Economic damage caused by the Beirut Port explosion is likely to exceed $20 billion, according to a new study.

Strategy&, PwC's strategy consulting subsidiary, said that on top of the immediate devastation of the explosion, the event has also left a devastating crater in Lebanon’s already-crumbling economy.Adding to the damage to infrastructure, businesses, housing, cultural and social costs of the blasts, Strategy& estimates that the bill stands at around $5 billion.

This figure excludes damage to public infrastructure, such as the port buildings and roads, and indirect economic impacts, such as export and supply chain disruptions, which are estimated at some $15 billion.

The report found a significant shortfall in funding for the reconstruction of Beirut. Distrust over the country’s leadership and the global recession at hand mean Lebanon faces a massive funding gap, it added.

On August 4, a large quantity of ammonium nitrate stored in Beirut port exploded. Approximately 2,750 tonnes of highly flammable substance – commonly used in fertiliser, and the main component in many types of mining explosives – had been abandoned without proper safety measures for the previous six years, following its confiscation by Lebanese authorities from the abandoned ship MV Rhosus.

The disaster killed roughly 200 people, wounding 6,000 more, as the blast sent shock waves through Beirut’s industrial waterfront into densely populated residential and shopping districts.

With the country’s unemployment rate surging past the 30 percent mark and the embattled central bank facing an internal audit to try and foster trust with the IMF, the explosion could not have come at a worse time for Lebanon.

The report said the infrastructure repair bill will cost more than $3.1 billion including over $1.8 billion to help rebuild housing and $865 million to help nearly 31,000 businesses impacted by the blast.

It added that the social impact of the disaster will also accumulate a cost of $555 million, with an estimated 31,000 houses now uninhabitable and around 13,000 households needing shelter, something which comes with a funding requirement of $30 million for 18 months.

The destruction of the country’s food supply has also left 300,000 people in moderate to urgent need of food assistance, something which will cost $215 million for one year.

Around $920 million in revenue will be lost by businesses in the aftermath of the port blast (based on a one-year window), with Lebanon’s retail scene to face the biggest hit. Around 38 percent of the total will come from shopping, while with eight damaged universities, the lucrative education sector has also been badly impacted.

Medawar, Rmeil, Saifi and Marfaa districts are most in need of urgent assistance, according to Strategy&. Rmeil alone suffered $489 million in property damage, including 14,000 impacted households, and 1,100 buildings.

Funding gap

While Strategy&’s analysis echoes that of the World Bank to some extent, it goes further in estimating the funding of Beirut’s recovery.

Regarding housing, for example, the generosity of those sending aid has been dwarfed by the size of the problem at hand. The UNHCR donated $35 million to shelter and protect the most vulnerable Lebanese, refugees, and migrant households in the coming months. Over $2 million was raised by public crowdfunding campaigns – with ordinary people managing to match the amount given by some of the world’s wealthiest corporations such as Google, Facebook, P&G, Pepsi and Chanel.

Despite several donations such as tonnes of glass being donated by the UAE and Cyprus for repairs and hundreds of shelters offered by the Lebanese community and hotels, of the $1.8 billion in costs incurred by the explosion, only a tiny portion has been realised.

Similarly, the announced pledges to help boost food security in Lebanon are worryingly underwhelming. With $215 million needed, countries such as Canada, the US, the UK, Australia, Denmark and Hungary have mustered $25 million in foreign aid to help, while USAID has added another $7.5 million.