Beirut, Lebanon – Music streaming service Anghami is moving its headquarters from Beirut to Abu Dhabi, in a move that will be seen as a blow to Lebanon’s crisis-stricken startup scene.
Founded eight years ago in the Lebanese capital by entrepreneurs Eddy Maroun and Elie Habib, the service has grown to serve more than 70 million users across the Middle East and North Africa.
The move, announced on Tuesday, is expected to take place within two months and aims to strengthen the company’s presence in key regional markets.
“We have always had a vision for the entire Middle East and North Africa region – that’s why we also have offices in Dubai, Cairo and Riyadh,” said Maroun, also. CEO, at Al Jazeera. “The relocation of the headquarters from Abu Dhabi is in line with our vision to become more of a pan-Arab platform.”
Anghami’s decision to relocate its base is another achievement for the Abu Dhabi Investment Bureau’s new innovation program, with a total of over $ 500 million pooled to provide a host of incentives. to get companies to invest in the Emirati capital.
The service’s new headquarters will include its engineering and research and development division, located a short walk from the Abu Dhabi offices of streaming giants Spotify and Deezer.
For Maroun and Habib, however, the decision to move was bittersweet.
“We love Beirut and we are from Beirut,” Maroun said. “But… the economy – and Lebanon in general – is going through a very difficult period,” he added, explaining that in the interest of the growth and sustainability of the company, the displacement of the base of the company was “obvious”.
In a scathing report in December, the World Bank said Lebanon was in a “deliberate depression” and warned of further economic suffering in a country where more than half of the population lives below the poverty line .
The value of the local currency has been plummeting against the US dollar since early 2020, losing more than 80% of its value. With soaring unemployment and the absence of viable utilities to cushion the shock, depositors stranded in their U.S. dollar accounts can only withdraw cash-strapped Lebanese banks in amounts limited to a devalued rate in Lebanese pounds.
The ever-growing crisis was further exacerbated by the coronavirus pandemic and a devastating explosion in the port of Beirut in August that killed 200 people, caused enormous economic damage and plunged Lebanese politics deeper into turmoil, leaving the country without an operational government for several months.
“We know that [the situation in Lebanon] is not very stable, but as far as we are concerned, we have tried to isolate ourselves from the negative in the country, ”Maroun said, noting that the company will not close or downsize in Beirut. Of its 120 employees, 50 will move to Abu Dhabi.
‘Startups cannot survive’
Despite the difficult environment, Maroun said he still believes Lebanon to be “an inspiring country in terms of creativity.”
Indeed, the startup scene in Lebanon thrives with talent but lacks the infrastructure and resources for growth, according to industry insiders.
When the financial crisis hit the country in the fall of 2019, issues such as international spending limits on debit cards and the search for local and international investment began to deepen.
“It was like a game of Whac-A-Mole,” said Rita Makhoul, founder and principal consultant at Onyx MENA, a consultancy firm. “Whenever there was one problem, you try to deal with it, and another pops up,” added Makhoul, who has advised and worked closely with Lebanese startups for much of the past decade.
Already poor infrastructure has deteriorated over the past two years as businesses weather the storm in the face of rising power cuts and skyrocketing costs, even for the most basic equipment, the economist says Sami Zoughaib.
“[Startups] are no longer able to access finance in Lebanon due to the banking crisis, and many small startups will struggle to find other funding avenues outside of Lebanon, ”Zoughaib told Al Jazeera, claiming that the precarious security and political situation frightened investors. a way.
“Startups cannot survive,” he added.
Meanwhile, an increasing number of people are choosing to leave the country in the hope of better economic opportunities abroad. While such a brain drain is not uncommon in a country with a history of political instability and rampant corruption, Makhoul said this time around was different.
“Those who left, we lost. I don’t see any of [our talent] come back, ”she said. “They are not leaving because another country was bombing us … they fought and suffered … and it was all from their country, not from an enemy.”
Anghami’s decision to relocate its headquarters to Abu Dhabi will have a “ripple effect,” Makhoul predicted, particularly with the Gulf region markets competing for incentives and investment opportunities.
“Now many will feel that leaving is inevitable as well,” Makhoul said. “They [other startups] will reach out to the biggest startups that have moved to see what they can do to join them. “