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Lebanon Humanitarian Fund Annual Report 2020

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2020 IN REVIEW
LEBANON HUMANITARIAN FUND AT A GLANCE

HUMANITARIAN CONTEXT

Humanitarian situation in 2020

The current crisis in Lebanon is driven by a mixture of regional, political, governance and development challenges, which are now converging to produce an increasingly visible humanitarian impact.

Decades of negligence, as well as dysfunctional governance and endemic corruption arising from the confessional formation of the post-war state, started to manifest in a crumbling infrastructure, maintenance of arms by political groups, a waste management crisis, and economic decline, with significant geographical disparities and inequalities.

This is unfolding within a context of structural gender inequalities. Lebanon ranks 145 out of 153 countries in the World Economic Forum Global Gender Gap Report, due to low rates of economic participation of women, political representation, and patriarchal socio-cultural norms. In addition, since 2011, the Syria crisis meant, among other things, that the country also hosts the largest per capita number of refugees worldwide, including an estimated 1.5 million Syrian refugees, 27,000 Palestine refugees from Syria, in addition to an estimated 180,000 Palestine refugees already living in the country.

Socio Economic Crisis
The economic landscape is characterized by a lack of competition, reliance on imports and low productivity, a chronically inconducive business environment, high production costs, low levels of investment, and adverse geopolitical conditions. The Banque Du Liban (BDL) finds itself in a critical position with foreign currency reserves at an alarming $17.9 billion, as of November 2020, which could result in shortages of basic imported goods (medicines, seeds, wheat, etc.) and fuel. Gross domestic product (GDP) growth averaged 9.2 per cent throughout 2007- 2010, but then declined sharply to an average of 1.3 per cent over 2011-2018, and -6.9 per cent in 2019. GDP is expected to contract by 25 per cent in 2021.

The banking sector now faces a severe solvency crisis along with a fiscal crisis, with a default on debt in March 2020. Banks imposed informal capital control measures to conntain capital flight, reducing access to foreign exchange-denominated deposits and limiting access to the Lebanese pound (LBP).

With an acute depreciation of the LBP, and a formal peg still at LBP1,517 to the US$, the LBP lost its value at an accelerated rate. After reaching nearly LBP10,000/US$ at the beginning of July 2020, the informal exchange rate dropped, recording a monthly average of LBP7,420/US$ in August 2020 – 90 per cent higher than the rate applied by banks for dollar-denominated accounts (LBP1,500/US$ at the time).

Between September and December 2020, the monthly average informal exchange rate remained stable at around LBP8,000/US$)– double the rate applied by banks for withdrawals in LBP from dollar-denominated accounts (LBP3,900/US$). As a result, businesses had highly restricted access to capital and to financing, especially for foreign currency.

This has severely constrained business transactions, especially import activity. Economic contraction was estimated at -13.8 per cent for 2020 and -4.4 per cent for 2021. In addition, Lebanon has among the lowest global rates of women’s labour market participation, hovering at 29 per cent for women and 76 per cent for men. The economic contraction on women’s overall employment in Lebanon was estimated by UN Women to result in a 22 per cent reduction in women’s employment.

Beirut Port Explosions
On 4 August 2020, two explosions rocked the Port of Beirut, causing widespread destruction to homes, businesses and infrastructure. The affected area is the main logistical point of entry and exit for an import-reliant country, and the epicentre of the major commercial, service and cultural hub. The explosions killed nearly 200 people (male: 62.8 per cent, female: 30.4 per cent, unidentified: 6.8 per cent) and wounded at least 6,500 people, including approximately 1,000 children.

The disaster initially left approximately 300,000 people displaced, while an estimated 70,000 workers in small- and medium-size businesses lost their jobs in various productive sectors.

Affected residents include large numbers of “old tenants” who hold pre-1992 rental agreements. These tenants have been at a risk of eviction and displacement since the amendments to the Rent Control Law in 2014 and 2017. Unless checked, such practices could increase in the post-disaster period. Six major hospitals and 20 health clinics sustained partial or heavy structural damage. Reports state that a quarter of school-age children in Beirut risk missing out on school after the explosions, which damaged 163 schools.

At least 2,000 doctors in Beirut were affected by the explosions – either they were physically injured or their clinics were destroyed. An estimated 40,000 buildings were damaged, with 3,000 residential structures seriously damaged. Stocks of medicines, vaccines and PPE were lost.

The explosions destroyed an estimated 15,000 metric tons of wheat in the Port. Wells, storage reservoirs, pumping stations, distribution networks, sewerage networks, sewage pumping stations, wastewater treatment plants and 159 schools were also affected in the explosions.

The overall damage incurred as a result of the explosions is between $3.8 billion and $4.6 billion. Compounding an already collapsing economy, the damage from explosions is expected to result in loss of economic activity, trade disruptions, loss of fiscal revenue. Increased poverty incidence is expected due to: (i) the direct loss of livelihood; (ii) the decline in aggregate output; (iii) higher inflation rates; (iv) the loss in quantity and quality of essential services; and (v) deteriorating social indicators (especially health and education).

Mental health services, food and medical assistance were among the most pressing needs, according to a survey. The Beirut Port Explosions have increased vulnerabilities around economic stability; poor areas and disadvantaged communities were dispropotionately hit, along with vulnerable groups that include female-headed households, youth, children, older people, people with disabilities, and LGBTIQ+ refugees and migrant workers. In many of the affected neighbourhoods, insecure tenure risks leading to large-scale and permanent displacements, while precarious living arrangements are increasingly exposing women and young girls to gender-based violence (GBV).

The impact of the explosions has already seen a downnfall in employment opportunities for women; female-headed households were 10 per cent less likely than male-headed households to report at least one member generating income in the weeks after the explosions. Those outside of Beirut are also likely to suffer acutely from the economic fallout of the explosions, despite being beyond its physical footprint.

UN Office for the Coordination of Humanitarian Affairs
To learn more about OCHA's activities, please visit https://www.unocha.org/.