The World Bank issued a press release on August 5, 2021 in which it stated that it will grant $25 million to assist in the recovery of targeted micro and small enterprises (MSEs) directly affect by the Beirut port explosion and sustain the operations of eligible microfinance institutions (MFIs). Said grant is part of the “Building Beirut Businesses Back & Better Fund” (B5) which was signed on August 4.

According to the World Bank’s press release, the Beirut port blast had a devastating impact on the productive sectors in Lebanon. The blast resulted in a sizeable physical damage and a loss of stock & inventory of circa 10,000 privately owned businesses located within a 5 kilometers radius from the explosion site. Furthermore, the press release noted that the blast has largely affected the productivity & revenue generation of firms. More specifically, the World Bank revealed in its “rapid firm-level survey” that circa 17% of affected Lebanese firms were permanently closed, 79% experienced reduced sales (drop by 69% on average) and 61% saw a reduction in the number of permanent workers (down by 43% on average). In addition, the survey showed that 46% of surveyed firms from different sectors were affected by the explosion (on a direct and indirect basis). These affected firms will keep on struggling to finance their reconstruction & recovery needs and to resume delivery services unless they obtain some financial assistance. In the same vein, the press release divulged that there has been very limited policy responses by Lebanese authorities to aid in the recovery of the severely deteriorated financial sector (banking, insurance, and microfinance) and firms damaged by the blast.

According to the World Bank Mashreq Regional Director Mr. Saroj Kumar Jha, the B5 Fund will begin the implementation of highly needed priority projects planned under the Lebanon Finance Facility (LFF) with the purpose of providing the Lebanese people with vital socio-economic relief, in addition to helping micro, small and medium sized enterprises in their recovery, and placing Lebanon on a sustainable recovery path. The World Bank also noted that the B5 Fund will provide grants to around 4,300 MSEs to cover working capital needs, technical services, equipment, and repairs. Support will also be given to entrepreneurs and businesses which suffered from a disability as a result of the blast. Furthermore, the Fund will support operational expenses of up to 5 MFIs that work with micro & small businesses and low-income populations. It is worth noting that the Lebanon Finance Facility was established in December 2020 and is a 5 year multi-donor trust Fund dedicated to support the immediate socio-economic recovery of people and businesses affected by the port explosion. From another perspective, the press release noted that the B5 Fund will channel the financial aids in a transparent and timely fashion and will be implemented by Kafalat SAL, which will be in charge of the implementation, management, selection of intermediaries, and monitoring & evaluation aspects of the Fund. In addition, the World Bank revealed that the Fund will adopt a “zoning approach”, i.e. beneficiaries will be prioritized depending on their proximity to the explosion site. In this vein, the press release noted that the disbursement of grants hinges on the completion of a screening by MFIs and Kafalat to verify the damages of selected firms based on initial assessments performed by the Lebanese Armed Forces after the blast.

Furthermore, the press release stated that a third party monitoring agent will be hired by the LFF in order to verify and confirm that the criteria, selection process, assessment and use of funds are in accordance with the project operations manual. It also disclosed that the LFF independent oversight body will monitor fund activities. In this respect, the World Bank commented that should the project prove successful, additional funds from the LFF may be considered to enlarge its scope to reach a greater number of Lebanese MSEs and MFIs. Finally, the World Bank unveiled that generous pledges and contributions were made to date by governments of Canada, Denmark, France, Germany, and from the European Union totaling $62.68 million that will allow the LFF to channel international support to Lebanon.