A National Economy — Without the Nation

West Bank entrepreneurs are building businesses in case peace breaks out

By Stacy Perman / Ramallah Monday, Oct. 18, 2010
    • Yoray Liberman for TIME

    Shoppers at the new mall in Nablus.

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    Last year, Shkukani obtained three more loans totaling $500,000 to expand his supplements business and to launch a snack-food distributorship, selling items like imported potato chips. More recently he opened Liberty, a used-car dealership. "Loans are for responsible people," he says. "We help the economy for our country by making a successful business. This is how it is around the world."

    Emblematic of the current commitment to entrepreneurialism, the PIF, along with Abraaj Capital, a Dubai-based private-equity firm, announced a $50 million fund that will focus on SMEs. "We believe that the PIF investment program can have a huge transformative effect on the economy," says Mustafa. "Moreover, the SME fund is great because the benefits exceed the funding to include the know-how that comes with it from the fund management." The PIF plans to invest $500,000 to $7.5 million in companies with less than $50 million in revenue or fewer than 250 employees or both.

    It's an acceleration for the PIF, which for five years has very quietly partnered with the Middle East Investment Initiative (MEII), a Washington-based nonprofit formed specifically to stimulate the region's fragile economies. MEII has been fueling ventures in the West Bank with a loan-guarantee program in excess of $200 million. The process of vetting the loans is heavily monitored not only for a business's viability but to ensure that the money is not going to finance terrorist groups, money laundering or weapons purchases. In the past 21⁄2 years, MEII has approved more than 322 loan applications totaling more than $63 million in guarantees. While the average loan is about $120,000, the largest, one of $16 million, went to the first competitive cell-phone system in the West Bank.

    This being the Middle East, there is always a wrinkle. Because of enduring distrust of the U.S. and cynicism regarding aid, the process is managed so that applicants have no idea their loans are being supported by a third party — namely an American organization.

    The IT Plan
    Behind glass on the third floor of the Burj office tower, 30 people are pressed into a small conference room. They are attending a seminar on open sourcing conducted by a representative from Intel and sponsored by the Palestinian Information Technology Association, better known as PITA. On the same floor, six start-ups share space as part of the Palestine Information and Communications Technology Incubator, or PICTI. There, Emad Ahmad, a filmmaker from Rafah, Gaza, is developing a program to digitize film archives. Emad Ammouri, who earned a master's in computer science from Texas A&M; University and later worked at IBM and Timex, is creating an Internet toolbox to make, as he says, "microchip-embedded systems more friendly." Ammouri has also begun teaching innovation courses to high school students and launched an innovation camp for fifth-graders. "We can do it," he says. "Why can't a Palestinian company innovate for the world?"

    With 4,000 engineering graduates each year and a trickle of returning expats, many are looking at tech as a potential economic engine. According to a recent study, the Palestinian IT sector grew from roughly $130 million in 2008 to $231 million in 2009. Significantly, because tech is not dependent on physical movement, it is somewhat insulated from checkpoints, closures and political unrest.

    After earning degrees from the New Jersey Institute of Technology, Ala Aladdin returned to the West Bank in 1996 and started a company, Bailasan (which means flower in Arabic), a Web-development and graphic-design firm. In 1999, Aladdin helped found PITA with a group of 24 companies to lobby for the fledgling sector. Today there are more than 100 companies in PITA, and one of its major accomplishments has been to bring the world's biggest tech companies to the region. "It was important to transfer know-how and build infrastructure," says Aladdin. Representatives from companies like Microsoft began to arrive, cautiously, offering workshops. Eventually, those workshops expanded into weeklong conferences. But tech leaders wanted more than seminars; they wanted real investment.

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