When I think of Lebanon, the Mediterranean Sea, rich culture, great food and a vibrant nightlife immediately spring to mind — but being a hub to support start-ups does not.

Riad Salame, the world’s longest serving central bank governor, wants to alter that perception and he has already put up $400 million (Dh1.4 billion) in which to do so. It comes under a relatively unknown bank law called “Circular 331” to encourage lending by Lebanese commercial banks to support small businesses.

The circular includes bank guarantees of up to 70 per cent for the money loaned and a revenue share on profits over time for the central bank. In a word this approach to encourage investment and risk taking is innovative, especially for an institution that has had an enlarged role as a guarantor of stability in a country that has clearly witnessed a deficit in that category.

The idea is to tap educated local talent and encourage the global Lebanese diaspora — estimated at four times the population of Lebanon itself — to bring home of their hard earned capital abroad to do the same.

“Lebanon is rich in talents. You can see them everywhere,” Salame told me in our interview for “Marketplace Middle East”. “If we give them the proper infrastructure, the proper environment, they can come and make out of Lebanon a place to be for the knowledge economy.”

The soft-spoken banker underlined a couple of big “ifs”: the proper infrastructure and environment, which he admits need to match a desire for advancement by the current generation of young graduates.

My interview with the veteran central bank governor dovetailed with his “Accelerate 2016 Forum” that attracts more than 6,000 attendees from over 50 countries. As it turned out, a new government was formed during the same week and a cloud of uncertainty began to lift after a couple of years of horse trading and backdoor bargaining.

“I think the government should make an effort. Of course, it’s not the central bank that can do it, but I sensed that there is awareness at the level of the government and things are getting done,” said Salame.

Challenges

There is clearly an investment shortfall, most evident in road infrastructure. The streets leading up to the giant conference venue were clogged with visitors coming in, a constant feature in the Lebanese capital during my scores of visits over the past decade.

Karl Abou Zeid and his partner Ziad Jureidini recently created Sqwirl, a motorcycle delivery service, to navigate the traffic on behalf of their customers who want hassle-free, speedy delivery. The two raised a total of $40,000 over the past year and recently crossed a milestone of having carried 1,200 shipments for customers.

“We face challenges every day in this country on so many levels. But because of the BDL fund and because of the incubator programmes that are here, we got a lot of support and encouragement to start the idea,” said Jureidini, a former advertising executive who embraced his friend Karl’s enthusiasm for Sqwirl.

The start-up now has 10 full-time employees and three-part time engineers providing back end support for their business-to-consumer company. Their office consists of a small glass cubicle that was not big enough for the three of us to sit down to conduct the interview.

A majority of their funding came from Sami Abou Saab, who overseas an investment fund called Speed@BDD.

Like other C-Suite executives at his level, Abou Saab worked abroad but unlike most of his peers he thought it was the right time to come home and assist in an effort to keep upcoming talent on Lebanese soil.

Next big thing

“The ecosystem is still at a very nascent stage, but all the stuff happening around us is becoming the next big thing in the region in terms of a start-up ecosystem,” said Abou Saab.

Five years ago, there was a lot of talk about creating hubs of excellence, but very little in the way of movement. It is now what can be described as a very crowded space with cities like Dubai, Sharjah, Manama, Riyadh, Amman and Cairo all vying for slice of investment to create jobs.

Region-wide, one out of four youth is without a job and a total of 73 million people are looking for work. It is difficult to make a sizeable dent in those numbers, with some of the highest birth rates in the world today, but there is a shift underway.

There is space being made for the private sector and a recognition that small business can play a bigger role when it comes to employment.

The writer is Emerging Markets Editor at CNNMoney