[OPINION PIECE] Unlocking the Potential of Palestine's Entrepreneurial Ecosystem

Entrepreneurship has become one of the main building blocks of healthy economies around the world. In today’s day and age, entrepreneurs and SMEs have become vital for economic growth and job creation, as well as catalysts of innovation and market competition. In fact, the World Bank reports that SMEs in the MENA region accounted for 80 to 90 percent of formal sector enterprises, illustrating the impact and potential SMEs and entrepreneurial ventures can have on any economy.

The importance of Entrepreneurship in Palestine

At 31 percent, Palestine suffers from one of the highest unemployment rates in the world. This breaks down to 52 percent in Gaza and 19 percent in the West Bank. And the PCBS reports that nearly one-third of the Palestinian population is between the ages of 15-29, this means that as of 2018, 41 percent of Palestine’s youth are unemployed, and for recent graduates, this number has hit a staggering 55 percent.

According to the World Bank, 47 percent of entrepreneurs are more likely to expand their workforce as opposed to 29 percent of large corporations. As a result, Palestinians are tapping into the power of entrepreneurship to create a world of new opportunities.

What Makes a Thriving Entrepreneurial Ecosystem?

According to the World Economic Forum (WEF), a nascent ecosystem requires entrepreneurial support organizations that not only provide access to markets, human capital, funding, and finance but organizations that are in tune with the needs of their emerging self-starters. Government intervention through strategic policy-making and collaborations with private sector actors can transform a stagnating entrepreneurial ecosystem into a thriving one.

Palestine’s Entrepreneurial Ecosystem: An Overview

Palestine’s nascent entrepreneurial ecosystem spans 15 major cities across the West Bank and Gaza. Yet with over 200 key actors in play, the majority of support organizations are located in Ramallah, which has since become the heart of the Palestinian entrepreneurial ecosystem.

But how effective are Palestine’s support organizations in anticipating the needs of the country’s growing ecosystem? With an ecosystem that is dependent on donor funding, the lack of effective government policies that have negatively affected the entrepreneurial sociocultural environment, the country’s ecosystem is struggling to maintain sustainable growth.

With branches across many Palestinian cities, the majority of support organizations are financial-based, ranging from a variety of national banks to microfinance providers. In terms of support organizations that provide incubation and acceleration services, mentorship, and training programs, there remains a lack of coordinated efforts between private and public actors resulting in major gaps within the ecosystem itself. Further, in many cities across Palestine, not only is a framework of support in its earliest stages but in many cases, non-existent. The entrepreneurial ecosystem is only as good as the sum of its parts, rendering Palestine’s as underdeveloped, uncoordinated, and subject to glaring coverage oversights, leaving the system as a whole underdeveloped.

Donor funding is a major roadblock for existing entrepreneurial organizations that rely on external means to keep their support programs alive. In a report published by media outlet Wafaa, 70% of incubators are dependent on international funding, 20% depend on private or public sector support, while only 10% rely on incubation revenues. This reality extends beyond local accelerators and incubators, and incorporates the major of support organizations, illustrating the fact that Palestine’s emerging ecosystem struggles with sustainability.

Government policies also play a major role in not only helping emerging self-starters but in fostering a culture of innovation and entrepreneurship. In Palestine, there remains a lack of coordinated efforts by government organizations, to provide incentives and the human capital required to promote entrepreneurship and the emergence of quality startups. Without access to training programs and unaware of the ecosystem as a whole, emerging entrepreneurs must self-navigate a disparate and underdeveloped ecosystem, or in many cases look beyond Palestine, for the support and markets they need to succeed.

And while several startups are emerging from Palestine, it becomes more a question of how these startups are impacting their local economy, what are their viability rates like, and how likely are they to compete in regional or international markets. To date, few startups have managed to expand beyond borders and integrate into international markets.

One startup that has made significant strides and has since expanded to markets in Latin America, is Gamiphy, a user engagement platform that develops fully tailored gamification strategies for their customers. Another, Mashvisor, operates exclusively from Palestine, while being solely focused on the U.S real estate market, ultimately contributing to the Palestinian economy while providing a countless number of jobs. However, other such examples are few and far between and attests to the lack of quality support available to local startups, and the lack of positive government policies that reinforce entrepreneurship.

For Palestine to become a home to entrepreneurs and develop a capable ecosystem, a more collaborative and coordinated self-aware approach needs to be taken. One that brings together stakeholders across social and economic institutions from both the private and public sector and that ensures the continuous supply of entrepreneurs and innovators to the economy. Strategies that focus on cultural transformation and policies that inspire development and builds the capacity of both individuals and enterprises to create sustainable ventures.

This article has been supplied by MENACatalyst - Palestine based non-profit working to tap into the potential of the diaspora to enhance Palestinian led innovation, industry, and collaboration on a global scale.

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