In the face of relentless war, Palestine's tech and startup ecosystem has faced unprecedented challenges. Despite severe infrastructure damage and psychological tolls, local entrepreneurs and freelancers continue to innovate and persevere. This narrative explores the pre-conflict growth, the devastating impact of war, and the crucial steps needed for recovery and development, underscoring the resilience and potential of Palestine tech community.

The Growth of Palestine's Tech Ecosystem Pre-Conflict

Before the recent wave of conflict, Palestine’s tech ecosystem was witnessing a remarkable growth in its tech and startup ecosystem. Gaza, in particular, had become a vibrant hub of innovation and remote work. Young entrepreneurs and freelancers were seizing global online opportunities, with startups making significant strides in programming, design, and digital marketing. Mohammed Qadada, founder of Planet for Digital Solutions, reflects on this period of growth: “Despite the many challenges, Gaza’s tech sector was flourishing. Startups were not only competing globally but also contributing to the local economy by creating new jobs and fostering innovation.”

Moreover, tech-focused programs and incubators, supported by international NGOs and tech firms, created a fertile ground for innovation. Remote work became a lifeline, as the COVID-19 pandemic had accelerated the demand for skilled freelancers, and Gaza was well-positioned to benefit from this global trend.

Impact of the War on Infrastructure and Human Capital mainly in Gaza

Economic Impact

According to the World Bank’s May 2024 report (appendix a), the Palestinian economy is projected to contract by 6.5% to 9.4%. Gaza’s already fragile infrastructure has been further damaged, including the destruction of essential services like roads, power grids, and internet connectivity. The United Nations Development Programme (UNDP), (appendix c), estimates that over $18.5 billion in damage has been inflicted on critical sectors such as housing, healthcare, education, and digital services.

Infrastructure Destruction

The conflict has significantly slowed the reconstruction of vital infrastructure. The UNDP report, (appendix c), shows that approximately 370,000 housing units were damaged during the current war, with 79,000 completely destroyed as of April, 2024. Even under optimistic conditions, where a fivefold increase in construction materials is allowed into Gaza, it is projected that it would take until 2040 to fully reconstruct these housing units.

Unemployment Crisis

Unemployment, already a critical issue before the war, has skyrocketed. Gaza's youth unemployment rate, which stood at 62.6% before the war, has worsened significantly.

By early 2024, over 500,000 jobs were lost across Palestine, including 201,000 in Gaza alone, according to the International Labour Organization (ILO), (appendix d). This job loss equates to approximately 12.3 million Israeli shekels (NIS) in daily labor income losses. Furthermore, 89% of private sector employees in Gaza were already earning below the national minimum wage (697 NIS) before the conflict, pushing many into extreme poverty.

Freelancers and the Workforce

Freelancers, particularly in the tech sector, have been severely affected. Freelancers like Amjad Yahia, a Gaza-based developer working with international clients, highlighted the daily struggle to maintain productivity without reliable electricity and internet access, and he also explained that the constant stress and trauma of working in a conflict zone forced many freelancers into survival mode, impacting their productivity and mental health

The World Health Organization (WHO) reports, (appendix b), a sharp increase in mental health disorders, with over 485,000 Gazans affected by conditions such as anxiety, depression, and PTSD due to prolonged conflict exposure. The long-term psychological effects on the workforce, especially tech professionals, are profound and cannot be overstated.

Economic Outlook

According to ILO report (appendix d) and under a scenario assuming the war would continue until August 2024 (which happened), Gaza’s GDP is projected to decline by 16.1%, while per capita income is expected to fall by 18%, marking the most significant decline in over two decades.

Moreover, a report by the Palestinian Economic Policy Research Institute (MAS), issued in March 2024 (appendix e), presents a bleak economic forecast, highlighting a sharp rise in inflation. The Consumer Price Index (CPI) increased by 33% in the fourth quarter of 2023, primarily driven by supply chain disruptions caused by the ongoing conflict.