The World Bank is calling on Israel to remove restrictions on telecoms and internet services in the occupied West Bank and the Gaza Strip to boost the Palestinian digital economy, address soaring unemployment and ease access to global markets.
The Palestinian digital economy has failed to reach its full potential, making investments in ICT sectors crucial, particularly during the current Covid-19 crisis when many local businesses have moved online, the Washington-based lender said in its latest Palestinian Digital Economy Assessment report.
“Investing in the Palestinian digital economy is more important than ever. Not only does it enhance its competitiveness and access to the global markets, providing jobs and a source of fiscal revenue, but it has also become vital in times of crisis," said Kanthan Shankar, World Bank country director for West Bank and Gaza.
Ranked below the average of other Arab countries in the World Bank’s Mena Tech Digital Economy Assessment, the digital transformation in West Bank and Gaza has been relatively slow in recent years amid Israeli-imposed restrictions on digital access. The West Bank and Gaza are below the developing country average in broadband penetration rate, the global ICT Development Index shows.
Israeli restrictions on ICT equipment imports and mobile internet speeds ― currently limited to 2G in Gaza and 3G in the West Bank, while Israel is introducing 5G tech for its citizens — have been a "major impediment" to the establishment of digital infrastructure, connectivity and high-speed broadband access, the Washington-based lender said. These measures have delayed network connectivity within the Palestinian territories and with the rest of the world.
The World Bank report called on the government of Israel to allocate the needed spectrum for Palestinian 4G and 5G deployments before completing 5G deployments in Israel.
Strengthening the Palestinian digital economy will require a sustainable political resolution with the government of Israel in order to remove current restrictions, the World Bank said.
The multilateral lender also called on the Palestinian Authority (PA) to execute internal policy reforms and invest financial resources for a full-fledged digital transformation of the economy.
"Palestinians have all the capabilities needed to leapfrog into the digital economy. Development of the digital economy is among the PA’s national priorities. It is thus important to ensure continued strong political leadership on the digital agenda to facilitate institutional and cross-sector coordination,” Mr Shankar said.
The PA should consider regulatory reforms for strengthening competition in the market, updating the law on e-transactions and developing the laws on consumer protection and cyber security, the World Bank said.
The report also recommends establishing an inter-ministerial committee on digital development, ensuring institutional co-ordination and mobilising resources for priority sectors.
"Increased investment and adoption of digital financial services is crucial to take full potential of the digital age," the report said.
Cash and cheques still dominate the economy and e-commerce sales continue to operate mainly through cash-on-delivery.
The report said increasing adoption of digital payments can vastly improve the efficiency of government agencies and digital businesses and ease the everyday life of Palestinians.
Digital transformation will also require upgrading the skills of Palestinians and supporting the growth of digital businesses, the World Bank said.
The Covid-19 pandemic has accelerated the demand for digital skills as more businesses and PA agencies have started using digital services.
Improving digital skills will help in updating the curriculum and teacher training, and forming stronger ties between tertiary educational institutions and industries, the report said.
Digital businesses can also create new jobs in Palestine, of whom 26.4 per cent, or about one in every four, were unemployed in the second quarter of 2021. The unemployment rate stood at 16.9 per cent in the West Bank and 44.7 per cent in Gaza.
There is also a gaping gender divide in unemployment: only 17 per cent of women participate in the labour market, compared with 68 per cent of men, and the women’s unemployment rate at 42 per cent is almost double the unemployment rate for men, said the World Bank.
"Promoting the growth of digital businesses will require support programmes to increase international market reach, enhance the capacity of support organisations [such as incubators and venture capital funds] and strengthen access to finance," the World Bank said.