise in digital trade transition to the future much more quickly and easily than those who do not. The pandemic is not over, especially for China, which has been the primary engine of global growth for many years. We need much more data to understand both the positive and negative impacts of COVID on digital commerce and its global impact. But these are topics that will merit in-depth study in the coming years as life and commerce settle into a new normal.

e-commerce at war

Doing business in a war zone presents, shall we say, extra challenges. Mobilizations draw employees to the front, battle lines run across shipping routes, and general uncertainty puts pressure on both investment and trade. Ukraine’s agricultural exports – its largest export sector – in the 2022-2023 season (up to 19 August) were down 51.6% from the previous year, and the World Bank now predicts that GDP will shrink by as much as 35% in 2022 (compared to a fall of 4 .5% for Russia’s GDP). But e-commerce platforms can provide a new way to help local businesses reach a global audience even as conflict rages. Last month, for example, the Ukrainian government launched an online marketplace called Made with Bravery that enables Ukrainian craftsmen and artisans to sell their wares worldwide. The platform is only available to businesses based in Ukraine, and it donates 5% of all revenue to a foundation that helps rebuild parts of the country hit hard by the fighting. (Full disclosure: Made with Bravery was launched in partnership with our sponsor, Visa.

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