With nearly half of Palestinian firms expected to shrink by almost 50% in production and sales and lay off 24% of their employees because of the COVID-19 impact, the World Bank yesterday granted an additional $9 million to the ongoing Innovative Private Sector Development Project to foster the resilience of innovative start-ups and Small and Medium Enterprises (SMEs) through financial and technical assistance, according to a World Bank press release.
“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. Hence, the World Bank’s response to ensure business continuity and job preservation is critically important especially for youth and women affected by the pandemic,” said Kanthan Shankar, World Bank Country Director for West Bank and Gaza.
The scaling up of the project will support the survival and recovery of firms during the COVID-19 crisis. The financial support will be based on business diagnostics of beneficiary firms to determine the key needs. In the short term, it will address liquidity constraints for a period of three to six months and primarily cover working capital needs to meet short-term obligations such as salaries, rent, and technology upgrades.
The pre-investment grants will be expanded from $30,000 to $50,000 per beneficiary in order to enhance and accelerate the capabilities, productivity, and growth of start-ups and SMEs with medium to long-term growth potential. In addition, market access grants will be also used to stimulate new product development and expansion to regional and international markets.
The co-investment grants will help firms raise private capital by de-risk investors and encouraging them to spread capital across more investments in order to benefit a larger number of Palestinian firms. The maximum amount for co-investment grants will be increased from $100,000 to $350,000 to better support more mature firms.
“Under the increasing pressure of market and client access constraints, the use of technology and digital platforms is an important crisis mitigation strategy during COVID-19 and future shocks. 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. While the project focuses on innovative startups and SMEs, women-led businesses will be strongly encouraged to apply and are eligible for a higher co-financing percentage,” said Iulia Cojocaru, Senior Private Sector Specialist.
The grants will also include technical assistance by international and local experts to maximize the impact and absorptive capacity of the grants, such as measures to quickly adopt remote work technologies, access markets virtually, mitigate supply chain disruptions, and prepare business continuity plans, said the press release.