92374 COUNTRY HIGHLIGHTS West Bank & Gaza 2013 2013 WEST BANK & GAZA ENTERPRISE SURVEY The World Bank interviewed a representative sample of the private sector composed of 434 firms between June and September 2013 across the West Bank and Gaza. The Enterprise Survey covers several topics of the business environment as well as performance measures for each firm. Below are the main highlights from the survey. Employment growth in the West Bank and Gaza is above other economies, but manufacturing lags behind 10 B Between 2009 and d 2012 f fi firms i in the h W Bank West B k 10 9 9 and Gaza added jobs at an annual pace of 7.6%, Annual Employment Growth (%) 8 8 which is above the average of other Lower Middle 7 7 Income (LMI) economies at 6.9% and the average 6 6 of all economies with ES data at 6.1%. Retail firms 5 5 grew the fastest, adding jobs at an annual rate of 4 4 9%, followed by firms in other services sectors at 3 3 8%. While still robust at a rate of near 7%, 2 2 employment growth among manufacturers in the 1 1 West Bank and Gaza lags behind the growth rates 0 0 in other areas of the private sector. West Bank & Gaza 2013 Manufacturing All countries Retail Lower middle income Other Services While employment growth is robust, firms in the West Bank and Gaza remain small by comparison Though Th h there h i evidence is id that h private i firms i fi ll in all 1% 100% sectors are adding jobs, the private sector in the 8% 8% Share of Private Sector Establishments (%) 12% West Bank and Gaza is disproportionally 80% 27% 27% composed of small and medium firms, 87% and 12%, respectively, which together account for 99% 60% of all firms. By comparison, two-thirds of firms in 87% 40% other Lower Middle Income economies have 64% 66% fewer than 20 employees and 93% employ fewer 20% than 100. Among all countries with ES data, the share of small firms is 64% and almost 92% of all 0% West Bank & Gaza All countries Lower middle income firms have fewer than 100 employees. 2013 Small(5-20) Medium(20-99) Large(100+) Additionally, capacity utilization in manufacturing is low 100 While manufacturers in the West Bank and Gaza 90 are increasing their employment, they are also 80 operating at comparatively low capacity: an average 70 level below 63%. By comparison, among all 60 countries, this average is over 73%, and among 50 LMI economies it is over 70%. Lagging capacity 40 utilization among the economy’s manufacturers is 30 driven by the smallest firms: manufacturers with 20 fewer than 20 employees represent 85% of all firms 10 in the sector, and they report 61% capacity 0 utilization. Capacity utilization West Bank & Gaza 2013 All countries Lower middle income Firms consider political instability to be the biggest obstacle, followed by electricity 2013 WEST BANK & GAZA ENTERPRISE SURVEY Political instability Among fifteen areas of the business environment, Electricity Informality firms in the West Bank and Gaza are more likely Tax rates to rate political instability as the biggest obstacle Access to Finance Customs and trade regulations to their operations. Over thirty-one percent of Corruption Business licensing and permits firms report political instability as the biggest Access to Land obstacle followed by electricity at 13%. Practices Transport Labor regulations of competitors in the informal sector, tax rates, Tax administration and access to finance are the next 3 most Crime, theft and disorder Inadequately educated workforce commonly cited obstacles. Courts 0% 5% 10% 15% 20% 25% 30% 35% Electricity provision in the West Bank and Gaza is comparatively poor Firms in the West Bank and Gaza report losses 30 30 due to electrical outages of above 6% of annual 25 25 sales. This is larger than the averages for LMI countries and for all ES economies. However, Number of outages 20 20 there are remarkable geographic differences. In Percentage the West Bank, reported losses are just above 15 15 1% and firms experience roughly 2 power outages each month. In Gaza, by contrast, losses 10 10 due to electrical outages average over 22% of 5 5 annual sales and firms experience nearly 29 outages monthly. The perception of electricity as 0 0 an obstacle is confirmed by firms’ experiences Losses due to electrical outages Number of electrical outages in a dealing with inadequate electricity provision. (% of annual sales) typical month West Bank & Gaza 2013 All countries Lower middle income Gaza West Bank Firms also report using financial services at relatively lower levels 40 Firms in the West Bank and Gaza access financial 35 services at lower rates: less than 10% use banks to 30 finance investments; 11% use banks to finance 25 Percentage their working capital; and only 6% have a bank 20 loan or line of credit. Among other LMI 15 economies, 28% (25% globally) use banks to 10 finance investments; 32% (30% globally) use 5 banks to finance their working capital; and 38% 0 have a bank loan or line of credit (compared to Using banks to finance Using banks to finance With a bank loan/line of investments working capital credit 36% of firms globally). West Bank & Gaza 2013 All countries Lower middle income The Enterprise Analysis Unit is a joint World Bank and IFC team of economists, survey experts specialized in private sector development. Surveys implemented by the team reveal what businesses and firms experience across the world by interviewing representative samples of the formal, non-agricultural, non-extractive, private sector with 5 employees or more. The resulting globally comparable firm-level data is used to construct business environment indicators and measure firm performance. The findings and recommendations help policy makers identify, prioritize, and implement policy reforms that support efficient private economic activity. For more information on the survey visit http://www.enterprisesurveys.org Generated using Enterprise Survey data as of January 14, 2013