Reforming and Rebuilding Lebanon's Port Sector

Abstract

On August 4, 2020, a massive explosion in the Port of Beirut (PoB) devastated the city, killing at least 200 people, wounding thousands, and displacing around 300,000. A Rapid Damage and Needs Assessment (RDNA), prepared by the World Bank in cooperation with the United Nations (UN) and the European Union (EU), estimated damage to the port at about 350 million dollars. This Note was prepared by the World Bank to provide guidance to policy makers in Lebanon on the crucial additional requirements to be undertaken in the rebuilding of the PoB in terms of both improving its resilience and addressing the underlying governance concerns that are broadly acknowledged to have contributed to the tragedy. The Note summarizes global best practices in port management and border management reforms. The PoB is the main gateway for the external trade of Lebanon, but it has failed in the key role as an enabler of economic development in the country. Despite the growth in volumes and revenues in the port over the last 10-15 years, the PoB has evidently failed to guarantee safe and efficient operations, and to undertake the necessary long-term planning for the benefit of the port and the country. More importantly it has underperformed in its key role as an enabler of economic development at a national level and has made a limited contribution to fostering socio-economic development more broadly. These failures are a direct result of the current governance framework of the PoB. Lebanon adheres to a port management system that arguably reflects the complex political-economic realities, and which as a result run counter to many recognized good practices. The governance of the sector is a patchwork of ad-hoc institutions, structures, laws and regulations that preclude the development of a coherent integrated strategy. The current framework inhibits efficiency as several key government agencies for transport, trade, and border management have overlapping mandates, divergent strategies, often operate under outdated processes and regulations and do not coordinate among themselves. Since 1990, the PoB has been managed by a temporary administrative committee, established in a legal vacuum. This has resulted in serious governance, transparency, and accountability issues. The Lebanese Customs is not structured to perform its mission properly. Its two parallel institutions, the Higher Council for Customs and the Customs Directorate have proven to be inefficient and subject to political exploitation and power struggles. The tragic explosion in PoB clearly illustrates the evident shortcomings of the current institutional set-up as well as the risks emanating from the no-reform scenario.