Despite Gaza war, Palestine’s tech sector remains an avenue of hope and opportunity

A resilient sector

The sector remains resilient, and active efforts are already being made to help sustain it, which deserves recognition and investment.

The technology industry has been one of the ways in which skilled workers in the West Bank and Gaza have been able to make a living in a context where economic opportunities are constrained because of the Israeli occupation.

Industries like manufacturing require the availability of buildings to house working spaces, often expensive machinery, and the ability of workers to move from their homes to the workplace. Israeli-imposed restrictions on the movement of Palestinians in the occupied territories, as well as on the flow of goods, have limited the growth of such industries.

Agriculture is another sector that is not easy to run under occupation due to the complexity of the supply chain, among other challenges.

Working in the technology sector as a software engineer or developer, on the other hand, does not require a significant physical infrastructure or mobility. A skilled technology expert only needs an internet connection and a laptop to work with global clients without needing to leave their homes.

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A report by the American non-governmental organisation Anera (American Near East Refugee Aid) published in 2022 says that 97% of the Palestinian technology sector operates without a physical working space.

Against all odds

Israel has tried to curb such opportunities for Palestinians in the occupied territories by refusing to allow those territories to get a 4G internet connection. Israel controls the internet and communications infrastructure in the occupied territories.

Despite a US administration announcement that 4G would be rolled out by the end of 2023, the West Bank has access to 3G only, while Gaza is limited to 2G. And yet, despite the much slower internet connection, many Palestinians have trained in technology and have used their qualifications to generate income from implementing projects for international clients.

Although achieving the skills required to work at this level is hard, increasing numbers of Palestinians have managed to train and work in the sector. The Anera report estimates that the value of the ICT sector in Palestine doubled between 2008 and 2018.

During the recent COP28 in Dubai, I attended a panel discussion about the Palestinian entrepreneurship ecosystem moderated by Rateb H. Rabi, Chief Executive Officer of the Bank of Palestine's non-profit business incubator, Intersect Innovation Hub.

The event featured Palestinian and international speakers ranging from investors to NGO workers. One of the speakers, Allie Burns, runs an American company called Village Capital, which is the world's largest company supporting impact-driven early startups.

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The company connects entrepreneurs with investors and mentors to build viable entrepreneurship ecosystems. Palestine is one of the regions that Village Capital began working in before the war.

During the COP28 event, Burns was keen to confirm that Village Capital's commitment to work in Palestine has not changed despite the war and to highlight that it remains a place of opportunity for impact investment.

Stakeholder confidence

Such a level of confidence in the Palestinian tech sector is not just driven by stakeholders wanting to do good. Ultimately, business is about seeking profitability and success.

One of the speakers at the above-mentioned event, Habib Hazzan, emphasised that international investors do not approach freelancers and tech startup companies in Palestine simply because they offer value for money due to the lower salaries and costs in Palestine compared to some other places in the world, but because they offer a high return on investment (ROI).

Hazzan—Managing General Partner of Ibtikar Fund, the only venture capital fund in Palestine, which was established in 2016—explained that because the local technology market in Palestine is very small, Palestinian startups have to, from the outset, benchmark themselves at the regional if not international level in terms of their quality.

If the quality they offer is not at least on par with that of peer companies elsewhere in the Middle East, they will not attract international investors. These market conditions have made sustainable Palestinian startups attractive to outside companies and founders.

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It is not just the private sector itself that is investing in Palestinian startups. The World Bank's International Finance Corporation (IFC), which describes itself as "the largest global development institution focused exclusively on the private sector in developing countries", also sees the digital economy in Palestine as an opportunity for growth.

In 2022, the IFC highlighted in a report the sector has unrealised potential that, if appropriately harnessed, can lead to more job creation, increase employment opportunities for women, and improve economic growth in Palestine.

International NGOs are also involved in supporting the sector alongside multinational corporations and private companies.

In 2011, Palestine's first and only tech startup accelerator — a programme to train and strengthen the capacity of startups to make them attractive for investors — was established by the American humanitarian NGO MercyCorps and Google and has since grown to include collaborations with other major corporations like Microsoft and Amazon. This startup accelerator, called Gaza Sky Geeks, has trained 5,000 coders and developers across Gaza and the West Bank.

Offsetting the effects of war

Both Palestinian and international stakeholders in the Palestinian tech sector are actively working to support the industry during the ongoing war. Israeli bombing has destroyed the headquarters of Gaza Sky Geeks in Gaza, and its team there is currently unable to work.

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Gaza Sky Geeks has handed over all projects that its Gaza team was responsible for delivering to its network in the West Bank so that the relationship between Palestinian workers and international clients is maintained. It is creating a compensation mechanism for its Gaza team to alleviate their loss of income.

Ibtikar Fund is working with Intersect Innovation Hub to create an emergency startup fund, which is currently pitched to generate half a million US dollars in investment funds for Palestinian startup companies. The emergency fund initiative remains open to contributions from any individuals or companies interested in investing in Palestinian startups.

During the COP28 event on the Palestinian entrepreneurship ecosystem, Alan El Kadhi, director of Gaza Sky Geeks, reminded the audience that despite the widescale destruction in Gaza, the tech sector's need for minimal physical infrastructure means that it is likely to recover rapidly after the war.

The combination of resilience, talent, and opportunities in the Palestinian technology entrepreneurship ecosystem makes Palestine's tech sector one of the crucial avenues for helping economic recovery and growth in Gaza and the West Bank.