The aftermath of political instability on the Palestinian economy has been severe. It is very hard to name a sector not affected by the current political crisis, In an economy were over 98% of the enterprises are micro, small, or medium enterprises (SMEs) , the development of economic enterprises is necessary to promote economic growth. Indeed, the focus on sustainable development rationalizes the need of business support units, providing financial services (grants) and non-financial non- commercial business development services (BDS) to those enterprises not capable of purchasing these services at market price. Prior research in the Palestinian Territories indicated that over 58.3% of enterprises in the Gaza Strip and 53.5% in the West Bank were not willing or capable for paying to commercial BDS.

Perhaps most vulnerable to this, are enterprises headed by youth. Through its Center for  Business & Employment Services, Sharek Youth Forum has been focusing on presenting entrepreneurship as a viable alternative to reduce unemployment and combat poverty among youth. The unit aims at one hand in creating small business ventures for impoverished entrepreneurs, and most importantly providing non-commercial BDS services to these small businesses until they are well grown and developed to purchase commercial services available at the market.

As units were established and now fully functional in Gaza City, Ramallah, Nablus, Hebron, and Rafah, with the Jerusalem unit ready to be launched soon, the expansion of activities to cover additional deeply devastated areas, namely the Seam Zone (enclave of the Separation Wall) and additional Gaza Strip localities is needed. To reach this expansion, the unit aims at developing existing links and capacities with Community Based Organizations (CBOs) in the anticipated localities to cater for young entrepreneurs, both financial (small business start up grants) and non-financial (BDS, counselling, mentoring, etc.) that will allow them to improve their families livelihoods and eventually stimulate economic activities in these marginalized areas.

Thus Sharek Youth Forum has highlighted three specific problems to be addressed by the action:

Poverty among Palestinian households: Recent studies by the Palestinian Central Bureau of Statistics have indicated that over 50% of Palestinian household headed by youth suffer and live under the national poverty line. In general, in 2007, over 56% of Palestinian were living in the national poverty line, and over 44% lived under the extreme poverty line.

Unemployment: According to recent statistics, over 30% of Palestinian youth are unemployed. The job market is not able to absorb these young persons due to constant political instabilities, particularly in the Seam Zone and the whole of the Gaza Strip.

BDS Market Stagnation: As highlighted above, Palestinian SMEs are unable to purchase and pay for services necessary for their growth and development. By providing non-commercial free of charge business counselling and mentoring services to newly established and existing enterprises led by youth, the youth business support unit will be able to fill in existing market gaps.

With economic stagnation being a major obstacle to Palestinian community development, and with a weakening role of the Palestinian National Authority in compensating for these problems, the role of SMEs are many in this context.. While the most prominent role would be related to employment, productivity, and economic growth, SMEs do play a significant role in poverty reduction and the functioning of societal institutions. Research by The Cooperation for Enterprise Development (CFED) suggests that in economies were competitive advantages lie in sectors of low economies of scale, such as in Palestinian territories, SME development is key for pro-poor growth. This is particularly applicable when there is an increase in the competition of markets where the poor are concerned, and when the business environment pushes for entrepreneurship thus creating jobs of the poor.  Consequently, by the presence of business support units promoting economic opportunities, growth, and poverty-reduction, the created enterprises are indirectly contributing to the general welfare of society in difficult political contexts.

On the other hand, non-commercial BDS such as training in administrative, technical, and financial topics, consulting services focused on operations, strategic, and organizational management, as well as marketing, legal, and other relevant services, contribute largely to the competitiveness and survival of economic enterprises in unstable and unfavorable environments. In addition, with the job-market unable to absorb sufficient labor force to stimulate the economy, the generation of new enterprises will provide alternatives and new-employment opportunities to young entrepreneurs.

Introducing business establishment and support services as a viable alternative for deprived Palestinian youth will significantly contribute to poverty reduction and local economic development. The Center for  Business & Employment Services works with Palestinian youth as links towards the enhancement of the livelihoods of their families, and those around them. Youth aged between 18-30 are eligible to apply and participate in the project’s activities. A major problem concerning newly established enterprises is sustainability beyond the first 6 months of establishment, thus BDS and mentoring services are necessary to assure that these enterprises are keeping up with market dynamics.

On the social front, children and youth growing up in poverty are more likely to have fewer opportunities in education and employment, suffer from malnutrition and diseases, and constantly facing difficulties to integrate in society. By supporting families in developing new revenue streams through small business set- up and support, the project significantly contributes to the reduction of poverty in the beneficiaries’ families and contributes to the overall improvement of their educational, social, health, and economic opportunities.

Poverty is a major problem in most developing contexts. For practical purposes, poverty is identified on income basis and not consumption basis. The reasoning behind this selection is that targeting income poverty promotes development. Handling poverty on a consumption basis will only provide aid or emergency assistance.

In Palestine, two levels of poverty are classified on basis of personal and family needs. Absolute poverty is based on the basic basket of needs which includes food, clothing, and housing. Relative poverty is based on an extended basket including additional needs such as education, healthcare, transportation, and other family needs. For a family of six (two adults and four children,) the relative poverty line is 2300 NIS per month, and the absolute poverty line is 1837 NIS per month.

In 2006, 49.10% of families in the West Bank and 56.80% of families in the Gaza Strip were under the relative poverty line. In total, 56.80% of Palestinian families suffered from poverty. Moreover, 44.10% of Palestinian families fell under the absolute poverty (hardship) line, with 36.40% in the West Bank and 66.70% in Gaza Strip.

Poverty also differs among Palestinian localities. Around 66.40% of persons living in refugee camps suffered from poverty, while in rural and urban localities the percentages were 58.00% and 53.60% respectively.

Statistics also proved that family characteristics influenced poverty. More than 72.00 % of families with more than 10 persons suffer from poverty.  Women headed households, which constitute 7.8% of the total number of households, had a poverty rate of 65.00%. In addition, households headed by youth, around 10% of society, had over 54.00% of them in poverty.

Perhaps the most stunning statistics regarding poverty in Palestine are those pertaining to aid and its effectiveness. Indeed, the leakage rate in Palestine was 56.60% indicating that over one-half of the recipients of aid and assistance were not needy. As a result, 28.60% of needy households did not receive assistance, a percentage also referred to as under-coverage.

The fact that most aid provisioned in Palestine had been emergency aid, and in realization that only true development programs can help families in overcoming poverty, legitimizes the need of the work of the Center for Business & Employment Services.   Moreover, and as reflected in the numbers above, the inefficiency in provisioning aid legitimizes the need to develop interventions that will benefit those that are in true need.