BENJI SHULMAN: Lessons from Israel’s Arab entrepreneurs for SA policymakers

On April 29 Gauteng premier David Makhura promulgated the Township Economic Development Bill to assist entrepreneurs in areas outside the economic mainstream. As SA policymakers grapple with how to support these activities, it is worth comparing experience with countries working on similar challenges.

Israel is well known globally as a technology and entrepreneurial powerhouse, especially in sectors such as water, agriculture, cyber security and health care. But it is Israel’s Arab innovators who are worthy of special attention for understanding the process of nurturing new talent in disadvantaged communities.

Though Israel is a majority Jewish country, its Arab community amounts to about 21% of a population of 9-million and includes the country’s Christian, Muslim, Druze and Bedouin groups. Arab-Israelis are well represented in the judiciary, parliament, media, civil society, and especially in the medical sector.

However, an important area in which Arab-Israelis are underrepresented is in Israel’s flourishing hi-tech industry. Israel has one of the most vibrant tech sectors in the world, and has the third-largest number of non-US stocks listed on the Nasdaq after China and Canada. For this reason it is often referred to as the “start-up nation”.

In the last decade, despite a large number of Arab-Israelis joining the workforce of tech companies in Israel, they still account for only 2%-3% of workers in that sector. And, of the estimated 10,000 start-up companies in Israel, only 100 were founded by Israeli-Arabs.

Recognising the pool of talent not being used and the need to encourage their greater participation, Israeli society as a whole began to think about ways to meet this challenge. The constraints Arab-Israelis face in entering the hi-tech sector are not political but related to cultural, geographic and sociological factors. There is a similar challenge in SA’s township economy.

Since the Arab-Islamic party known as Ra’am joined Israel’s government coalition, moves have been under way to remove barriers and achieve proper integration of Arab-Israeli communities, in particular the high tech sectors, which provide exciting opportunities for young people in particular.

Led by a statutory body, the Israeli Innovation Authority, the initiative will cost $150m and will focus on promoting science and innovation in Arab-Israeli communities, including through accelerators, entrepreneur meetups and mentoring programmes. It will also seek to simplify the visa procedure for experts and tax benefits for hi-tech workers who return to Israel from overseas.

Demand

The programme is not just seen as positive for Arab-Israelis; Israel is struggling to keep up with the demand for hi-tech engineers and the government sees the support for hi-tech skills development in previously disadvantaged communities as a social good. Science & opportunity minister Farkash Hacohen said: “We must make sure that the success of the hi-tech sector in Israel will not be a divisive factor in our society. On the contrary, it is an opportunity to reduce social gaps in Israel.”

But it not just the government is getting on board; the private sector is also playing a role. One example is Takwin, a venture capital fund and supporter of start-up infrastructure that focuses on the Israel-Arab community and is raising $80m in finance for a range of start-ups.

“It’s not enough to invest money in Arab entrepreneurs in Israel,” says Itzik Frid, Takwin’s managing partner and CEO. “They also need resources, like office space outside the country’s main technology hubs and closer to where they live. They need connections to people and organisations that can help them succeed. They also need success stories so they and their families can see what can be achieved and to give them the courage to dream.”

Backing Takwin’s efforts are big drivers in the Israeli start-up scene, including Chemi Peres, son of the late former Israeli president Shimon Peres. Included in Takwin’s portfolio is OVO Tech, which helps with chicken farming, and Feelit, which assists in monitoring large infrastructure to warn of impending failure. Both of these have large potential relevance for SA’s economy, especially the latter after the flood disaster in KwaZulu-Natal.

Though nearly 30 years have passed since the advent of democracy in SA, our country still struggles with creating the right environment for entrepreneurs to thrive. The example of Arab-Israeli entrepreneurs shows that underprivileged communities can be brought into the mainstream economy through the right combination of government policy and support, and partnership with the private sector and civil society.

SA policymakers and industry leaders should take note and look to implement a similar approach for a more inclusive economy that can also help heal the divisions of the past.

• Shulman is director of public policy at the SA Zionist Federation.