From Crisis to Opportunity:Leveraging Digital Economy Tools to Support Economic Recovery of Palestinian Women-led MSMEs

July 1, 2020

Source: UN Women’s survey results on the impact of COVID-19 on Palestinian women-led MSMEs

COVID-19 delivered a major negative shock to the socio-economic development in the State of Palestine. With a decline of GDP predicted by the Palestinian Monetary Authority (PMA) as 14% in 2020 compared to 2019, the pandemic is putting at risk inter alia public welfare, employment and livelihoods, food security, and social cohesion. To revive the economy from such an unprecedented crisis, there is a need for comprehensive, participatory, cross-sectoral, and gender responsive mitigation and recovery interventions.

COVID-19 jeopardizing women’s entrepreneurship and business development

Micro, small, and medium enterprises (MSMEs) dominate and have been the backbone of the Palestinian economy – comprising 98% of businesses, of which 25% are led by women as per a recent study by PMA. The prolonged lockdown has put severe strains on these businesses, leaving many at risk of permanent closure. The crisis is expected to exacerbate the gendered challenges and barriers to women’s economic participation, which stood at 21% compared to 72% for men before the pandemic.

Addressing the socio-economic impact of COVID-19 and related restrictions should include supporting the resilience of MSMEs, especially those led by women situated in the invisible economy, between the formal and informal sectors. They tend to have less diverse networks and do not enjoy equal access to market, finance, and exposure to business development support and economic opportunities compared to men-led businesses. These challenges are amplified by the fact that women leading MSMEs as well as those employed by small businesses, bear an unequal share of unpaid care and household responsibilities.

The COVID-19 crisis has generated negative impacts on virtually all productive sectors of the Palestinian economy. A clear example is represented by the Palestinian food system, which has historically played an important role not only in enabling food and nutrition security but also in providing employment opportunities, economic resilience, and livelihoods for vulnerable women, especially in times of crisis. The ripple effect of the country lockdown has serious repercussions on women cooperatives in food processing. Women reported a sharp fall in demand, lost connection to their traditional input suppliers and markets during the crisis, and thus sought alternative suppliers that imposed extra logistical costs or higher prices. To cope, women cooperatives resorted to placing their production activities on hold due to a liquidity crunch and limited access to markets as a result of movement restrictions.

Palestinian Accelerator Lab testing an online platform to market women’s products and support their resilience

As part of its efforts in responding to the effects of COVID-19, UNDP’s Accelerator Lab is running an experiment to link 20-30 women cooperatives and small producers to an online marketing platform through establishing a specialized online store for traditional food commodities.

With markets shifting from dining out towards home delivery services, connecting women-led MSMEs to online stores will instigate new forms of partnerships and types of clientele. This in turn, will strengthen various supply chains of vulnerable groups, especially small farmers who can benefit from sustained linkages with women-led MSMEs that typically source fresh produce from them.

Through this experiment, the Accelerator Lab will test whether women producers could benefit from joining a local food ordering website and mobile application called Through this experiment, paying-in-advance for products through e-payment will be also tested along with the cash-on-delivery option by to encourage a smooth delivery of products and gauge the behavioural changes of customers paying-in-advance for these goods.

Turning Challenges into Opportunities - Outreach to women-led MSMEs in rural communities

Being aware of the logistical challenges encountered in connecting women MSMEs in rural communities directly with an online marketing platform, the Accelerator Lab partnered with Bas Baladi, a non-profit organization that markets women and small farmers’ food products. Bas Baladi’s existing network will support with the logistics, especially for sourcing small quantities, allowing better outreach to vulnerable women-led MSMEs in rural communities. Moreover, Bas Baladi will help avoid any loopholes in the quality of commodities delivered by running quality checks and advising women MSMEs on ways to improve the quality of their products based on customer feedback and ratings.

Based on customer traction and feedback, the Accelerator lab will explore with the women-led MSMEs and how to strengthen women’s competitiveness, enhance their marketing and ICT skills, and access to financial services to efficiently manage business transactions on the platform. The results of this experiment would also spur to conduct more rigorous market research to see if any adjustments need to be introduced to their business model to achieve greater efficiency of platform operation and mutual benefit.

Access to e-payment and fees

The use of online payments by Palestinians remains limited. For years, the government along with civil society organizations, have been at the forefront driving the expansion for the use of e-payments to address financial inclusion and work with local e-payment service providers to reduce transaction fees. Access to international payment gateways is also very restricted due to the unstable political situation. PayPal, the most globally recognized digital platform for transferring money in the world, does not offer its services to Palestinians despite it working in over 200 countries including those with political conflicts.

Through this experiment, the Accelerator Lab will be testing whether customers of will pay-in-advance using local e-payment solutions like (a) PalPay- the first Palestinian multi-channel e-payment service provider established by the Bank of Palestine- and (b) Jawwal Pay- an integrated e-wallet solution established in 2019 by the largest Palestinian mobile network provider. the Accelerator Lab will gauge whether reduced transaction fees announced lately by PalPay and the new e-wallet of Jawwal Pay might encourage more online customers to pay-in-advance instead of cash-on-delivery.

In the second phase of this experiment, and upon successful adoption of e-payment by, we will test the establishment of market linkages between women-led MSMEs and the Palestinian diaspora by selling readily-made “taste of Palestine” kits, gifts for their families in the State of Palestine or donations to families living in poverty.

Scaling up the digital solution

Mainstreaming digital solutions into women’s businesses and access to virtual marketplaces will not only empower Palestinian women-led MSMEs and help them flourish and grow their clienteles’ base. It will also support their resilience, especially in the context of political instability that usually results in a series of closures and restrictions on the movement of people and goods, impacting the operation of businesses.