Palestinian tech firms adapt to survive as war hits business

Palestinian businesses already faced hardships prior to the war, but despite setbacks, an organization for women in tech said it is still finding ways to keep its members motivated

• By Nazih Osseiran
  / Thomson Reuters Foundation, BEIRUT

Before the Israel-Hamas war, the women of the West Bank-based tech nonprofit Female Innovators and Investors of Middle East and North Africa (FINOMENA) had grand plans.

Some were honing their coding skills ahead of a hackathon in partnership with Microsoft Corp. Others were excitedly planning to travel to a networking event in Dubai, United Arab Emirates, where they hoped to impress potential customers and investors.

The women of FINOMENA were surfing a technology 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.

Photo: Reuters

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 Hamas’ shock attack on Israel on Oct. 7 last year and Israel’s invasion and bombardment of Gaza to annihilate the militant group, the already-tense security situation in the occupied West Bank deteriorated even further.

Violence has surged with at least 400 Palestinians killed in clashes with Israeli soldiers and settlers, and Israel regularly raiding Palestinian areas across the territory it occupied in 1967.

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

The founder of an artificial intelligence (AI)-powered start-up said 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 said, speaking on condition of anonymity because of fear of repercussions.

A senior executive at a tech services company in the West Bank, speaking on condition of anonymity because the group signed nondisclosure agreements with clients, said 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, the West Bank’s tech community is pushing back by trying to find new ways of doing business, and some hope the sector can buck the wider trend of economic slowdown across the Palestinian territories.

“We are trying to outsmart our reality,” Sabaneh said.

A 2021 report by the World Bank — its latest on the digital economy in the occupied Palestinian territories — said the tech sector contributed almost US$500 million a year to the economy in added value and accounted for almost 3 percent 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 said.

Digital technologies also allowed Palestinians to circumvent restrictions on the movement of goods, it added.

Then war broke out after Hamas militants killed 1,200 people and seized more than 250 hostages in Israel.

Since then, more than 30,000 people have been killed and more than 72,000 wounded in Israeli attacks on Gaza, the strip’s health ministry says.

In December last year, the International Labour Organization said that 32 percent of employment — equivalent to 276,000 jobs — had been lost in the West Bank since the war began.

That same month, the World Bank that it expected the overall Palestinian economy to shrink by almost 4 percent last year.

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

“This is the most difficult situation we have been through in our entire lives,” he said, adding that even before the war, every piece of tech that was brought into the West Bank needed to be approved by Israeli authorities.

Now, official permissions were taking longer to process, driving up costs, while his engineers risked being attacked at Israeli checkpoints or by settlers while traveling to do their work, he said.

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

“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,” the statement said.

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 neighboring Egypt and they have 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 telephone 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, the executive said.

Sabaneh, who said the women in her organization were sunk in depression at first and spinning around “like a tornado in a teacup,” 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, Sabaneh said, adding that 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 program 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,” she said.

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