Music service Anghami moving from crisis-hit Lebanon to UAE | Technology News

Beirut, Lebanon – Music streaming service Anghami is relocating its headquarters from Beirut to Abu Dhabi, in a move that will be seen as a blow to the startup scene of crisis-hit Lebanon.

Founded eight years ago in the Lebanese capital by entrepreneurs Eddy Maroun and Elie Habib, the service has now grown to cater to more than 70 million users across the Middle East and North Africa.

The move, announced on Tuesday, is expected to take place within two months and is aimed at solidifying the company’s presence in key regional markets.

“We always had a vision for the whole Middle East and North Africa region – that’s why we also have offices in Dubai, Cairo and Riyadh,” Maroun, who is also the chief executive officer, told Al Jazeera. “The Abu Dhabi headquarters move is in line with our vision to grow more into a pan-Arab platform.”

Anghami’s decision to shift its base is another success story for the Abu Dhabi Investment Office’s new Innovation Programme, with a total of more than $500m pooled to provide a host of incentives to bring businesses to invest in the Emirati capital.

The service’s new headquarters will include its engineering and research and development division, located just a stone’s throw away from the Abu Dhabi offices of streaming giants Spotify and Deezer.

For Maroun and Habib, however, the decision to move was bittersweet.

“We love Beirut, and we are from Beirut,” said Maroun. “But … the economy – and Lebanon in general – is going through a very hard time,” he added, explaining that in the interest of growing and sustaining the company, the shifting of the company’s base was a “no-brainer”.

In a scathing report in December, the World Bank said Lebanon was in a “deliberate depression” and warned of further economic pain ahead in a country where more than half the population are below the poverty line.

The value of the local currency has been freefalling against the United States dollar since early 2020, losing more than 80 percent of its value. With unemployment soaring and no viable state services to soften the blow, depositors locked out of their US dollar accounts can only withdraw from Lebanon’s cash-strapped banks in limited amounts at a devalued rate in Lebanese pounds.

The ever-deepening crisis was further exacerbated by the coronavirus pandemic and a devastating explosion at Beirut’s port in August that killed 200 people, caused huge economic damage and plunged Lebanese politics deeper into turmoil, leaving the country without a functioning government for several months.

“It’s known that [the situation in Lebanon] is not very stable, but as far as we’re concerned, we tried to isolate from the negative in the country,” Maroun said, noting that the company will not shut down or downsize its Beirut office. Of its total 120 staff, 50 will be moving to Abu Dhabi.

‘Startups cannot survive’

Despite the challenging environment, Maroun said he still believed Lebanon is “a country that is inspiring in terms of creativity”.

Indeed, Lebanon’s startup scene flourishes with talent but lacks infrastructure and resources for growth, according to industry insiders.

When the financial crisis hit the country in the autumn of 2019, problems such as international spending limits on debit cards and finding local and international investment began to mount.

“It was like a game of Whac-A-Mole,” said Rita Makhoul, founder and principal consultant at Onyx MENA, a consultancy firm. “Every time there was a problem, you try to take care of it, and another one pops up,” added Makhoul, who has been advising and working closely with Lebanon’s startups for much of the past decade.

The already subpar infrastructure has worsened over the past two years, with companies trying to brave the storm faced with increased power cuts and skyrocketing costs for even the most basic of equipment, according to economist Sami Zoughaib.

“[Startups] are no longer able to access financing in Lebanon due to the banking crisis, and many smaller startups will have a hard time trying to find other avenues of financing outside of Lebanon,” Zoughaib told Al Jazeera, saying the shaky security and political situation scared investors away.

“Startups cannot survive,” he added.

Meanwhile, an increasing number of people opt to leave the country in hopes of better economic opportunities abroad. While such a brain drain is not an uncommon occurrence in a country with a history of political instability and endemic corruption, Makhoul said this time was different.

“Those who left, we lost. I don’t see any of [our talent] coming back,” she said. “They’re not leaving because another country was bombing us … they struggled and suffered … and all that came from their country, not an enemy.”

Anghami’s decision to relocate its headquarters to Abu Dhabi will have a “ripple effect”, Makhoul predicted, especially with markets in the Gulf region competing over incentives and investment opportunities.

“Now many will feel that leaving is inevitable, too,” Makhoul said. “They [other startups] will reach out to bigger startups that moved to see what they can do to join them.”