This reform monitor is supported by the Royal Norwegian Embassy in Beirut. The opinions expressed here do not necessarily reflect those of the donor. 

What Is the Issue at Hand?

Small and Medium-Sized Enterprises (SMEs) form the backbone of Lebanon’s economy, accounting for more than 90 percent of registered firms and employing over half of the active labor force (World Bank, 2020). Despite this dominance, Lebanese entrepreneurs face a maze of bureaucratic and regulatory barriers when attempting to start or formalize a business. Multiple licensing steps, duplicated documentation, and high transaction costs discourage formal entrepreneurship and foster informality (Haidar, 2013).

Before its discontinuation in 2021, the World Bank Doing Business Index ranked Lebanon 143 out of 190 economies in the “Starting a Business” category, requiring seven procedures, an average of 15 days, and costs equivalent to 40 percent of per capita income (World Bank, 2020). The economic collapse that began in 2019 exposed deep structural weaknesses in Lebanon’s public administration and further delayed digital and legal reform initiatives. Amid the ongoing crisis, simplifying business entry has become a priority for restoring trust in institutions, encouraging job creation, and attracting investment (World Bank, 2025).

The Reform, Recovery, and Reconstruction Framework (3RF)—a joint initiative of the European Union (EU), United Nations (UN), and World Bank—identified administrative simplification and regulatory transparency as foundational to economic recovery. The 3RF emphasizes that improving the ease of doing business is not merely a technical matter but an integral part of building accountability and integrity in public institutions (UNDP, 2024).

Current Framework and Challenges

Business entry in Lebanon remains fragmented and largely manual. Entrepreneurs must certify company by-laws notary public, register with the Commercial Registry under the Ministry of Justice, obtain a tax identification number and VAT registration from the Ministry of Finance, and register employees with the National Social Security Fund. Each agency operates independently, with limited data sharing and no unified digital portal (World Bank, 2025).

This fragmentation creates a host of challenges. Administrative fees and notarial costs often exceed $500, a burden for micro-enterprises facing currency depreciation. Lengthy procedures discourage formalization and push entrepreneurs into the informal sector, where more than 55 percent of Lebanon’s micro and small firms currently operate. Women and youth entrepreneurs are disproportionately affected, as they often lack access to finance and legal assistance required for registration (UNDP, 2024).

Institutional coordination is another critical issue. No single authority is responsible for overseeing business entry reform, leading to duplicated efforts and weak accountability. Furthermore, Lebanon’s Commercial Code, adopted in 1942, does not recognize electronic signatures or digital incorporation. Outdated provisions have made it difficult to implement modern e-government systems and discourage foreign investment. Public trust is also undermined by discretionary approvals and opaque fee structures, creating opportunities for cheap corruption (Transparency International, 2020).

Positive Developments

Despite persistent constraints, several notable reforms and pilot projects have emerged since 2023. The Ministry of Economy and Trade (MoET), in collaboration with the United Nations Development Program (UNDP), launched a pilot digital platform aimed at simplifying business registration as part of the Lebanon Economic Recovery Project. The platform includes key features such as trade name reservation, document uploads, and application tracking (UNDP, 2025).

Complementing this effort, the Office of the Minister of State for Administrative Reform (OMSAR) developed the Commercial Register through Interoperable Platform (CRTIP), which integrates data across the MoET, Ministry of Justice, Ministry of Finance, and the National Social Security Fund (NSSF). This system introduces a Legal Entity Identifier (LEID), supports electronic signatures, and enables e-payment, marking a significant step toward full digitalization (OMSAR, 2025). These initiatives align with Lebanon’s Digital Transformation Strategy 2020–2030, which prioritizes administrative simplification, transparency, and service modernization.

In 2024, the MoET and Ministry of Justice drafted amendments to the Commercial Code introducing electronic signatures and a unique business identifier linking tax and social security records. The reform also seeks to simplify incorporation for limited-liability firms and reduce minimum capital requirements. Additionally, the government committed under the 3RF to publish service standards, processing times, and fees to enhance transparency (UNDP, 2024).

Lebanon has also engaged in regional peer learning. Jordan’s Companies Control Department successfully streamlined registration through full digitalization and process integration (Jordan News Agency, 2024), and the United Arab Emirates offers a model of one-stop digital licensing that significantly reduces compliance costs (UAE Ministry of Economy, 2023). Local chambers of commerce and business associations have partnered with international organizations such as the European Bank for Reconstruction and Development (EBRD) and UN Economic and Social Commission for Western Asia (UN ESCWA) to provide technical support for SME formalization (EBRD, 2024; UN ESCWA, 2023).

Recommendations

For Lebanon to realize the potential of its SME sector, reform must extend beyond pilot projects and address structural barriers to entry. A comprehensive digital one-stop system integrating the MoET, MoF, NSSF, and Ministry of Justice should allow entrepreneurs to complete all registration steps electronically. Such a system would reduce processing times, ensure data consistency, and limit face-to-face interactions that can lead to corruption.

Procedural simplification must be paired with legal modernization—specifically updating the Commercial Code to recognize e-signatures and digital corporate records (Transparency International, 2020). Transparent fee structures and standardized timelines should be published online, along with complaint mechanisms to report delays or misconduct. Public “service charters” outlining agency responsibilities can strengthen accountability.

Inclusion should also be mainstreamed into reform design by offering reduced fees for women- and youth-led enterprises and developing digital-literacy training programs in rural areas (UNDP, 2024). Finally, a robust monitoring and evaluation system is essential. Tracking new business registrations, processing times, and formalization rates through open data platforms would enable civil society and research institutes to evaluate progress and policy impact.

Why Is This Important?

Simplifying business entry is vital to Lebanon’s economic recovery and state legitimacy. An efficient, transparent, and digitalized registration framework directly supports the 3RF’s pillars of transparency, accountability, and economic recovery (UNDP, 2024). Economically, easier business entry stimulates formalization and innovation. OECD research suggests that improving SME formalization and reducing entry barriers can significantly boost employment and productivity (OECD, 2023).

Formal SMEs are also more likely to access finance, export markets, and social protection schemes. From a governance perspective, digitalization reduces opportunities for corruption by minimizing personal decisions and ensuring traceable transactions. Publishing performance data rebuilds public trust and creates pressure for bureaucratic efficiency. Socially-inclusive formalization empowers marginalized groups and expands access to social security and employment benefits. Strategically, an improved business environment sends a signal to investors and the Lebanese diaspora that the country is serious about reform and governance.

Simplifying business entry is a cornerstone for rebuilding the social contract between citizens and the state. By linking administrative modernization with integrity-based governance, Lebanon can foster inclusive economic growth while laying the institutional foundations for transparency and accountability.

References

EBRD. (2024, June 5). EBRD and EU launch new programme to support Lebanese enterprises. European Bank for Reconstruction and Development. https://www.ebrd.com/home/news-and-events/news/2024/ebrd-and-eu-launch-new-programme-to-support-lebanese-enterprises.html

Haidar, J. I. (2013, January 8). Business regulations in Lebanon: Where are we? Where do we go now? World Bank Blogs. https://blogs.worldbank.org/en/arabvoices/business-regulations-lebanon-where-are-we-where-do-we-go-now

Jordan News Agency (Petra). (2024, April 1). Jordan sees 8% surge in new company registration in Q1 2024. https://petra.gov.jo/Include/InnerPage.jsp?ID=58560&lang=en&name=en_news&cat=en_news

OECD. (2023). OECD SME and entrepreneurship outlook 2023. Organisation for Economic Co-operation and Development. https://www.oecd.org/en/publications/oecd-sme-and-entrepreneurship-outlook-2023_342b8564-en.html

OMSAR. (2025). Commercial Register through Interoperable Platform (CRTIP). Office of the Minister of State for Administrative Reform. https://www.omsar.gov.lb/Digital-Transformation/Automation-Applications/Commercial-Register-through-Interoperable-Platform?lang=en-us

Transparency International. (2020). Building Integrity and National Accountability in Lebanon (BINA’). https://www.transparency.org/en/projects/building-integrity-and-national-accountability-in-lebanon-bina

UAE Ministry of Economy. (2023). Establishing businesses: Digital licensing and company setup in the UAE. https://www.moec.gov.ae/en/establishing-companies?p_p_resource_id=PageHelpFul

UNDP. (2024). Lebanon Recovery Fund – 2023 Annual Progress Report. United Nations Development Programme. https://mptf.undp.org/sites/default/files/documents/2025-05/lebanon_recovery_fund_2024_narrative_report.pdf

UN ESCWA. (2023). Annual SDG review 2023: The private sector and the SDGs in the Arab region. United Nations Economic and Social Commission for Western Asia. https://www.unescwa.org/publications/annual-sdg-review-2023

World Bank. (2020). Doing Business 2020: Comparing business regulation in 190 economies. https://documents1.worldbank.org/curated/en/688761571934946384/pdf/Doing-Business-2020-Comparing-Business-Regulation-in-190-Economies.pdf

World Bank. (2025). Lebanon Economic Monitor, Spring 2025: Turning the tide? https://www.worldbank.org/en/country/lebanon/publication/lebanon-economic-monitor-spring-2025-turning-the-tide