Small Business Owners in the West Bank Struggle to Survive

UNRWA representative Ibrahim Jaber talks with clients in his office in Nablus, in the West Bank. (Genevieve Long/The Epoch Times)

NABLUS, Palestinian Authority—Ibrahim Jaber’s phones are constantly ringing and his office is a merry-go-round of staff and visiting clients who have meetings standing up. Jaber is the branch manager for the United Nations Relief Works Agency (UNRWA) in Nablus, in the West Bank. Through UNRWA’s Microfinance and Microenterprise Department, Jaber oversees the disbursement of at least 100 new small, targeted loans to small business owners every month.

“The bank looks for people who are a good risk,” says Jaber. “We are looking for poor people.”

UNRWA administers three funding programs, of which the donor-based capital fund is US $3 million, almost 30 percent of which is donations from the United States. The funds for approved loans are distributed to business owners via installment checks.

Jaber’s office houses thick files of client records, written in Arabic and English that date back to 1998, when the Nablus branch office became UNRWA’s first Microenterprise Credit (MEC) project in the West Bank.

After peace talks failed and war between Israel and the Palestinian Authority broke out in 2000, it marked the beginning of a downward economic spiral that many of UNRWA’s clients in Nablus (which was a wartime hotspot) are still struggling to recover from.

From April to October, 2002, the Nablus branch office lost scores of portfolios due to bad debts because of regional instability. As Nablus became cut off by war and strict checkpoints, it became almost unfeasible for some small businesses to survive.

Slow Road to Recovery

Seven years later, Nablus is slowly recovering and in recent weeks two nearby major checkpoints were either shut down or set to stay open for passage on a 24-hour basis. There are a total of 52 checkpoints throughout the West Bank.

But entrepreneurs like Sa’adi Mohammad Husein Ledawi still struggle with the simple logistics of doing business. Ledawi makes and sells iron bed frames to a neighboring company in Israel, and has been receiving microenterprise credit loans from UNRWA for the past several years.

“It’s too difficult to go through checkpoints—it’s a waste of time,” said Mr. Ledawi in his shop on Salahadin Street in Nablus late last month. He makes such trips for business once or twice a week. “Yesterday I went to a checkpoint and it took me three-and-a-half hours.”

Ledawi, who has been in business for 30 years, has a permit card from the Israeli government to go back and forth, but must reapply for it four times a year. The process takes at least one month, and sometimes he is denied a pass. But for Ledawi and many others in Nablus, suffering through administrative red tape is necessary for economic survival.

The disruption of trade relationships like Ledawi’s were largely a result of Israeli policies following the second intifada in 2000. Checkpoint closures and access restrictions disrupted labor and trading relationships, as well as regional employment. Today, according to the CIA Factbook, the unemployment rate in the West Bank is a whopping 16.3 percent.

“In these days, the market in Israel is many times better than Nablus,” said Mr. Ledawi. “Without the market in Israel, I would have to close my business.”

An Abundance of Challenges

Ledawi is not UNRWA’s only client in Nablus who is having trouble staying afloat. Jawed Fayez Abddelqader Haj Mohammad operates a shoe factory with his two sons and sells the shoes through in Israel. Before 2002, he had 16 employees and sold to several Israeli clients. Now it is only him and his sons and he sells to one client. In 2005, Haj Mohammad started getting UNRWA loans in order to stay afloat.

“It is better than nothing—it helps a little,” said Mr. Haj Mohammed from behind his desk on the top floor of his small factory in Nablus. All of the materials he uses in his handmade shoes are local, but that’s not a very strong selling point these days. Haj Mohammed says after the intifada, cheap shoes from China started to flow into Israel, undercutting the profit he can make on his product. A pair of shoes costs about $8 US to make, and sells for about $11—a profit margin Haj Mohammad calls “good” in light of competition from China.

“There is no control on imports,” said Mr. Haj Mohammad.

On the other side of town, Amir Abed Sayed’s paper product factory has been in business for 22 years, but just last year starting making a profit again after 7 years of slow and laborious economic recovery. The sheer cost of jumping through administrative and security checkpoints makes it difficult for him to compete. There are also challenges with delivering products, as Sayed does not have permission to cross into Israel.

“Sometimes goods get destroyed from loading and unloading because of being lifted with the forklift,” said Mr. Sayed, who adds that the cost of transport is almost prohibitive. “Sometimes the cost from here to Israel is more than bringing raw goods from Turkey.”

Sayed also faces challenges with the most basic of business practices: meetings. Since he can’t cross into Israel he has to find other ways to meet with clients.

“Sometimes we meet in the street, most of the time we communicate by phone and email,” said Mr. Sayed. “Sometimes we find a gas station and ask if they have chairs.”