The World Bank granted an additional $9 million to the ongoing Innovative Private Sector Development Project, which aims to support start-ups and small and medium enterprises through financial and technical assistance.
The $9m grant will address companies’ liquidity constraints for three to six months and primarily cover their working capital needs to meet short-term obligations such as salaries, rent and technology upgrades, the statement said.
Nearly half of all Palestinian firms are expected to see a decline of about 50 per cent in production and sales and lay off 24 per cent of their employees due to the impact of Covid-19, the Washington-based lender said.
“The Covid-19 crisis has severely affected the private sector in an already weak Palestinian economy. SMEs and start-ups are now experiencing serious capacity constraints and need financial support to curb layoffs and avoid bankruptcy,” Kanthan Shankar, World Bank country director for West Bank and Gaza, said.
The World Bank’s response to “ensure business continuity and job preservation is critically important, especially for youth and women affected by the pandemic”.
This move follows the World Bank's recent grant of $20m to improve access to high-speed broadband services in Palestinian territories. The Digital West Bank and Gaza Project will allow the use of e-services and help people conduct business online, the lender said.
Palestine's gross domestic product is estimated to have contracted by 8 per cent in 2020, according to the World Bank.
The scaling up of the IPSD project will support the survival and recovery of companies during the Covid-19 crisis, the statement said.
The main objective of the initiative is to improve economic opportunities for individuals and companies in the West Bank and Gaza Strip by developing the entrepreneurship ecosystem.
The World Bank said financial support will be based on business diagnostics of beneficiary companies to determine their key needs.
The pre-investment grants will be increased from $30,000 to $50,000 per beneficiary to improve the capabilities, productivity and growth of start-ups and SMEs with medium to long-term growth potential. Companies will also be encouraged to use market access grants for new product development and expansion to regional and international markets.
Meanwhile, co-investment grants will help companies raise private capital. The maximum amount for co-investment grants will be increased from $100,000 to $350,000 to better support more mature firms, the lender said.
“The Palestinian entrepreneurship and innovation ecosystem are still nascent and needs all the support to maintain its accelerated growth path we have witnessed in the last years,” Lulia Cojocaru, senior private sector specialist at World Bank, said.
“While the project focuses on innovative start-ups and SMEs, women-led businesses will be strongly encouraged to apply and are eligible for a higher co-financing percentage.”
The grants will also include technical assistance by international and local experts to maximise its impacts.
It will help companies to quickly adopt remote work technologies, access markets virtually, mitigate supply chain disruptions and prepare business continuity plans, the World Bank statement added.