Sam Bahour, 31 Oct 2010
Palestinian Prime Minister Salam Fayyad will most likely cut a ribbon; a handful of government officials will be jockeying for camera time to claim economic leadership; major multinationals will compete to get their logo in the limelight; international donors, like USAID, DFID and the World Bank will be prominently featured and the media will eat all of this and regurgitate it, with little or no real analysis, as economic development toward statehood. This is all a probable scenario in the upcoming Palestinian information and communication technology (ICT) sector’s premier annual public event, EXPOTECH Technology Week 2010.
The real story however will be embedded in the exhibition’s booths, in the people who are struggling to survive under a brutal and prolonged Israeli military occupation while keeping their eye on the prize: building an information technology sector that has the potential to be a pillar of a future Palestinian state while in the meantime providing sustenance under the distress of occupation.
This exhibition is not about growth; it is about survival.
Palestine’s ICT players are many but the key to this sector is its knowledge-based resources. The human resources that feed the sector are a mix between products of Palestine’s higher education system and Palestine’s diaspora and ex-pat community who have returned home during the past two decades.
Palestinian universities have been weathering crisis after crisis ever since Israeli occupation began in 1967. In the mid 1970’s university presidents and staff had to deal with being deported from their homes by Israel; in the late 1980’s several Palestinian universities were closed for years on end and hundreds of staff and students were arrested by Israel; in the 1990’s, with the signing of the Oslo peace accords, what was supposedly a paradigm shift toward independence turned out to be a reshuffling of the occupation with a new layer of bureaucracy called the Palestinian Authority (PA). Since the year 2000 Palestinian professors and students have been randomly blocked by Israeli checkpoints and closure regimes from reaching their classrooms and continue, all the while, to be arbitrarily harassed, humiliated and arrested.
More recently, how higher education institutions in Gaza can sustain their existence under Israeli siege and constant shelling from the air, land and sea is a story in itself and will surely be noted in tomorrow’s history books.
In spite of this bitter reality, Palestinians persevered and held on to education like there was no tomorrow. This steadfastness in the face of incredible odds should not be underestimated. In the midst of all of this chaos, universities struggled to attain their fair allocation of the PA budget to meet their payrolls, retain their teaching staff and adjust their offerings to meet the rapidly changing market needs. For better or for worse, this is the foundation that the information technology sector of Palestine stands on.
Those driving Palestine’s occupied economy are also key. Thus far, the donor community, by virtue of its funding abilities, is the back-seat driver of the entire economy and is in structural control. The U.S., EU, World Bank and the like are micromanaging many sectors in Palestine; the ICT sector is not an exception.
Intervention comes in many shapes and sizes and, over time, develops its modalities. What started nearly two decades ago as charitable assistance has since moved to grants managed by each donor country’s private sector firms. Over time, and with the need to navigate through a political minefield, assistance to the sector took a new shape: partnerships with local civil society. Even multinational corporate social responsibility venues started playing a major role.
A growing number of Palestinian software development firms and service providers are reaching out to global markets, some benefiting from this international support and others on their own. Hidden in the alley ways of Palestine’s economic landscape are Palestinians from the ex-pat community and diaspora who are linking local engineers to global markets.
Firms like gSoft Technology Solutions (www.gsofttech.com), one of the leading software development companies in Palestine which provides outsourcing services to leading American companies specializing in the semiconductor, solar, insurance, medical, real-estate and mobile markets in the U.S., is a prime case in point. gSoft also builds and globally markets mobile and advertising products and services. This firm highlights the organic link that the Palestinian diaspora can play in opening up markets for local firms to serve.
Another local success story is Bisan Systems (www.bisan.ps). This firm has been providing accounting software services to the lion’s share of the Palestinian market for over 22 years. In keeping with the times they now provide all of the occupied territory with a new version of their Java-based, multilingual, online accounting application in an application service provider model. The firm is also providing the accounting system plumbing behind some of the main elements of the Palestinian Authority’s institutional financial reform efforts and is receiving rave reviews by international organizations like the World Bank. This is another local success story—ready, able and willing to compete on a regional and global scale. The examples are many.
Over the years many multinational firms have dabbled into Palestine’s ICT sector as well. At one point TIMEX had a team of Palestinian developers working as part of their global research and development network to develop new digital watch software. Today, HP and Google are just two more examples of firms on the ground in Palestine.
The most promising of the multinational experiences has been a three year commitment from CISCO’s CEO John Chambers, which is due to expire at the end of this year. CISCO has hinted that they are more than pleased with the investments they have made in Palestinian firms. The sector anxiously awaits a comprehensive review of the $10 million that was invested by CISCO in order to build on this high profile platform for other multinationals to follow suit.
The convener of the upcoming high-tech exhibition is the Palestinian Information Technology Association of Companies (PITA), of which my consulting firm is a proud member. PITA was founded in 1999 by a group of Palestinian entrepreneurs who wanted to create a non-governmental body to defend the interests of the ICT sector. Operations began in the city of Ramallah in the West Bank with one employee and a paid member base of 25 Palestinian ICT companies.
PITA can safely claim to be the most active Palestinian trade association, both on and offline. During the tough years of the second Intifada, PITA grew and today represents 100 ICT firms (29 of them based in Gaza)—everything from hardware distributors, software development firms, office automation vendors, internet service providers, telecommunications, IT consulting, IT training and related businesses. This growth and member base diversity exemplifies the dynamism of this sector and reflects its tremendous potential.
The newest addition to the sector has been the establishment of several university-based Centers of Excellences dedicated to incubation services to capture a pipeline of ideas emerging from Palestine’s youthful population.
Even the Palestinian Authority itself, at least in the West Bank, has started to finally get its act together and make progress on several long standing issues that have held back the sector, such as opening the telecommunications market for competition.
Capital in Action
The investment leadership in the sector has also become richer and more diverse in recent years. Today Palestine is proud to host several new private equity funds that are open to ICT investments. Abraaj Capital, the region’s biggest private equity group in the Middle East, North Africa and South Asia, has partnered with the Palestine Investment Fund, Palestine’s sovereign wealth fund, to launch Palestine’s branch of the Riyada Enterprise Development by way of a $50 million private equity fund. Abraaj Capital Group, the parent of Riyada Enterprise Development, was a recent recipient of $150 million in financial support from the U.S.’s Overseas Private Investment Corporation (OPIC) to expand its efforts in the MENA region.
Massar International, one of Palestine’s emerging economic powerhouses, has recently received $30 million financial support from OPIC to launch the Siraj Palestine Fund I, another private equity fund.
Some funds have tried to bury the political complexities of managing a matrix of interests in Palestine, but others have dealt with the political complexities head on. For example, as reported in America.com, the Aspen Institute “has several projects designed to encourage Middle East entrepreneurship. It has played a key role in organizing the Middle East Venture Capital Fund, which is managed by Israeli businessman Yadin Kaufmann and Palestinian entrepreneur Saed Nashef. Backed by the European Investment Bank, Cisco Systems Inc., Intel Corporation and other contributors, the fund has $50 million to fund high-growth, export-oriented ventures in information technology.”
The UK-based aid and development agency Mercy Corps recently reported in a press release that it “received a major international award for its work to support Palestinian information and communication technology (ICT) companies…They won the prestigious Digital Opportunity Award for their programme building links between Palestinian and Israeli ICT companies as a step towards peace in the region…[and]…in recognition of their ‘remarkable and successful’ work in building closer business relationships between Palestinian and Israeli companies. The programme involved an extensive awareness-raising campaign and proactively building business relationships, through meetings and the launch of a new website [see the Outsource to Palestine website at www.outsource2pal.com] and report , all aimed at promoting the capabilities of the Palestinian ICT sector to the Israeli and international market.”
Several new private equity and venture capital funds are also in the pipeline. Thus, one can see a clear building of the needed investment infrastructure. But to be honest to Palestine’s experience, it was never the hard infrastructure which was cause for concern, but rather the soft infrastructure—that which may be called the investment eco-system—that has hindered our progress: things like freedom of movement of people and goods, the right to engage in cross border trade without Israeli restrictions, a telecommunications network which is not forced to go through an Israeli operator and the like.
The rigorous international intervention to support Palestine’s ICT sector is surely welcomed; however, it would be meaningless if it was not accompanied by concentrated efforts from donor states to remove—not maneuver between—Israel’s illegal actions that hamper our sector’s development.
A Real Display of Resilience
Palestine’s EXPOTECH Technology Week 2010 has all the trappings of any world class exhibition. It will be the first event to be held in Palestine’s first 5-star Movenpick Hotel in Ramallah. A parallel venue in Gaza is also planned for those not permitted by Israel to attend. Aside from the business to business meetings, an array of workshops will be held on IT Business in Palestine, Telecommunication and Broadband, Technology Entrepreneurship, Technology Trends, e-Government Initiative, Technology Financing, Strategies to Grow the ICT Sector, Technology/Innovation Marketing and IT Education. If one did not know better, the exhibition agenda looks like one from any free market anywhere in the world. However, we do know better.
In the face of the systematic Israeli stifling of our economy, our technology entrepreneurs are putting on a show of Palestinian business resilience like no other. It can be viewed as an example of a battered people, proudly standing up at the podium of a globally vibrant sector, and screaming at the top of their voice that we are a people yearning to be free, yearning to compete in a global economy. We are a people that have kept abreast of our sector’s developments across the globe even as we find it hard to move from city to city in our own homeland.
The exhibition will physically bring together West Bank Palestinians, Jerusalemites, a few Gazan Palestinians and Palestinians from the Diaspora. It will be a symbolic sign of economic unity, albeit not fully complete. Those Palestinian technologists that are dispersed throughout our refugee community will be missing. Yet other loved ones from our sector who are currently being imprisoned by Israel will also be missing. But in spirit all will be present and all will be showing a side of Palestine that is rarely seen—a Palestine that can contribute to human knowledge; a Palestine that can improve human well being; and maybe more than anything else, a Palestine that is giving countries of the world yet another chance to uphold their obligations as signatories to the Fourth Geneva Convention and to remove the misery caused by the dirty boot of Israeli military occupation being on our necks for so many years.
(Visit this display of genuine Palestinian business resilience at www.expotech.ps.)
Sam Bahour is a Palestinian-American business consultant living in the Palestinian city of Al-Bireh/Ramallah in the West Bank.
(A version of this article was first published in Arab News: http://arabnews.com.)