Palestinian tech firms adapt to survive as war hits business

Before the Israel-Palestinian war, the women of the occupied West Bank-based tech non-profit Female Innovators and Investors of MENA (FINOMENA) had grand plans. Some were honing their coding skills ahead of a hackathon in partnership with Microsoft. Others were planning excitedly to travel to a networking event in Dubai where they hoped to impress potential customers and investors.

The women of FINOMENA were surfing a tech wave sweeping across the occupied Palestinian territories, boosting the economy and offering hope to digital pioneers who were using their skills to open a virtual window onto the world. But war changed everything, said Nadiah Sabaneh, managing partner at FINOMENA, which seeks to empower women in an often male-dominated sector through mentorships and training.

After the surprise Hamas attack on Israel on 7 October, and Israel’s subsequent bombardment and invasion of Gaza in an attempt to annihilate the movement, the already-tense security situation in the occupied West Bank deteriorated even further. At least 400 Palestinians have been killed by Israeli soldiers and settlers, with Israel regularly raiding Palestinian areas across the territory it has occupied since 1967.

OPINION: The untold story of the red chemise

As Gaza’s fledgling digital infrastructure was destroyed and some of its brightest tech talents were killed in the Israeli bombardment, software and hardware companies, start-ups and IT service firms in the West Bank also found business grinding to a halt.

The founder of one AI-powered start-up said that they were forced to declare bankruptcy and lay off 14 employees. “Literally no entity tried to help us in these difficult times; we didn’t get any support whatsoever,” the founder told the Thomson Reuters Foundation, speaking on condition of anonymity because of fear of repercussions.

A senior executive at a tech services company in the West Bank, also speaking on condition of anonymity because the group signed non-disclosure agreements with clients, said that their firm lost two new international projects because of the war.

“They think this area is unstable,” the executive said, referencing an “ignorance of geography” that meant international clients were not differentiating between Gaza and the West Bank, which are “separate geographical entities.”

Despite such setbacks, though, the West Bank’s tech community is pushing back by trying to find new ways of doing business. And there are hopes that the sector can buck the wider trend of economic slowdown across the Palestinian territories. “We are trying to outsmart our reality,” said Sabaneh.

A 2021 report by the World Bank — its latest on the digital economy in the occupied Palestinian territories — said that the tech sector contributed almost $500 million a year to the economy in added value, and accounted for almost three per cent of GDP in the West Bank and Gaza. Digital business connected Palestinians to new markets and the tech and services sectors outperformed others, recording more direct foreign investment and creating more jobs, the report pointed out. Digital technologies also allowed Palestinians to circumvent restrictions on the movement of goods, it added.

But then war broke out. In December, the International Labour Organization said 32 per cent of employment — equivalent to 276,000 jobs — had been lost in the West Bank since then. Moreover, the World Bank said in the same month that it expected the overall Palestinian economy to shrink by almost four per cent in 2023.

READ: Ireland condemns ‘propaganda campaign’ against UNRWA

Ibrahim Barham, the 58-year-old CEO of Palestinian hardware company SAFAD, said that the West Bank’s tech sector had always faced limitations because of the Israeli occupation, but that now it was much worse.

“This is the most difficult situation we have been through in our entire lives,” explained Barham. Even before the war, he noted, every piece of tech that was brought into the West Bank needed to be approved by Israeli authorities. Now, official permission was taking longer to process, driving up costs, while his engineers risked being attacked at Israeli checkpoints or by settlers while travelling around to do their work.

Asked about the effect of the conflict on tech firms, a World Bank spokesperson said in an emailed statement that the sector could prove more resilient than other traditional sectors, which require manual labour.

“Nonetheless, prospects for growth will depend on the ability of firms to access new business to compensate for lost business from Israeli customers and lower investor confidence as a result of political instability,” said the bank.

Some tech entrepreneurs are showing signs of this resilience, either by adapting their businesses or moving elsewhere. The founder of the AI-powered start-up moved the business to neighbouring Egypt and it has already signed two new clients and an investor. “I didn’t want to leave my home, didn’t want to leave my family, but I must,” the founder said in a phone interview.

The senior executive at the tech services firm said that the business was trying to save money by not replacing workers who resign, although there were no plans to dismiss employees. “Our sector is resilient and we won’t raise our hands [in defeat].”

According to FINOMENA’s Sabaneh, who said that the women in her organisation were sunk in depression at first and spinning around “like a tornado in a teacup”, she is also trying to find new ways to keep her members motivated. She holds online learning sessions where the women discuss the latest security and online challenges and figure out ways to help each other and showcase their work.

Donors are also back, added Sabaneh, and she has had talks with Palestinian government officials to unlock new areas of cooperation.

The hackathon is now back on track and FINOMENA’s mentorship programme is bigger and better than ever, with more than 250 women benefiting, she added. “If we wait for things to get better to get to work, we would never work.”

OPINION: Humanitarian aid is a genocidal tool in the hands of Israel and the US

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.