Circular No. 331 issued by the Central Bank of Lebanon (BDL) on Aug. 22, 2013, will not only help start-ups and boost the knowledge economy sector through financial incentives to banks, it may also turn into an incentive for developing the financial markets, consolidating the economy and boosting growth, especially if the appropriate security and political conditions are met that would come to the country’s advantage.

Circular No. 331 encourages commercial banks to invest in start-ups. The BDL will guarantee up to 75% of the value of these commercial bank investments in the capital of start-ups that meet the determined criteria.

These start-ups must be innovative Lebanese companies working in the knowledge economy sector and must contribute to creating jobs.

According to the circular, the total participation of any bank in start-ups may not exceed 3% of the bank’s capital, provided the participation of any bank in a single start-up does not exceed 10% of the aforementioned 3%. Thus, commercial banks must invest in at least 10 start-ups if they want to benefit from all the facilities provided to them by BDL. Considering that the total amount of equity of commercial banks operating in Lebanon is registered at $13.5 billion, the BDL would be placing a total of $400 million in the service of the knowledge economy, innovation and entrepreneurs through this program. At the circular’s application, the BDL will be thus urging banks to invest in this area, bearing the greater part of the burden and motivating commercial banks to diversify their investments and distribute their risks.