Beirut, August 10, 2021 – Digitalization is one of key foundational stones for the reconstruction and modernization of the Port of Beirut (PoB) operations, according to a new World Bank note that aims to provide guidance to policymakers on the crucial requirements for building back better this vital facility. The implementation of an efficient and effective PoB digital action plan is contingent on high level political commitment.
The note titled “Reforming and Rebuilding Lebanon’s Port Sector: Policies and Solutions for Digitalizing the Port of Beirut” outlines key principles for the design and implementation of digital trade solutions at the PoB. It explains the need for digitalization, outlines the building blocks of the required enabling environment, and presents the chronic obstacles to change and possible solutions to address them. Developed in collaboration with the Agence Française de Développement (AFD), this note deepens the digitalization agenda outlined in the first note on Lebanon’s port sector institutional reform published by the World Bank in January 2021.
The resilience of the Lebanese port sector has proven to be low. The impact of the ongoing economic crisis, the COVID-19 pandemic, and the PoB explosion has traumatized the sector and exposed its weaknesses and inabilities to predict, identify, and respond to external risks. The anticipated slow recovery of the sector is likely to exacerbate the burden on the economy while opportunity costs are high, and competition with other ports in the Eastern Mediterranean region is expected to intensify.
The note argues that digitalization of the Port of Beirut will generate positive spillover effects on the Lebanese economy. Its implementation will reinforce anti-corruption practices and increase people’s trust in government organizations. It will also help reduce trade costs and bureaucracy, enabling more small and medium enterprises to participate in international trade. Port digitalization makes movements of hazardous substances more transparent and permits identification of dangerous levels or cases of combined storage. It also improves the efficiency, effectiveness and predictability of logistics services. Finally, digitalization will improve regulatory oversight and decision making via the analysis of big data and the generation of new key performance indicators and business intelligence.
“Rapidly evolving technology is creating the digital ports of the future and Lebanon should not be left out”, said Saroj Kumar Jha, World Bank Mashreq Regional Director. “Through an all stakeholder approach, Lebanon should immediately enact special port institutional framework to reform the port sector and to launch transformation process towards a structured and systematic technological upgrade of the port of Beirut to support Lebanon’s economic recovery.”
Arthur Germond, AFD’s head of office in Beirut, supported this opinion: “Lebanese authorities urgently need to modernize port operations. This upgrading is imperative to rekindle the country’s economy; it will only bear fruits after a comprehensive overhaul of the institutional and legal framework of Lebanon’s port system. France, notably through AFD, stand ready to work with Lebanese authorities in this endeavor.”
The Note proposes a digitization action plan comprised of three pillars which ensure that policy considerations go beyond the technological architecture and include economic framework and human capacity dimensions. The first is the institutional pillar which aims to strengthen the Lebanese digital enabling environment and entails reforms in the legislative and operational framework towards trade facilitation, improved border compliance, and adequate national digital infrastructure. These include the adoption of the new Customs law and the restructuring of the Customs administration into a “one head one body” organization. The second is the digital pillar, which recommends the implementation of three port digital solutions, namely the “maritime single window”, “port community system” and “national single window” digital solutions, which enable intelligent and secure information exchange between public and private stakeholders. Finally, the human capital pillar ensures that the required capacity is in place both from the public and the private sector.
Successful digital transformation is contingent on the implementation of structural reforms, especially those related to governance and institutional framework of port sector. Digital port solutions should not be narrowly perceived as a pure IT port infrastructure project. Beyond hard and soft digital infrastructure, there is a critical need to develop the appropriate institutional and legislative framework in support of their seamless functioning. The full and effective adoption of a digital action plan requires a set of fundamental reforms. Some of them have been identified a long time ago and characterized as urgent, but they have been on halt for years in the design phase pending implementation. Their enactment would send positive signals of change to private port operators and the logistics industry players and could help unlock much needed investments in the Lebanese port sector.