In addition to the common challenges with other countries in the Middle East, Palestinians have their own unique context with many demographic, socioeconomic and geopolitical challenges. Palestine is a small country with weak, small, limited and unsustainable economy. The economy is also highly connected to and controlled by Israel and dependent on the donor community. The market size is small, separated, divided and isolated. The PNA received international assistance in the amount of $2.4 billion in 2009 (UNCTAD 2010)[i]. Similar to the government, most development agencies including NGOs and CBOs are donor driven and dependent. The unemployment rate is among the highest in the region with an average of 25% and more than 30% of them are universities' graduates. Youth represents more than 50 percent of the population and according to the Palestinian Central Bureau of Statistics (PCBS)[ii], the highest unemployment rate is among the 20-24 age group. PCBS in 2012 also reported that 25.7% of the population lives in poverty or deep poverty, and around 25% are poor.
On the other hand, real economic development will not be achieved without political development as they are connected and should go in parallel. In addition to the political complicated track, the government's main concerns are securing the public sector wage bill on one hand and creating new jobs for hundreds of thousands who are unemployed and for thousands of youth and graduates entering the labor market every year on the other hand.
Palestinians believe in the knowledge based economy and its three main pillars: "Education, Research and Innovation". Also, in the micro, small and medium enterprises (MSMEs) as the secret toward sustainable development, better local economy and social life. According to EIB and ESCWA, knowledge and innovation are drivers of value creation and economic growth. Innovation is no longer restricted to technology, research and development and patents, but also management, business models, social and other aspects.
Therefore and as a tool, many incubation and acceleration programs and related initiatives were designed and implemented to support Palestinian entrepreneurs and small businesses. Though, the impact and the return on investment of such initiatives and efforts is still limited and intangible. We are not satisfied with the number of jobs created as well as the number and the size of the successful startup companies established directly or indirectly. The SME support is mostly fragmented, on ad-hoc basis, and donor driven. The SME strategy is not yet finalized as if it's going by nature and on its own without national clear vision and plans.
As an example, bank loans to SMEs represented only 6% of total loans in 2010 while it was 24% in Morocco and 16% in Lebanon.
The Report on the Implementation of the Euro-Mediterranean Charter for Enterprise[iii] by the European Commission (EC), the Organization for Economic Cooperation and Development (OECD), the European Investment Bank (EIB) and the European Training Foundation (ETF) is a effective tool and a good benchmarking platform. In 2008, the assessment was conducted based on the Euromed Charter for Enterprise, while in 2013 it was based on the implementation of the Small Business Act (SBA) for Europe. The final report of 2013 including the assessment of ten dimensions will be published during the first quarter of 2014. It is a great benchmarking platform to monitor and assess the improvements during the past five years as well as comparing Palestine results with other Mediterranean countries. Palestine ranking is very low in Dimension Eight: "Promoting Skills’ Upgrading and Innovation". This result was due to the lack of a "Policy Framework for SME Innovation" which supports innovative and high-growth enterprises and also to the absence of related national systems, regulations and strategies.
Another tool is the Global Innovation Index 2013[iv], Israel rank is 14 out of 142 which is the highest among the Northern Africa and Western Asia (NAWA) countries and classified as the only innovation leader in the region. On the other hand, United Arab Emirates ranked 38, Jordan 61, Tunisia 70 and Palestine is not there.
The Knowledge Economy Index (KEI) by the World Bank[v] is a third powerful tool to compare and monitor. Innovation is a sub-index of the KEI and is one of the four pillars of the Knowledge Economy (KE). Again, Palestine is not listed in the KEI 2012 ranking which shows that Israel is ranked 25 out of 145 and is one of the top 10 economies in the innovation pillar. Jordan ranking is 75, Bahrain is 43 and Tunisia 80.
Based on the above tools, indicators and simple analysis,
- The whole entrepreneurship and innovation eco-system in Palestine should be revised including the social, education, economic and other systems as one package.
- The private sector, local business angels, the government and also the Palestinian diasporas should play a critical role in this game.
- The proper coordination and cooperation between all stakeholders and players of different sectors on the scene is a must.
- This level of integration will not be achieved with the absence of a clear vision and agreed upon national strategies and agendas taking the Palestinian context into consideration.
Therefore, it is a priority and a must to have effective, actionable and implementable national strategies and polices such as: National Innovation Systems (NIS), Strategies for Women Entrepreneurship (WE), Long Life Entrepreneurship Learning (LLEL) and Business Incubators & Accelerators Strategies as well as Science & Technology Policies (STP). Then to benchmark these polices with those of other countries for enhancements and lessons learned purposes.
Without having such strategies, polices, plans, vision and leadership on the national level:
- We'll not go so far in this domain.
- The whole story will be left for and influenced by individuals with personal opinions, judgments and interests who are not necessarily experts and competent in this field.
- Also, we'll end up with more and more fragmented efforts, initiatives and donor driven programs competing with no real and tangible outputs which is the case now.
So, the question is: who will and should initiate the process and lead such efforts toward national related strategies and when?
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By: Hasan Omar - January 2014
Mr. Omar is an entrepreneurship, innovation, and incubation expert. He is a founding executive member of the first ICT incubator in Palestine in 2004 and its CEO for many years. He is the head of the innovation committee at the Engineers Association - Palestine and a board member at the Higher Council for Innovation & Excellence. Mr. Omar can be reached at +970-59-922-5092, Hasan.Omar2015@gmail.com
[i] http://unctad.org/palestine
[iii] http://ec.europa.eu/enterprise/policies/international/files/2008_report_charter_en.pdf
[iv] http://www.globalinnovationindex.org
[v] http://siteresources.worldbank.org/INTUNIKAM/Resources/2012.pdf
العمل الحر من خلال الانترنت وسيلة للتشغيل الذاتي وتوفير فرص العمل