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Land of Promise


Hasan Omar looks at the challenges and opportunities that exist for Palestinian entrepreneurs during the early stages and preincubation phase

We all know that during their business journey, entrepreneurs usually face many challenges. While, many of these challenges are common despite the economic sector, gender, the nature of the ventures, the maturity of the ecosystem and the geographical location, Palestine faces its very own set of obstacles. This article will attempt to shed the light on the challenges the Palestinian technological entrepreneurs are facing during the pre-incubation phase of their venture, and offer some possible solutions to ensure that entrepreneurial needs are met against the unique backdrop of the region.

Palestine is a small occupied country, with limited and controlled natural resources. The geopolitical and socioeconomic context is very complicated, and talents and youth are the real asset given these factors. The technology sector is promising due to the available qualified human resources and the huge numbers of talented graduates in West Bank and Gaza. The first business incubator was established / launched back in 2004. The Palestine ICT Incubator (PICTI ) and EBN is actively supporting SMEs development and filling a gap in the local ecosystem. It contributed considerably towards spreading the innovation and entrepreneurship culture in the country, and has also paved the way for others to enter this field. Currently, there are dozens of preincubation and incubation programmes and business acceleration initiatives working in this industry in Palestine. All gearing towards creating wealth in tough conditions.

During the pre-incubation phase, entrepreneurs usually suffer from a number of obstacles and challenges. As a result, few of them continue with their ventures and start -ups and progress to the point of real success. The reasons for these are as follows:

National innovation systems, related polices and regulations: there are huge efforts toward supporting entrepreneurs and SMEs development in Palestine. However, these efforts are fragmented and distracted and on an extremely ad-hoc basis. Needs dictate this must be a game of cooperation, coordination and integration. National systems and strategies should and will be developed by the Higher Council for Innovation and Excellence which was launched by the president last year. Vision and plans on the national level will support the concept of integration and enhance the level of cooperation between all players in different sectors.

Lack of business experience: Mostly and similar to many countries in the region, technology entrepreneurs joining the pre-incubation programmes are either university students or fresh graduates with no real business experience. The university-based pre-incubation programmes and centres of excellence are doing a great job in this regard by organizing training boot camps on business planning and entrepreneurship in general. Yet, it is not enough, and the concept and philosophy of entrepreneurship needs to be systematically embedded in the education system and curricula to create a generation that looks to starting their own businesses.

Funding opportunities: Currently there is a gap in the available funding options and mechanisms. Accessing these limited funds is not an option for many entrepreneurs. The research and development funds are almost not there due to the lack of the required and allocated financial resources either by the public sector or the universities. Some of the projects are actually R&D and university graduation projects which are not necessarily commercialized, which is par for the course. Although, with the lack of dedicated funds allocated for such research projects, the pre-incubation stage alone is not enough to create success stories and successful start-up companies out of these research and development projects.

Social, cultural and gender related challenges: In addition to the above listed challenges, a high percentage of female entrepreneurs don't continue with their projects, especially those that live in rural areas. Sometimes they are hindered by financial reasons, and often for social ones. Lack of motivation can also be a real drawback. Team building and fear of failure are also barriers for many entrepreneurs when it comes go starting their own business especially with the high level of uncertainty that goes with the territory. Literally speaking, in this case.

Centralisation: Similar to other countries, most of the high-tech firms are located in larger cities. It is a whole other challenge for entrepreneurs to take on when they are located in other areas, far away from the centre. It is not only due to travel and living issues and unaffordable expenses, but also due to the weak entrepreneurship context available in other districts.

Marketing and international cooperation: The beauty of this game is that the market for hi-tech start-ups, products and services is not only the local small market but, the entire globe. It must also be pointed out that the tough competition based on international and high quality standards which must be met is very doable. It has been proven by Palestinian professionals and talents in different occasions and many success stories that they are capable. But, what is not fair is that entrepreneurs in Palestine, during the pre-incubation stage, lack the opportunity to work with and practice the international standards due to many reasons. One of them is the absence of branches for international hi-tech firms. Branches and labs for Google, Intel, Microsoft for example would help a lot in enhancing the technical capabilities as well as the marketing and communications skills among youth and entrepreneurs. It will also indirectly enhance the level of innovation in the business ideas.

Investment: In addition to the above mentioned difficulties related to funding and access to finance, there is also another challenge with the available investment opportunities, either by local or international investors. With respect to regional and international investors, many of them are not aware about the available (and enormous) investment opportunities in Palestine. As a result, more efforts need to put in towards marketing the other side of the coin, and the reality of the Palestinian people against the current perception in some international circles that have come about as a result of the political context and related media influences and effects. However, it has been recently seen that social media has played a critical role in fixing this issue to some extent. The Palestinian Investment Promotion Law and related regulations are effective tools that help attract investors to bring their money to Palestinian entrepreneurs and their start-ups. However, extra efforts and marketing campaigns, as well as dissemination are much needed for such incentives to take root and flourish.

On the other hand, a high percentage of local investors and business people have been investing in real estate, construction and trade -related businesses for many years in this region and can be a possible funding option for entrepreneurs. Establishment of the Palestinian Business Angel Network would be a recommended tool to change cultural issues in this field and open up new channels of investment for start-ups. The proposed network should include the Palestinians diaspora - an asset that offers some potential.

The development of a culture of innovation needs to be cultivated and it needs to be done from very early stages. It needs to be seeded into the environment, as well as the education system in order for real change to happen. It is vital to introduce entrepreneurship courses into schools and universities that will impact students before they graduate. University based pre-incubation programmes can play a critical role helping create innovators who can hit the road running as they leave their student lives. This will not be achieved without actionable, implementable and affordable national plans, policies, strategies, regulations and vision. The localization of the programmes and the design of the initiatives, as well as their business model, will all be key to this success. 'Adoption' of international successful models will not necessarily work, but the 'adaptation' of those will work better, taking into consideration the Palestinian and MENA context and eco-system.

In the complex geopolitcal context that Palestine currently operates, the road to entrepreneurship can be bumpy, paved with problems that make the journey that much more difficult for aspiring start-ups to succeed. However, there is a need, that is matched by talent and ability to create a region that taps into the intellectual capital that exists to create wealth and to become a global example of good practice in innovation.

Published on 26-05-2014 00:00 by David Tee. 1413 page views

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