The financial landscape in Gaza and the West Bank has been profoundly impacted by the ongoing crisis since October 2023, marking a critical juncture for resilience and reconstruction efforts. As the conflict unfolds, financial service providers confront unprecedented challenges that vary significantly between Gaza and the West Bank.
In the West Bank, where economic disruptions are not unfamiliar, financial institutions have relied on contingency plans honed through past crises. Measures such as USSD protocols for mobile data disruptions, solar-powered ATMs to mitigate power cuts, and adapted client engagement strategies have been pivotal amidst mobility restrictions and revoked Israeli work permits. Despite economic slowdowns, leading institutions have managed portfolios adeptly, albeit amid heightened credit and repayment risks.
Conversely, Gaza's financial sector faces unique challenges distinct from previous crises. Initially, some institutions managed operations remotely from the West Bank, facilitating critical transactions amidst operational disruptions and staff unavailability. The Bank of Palestine and Al-Quds Bank exemplify resilience, executing high-risk cash transfers to meet localized demands amid infrastructure devastation.
Financial tools initially offered a glimmer of resilience amidst adversity. Despite low banking penetration pre-crisis, savings accounts proved crucial with substantial deposits early in the conflict. Meanwhile, remittance services, although constrained by international operator inactivity, persisted through informal networks and Egyptian telecommunications. The Bank of Palestine's expansive network sustained crucial humanitarian aid transfers, underscoring the sector's initial role in facilitating relief amid operational challenges.
However, as the crisis persists, the limitations of financial tools in sustaining resilience have become increasingly apparent. Microfinance giants like Vitas and Faten have written off substantial Gaza portfolios, reflecting the profound disruption of economic norms. Cash transfers have dwindled, prioritizing immediate needs over financial inclusion, highlighting the sector's evolving role in crisis response.
Looking forward, the future role of financial services hinges on stability and recovery. The reconstruction of a robust financial sector in both Gaza and the West Bank will be pivotal for channeling future investments and fostering economic revitalization. Coordination among international funders will be essential, drawing from lessons in post-conflict financial reconstruction to optimize impact and avoid redundancy.
While the path ahead remains uncertain amid ongoing conflict, the potential of financial services to support recovery and development in Gaza and the West Bank remains undeniable. A strategic focus on rebuilding local institutions and bolstering market resilience will be crucial in harnessing the sector's potential as a catalyst for sustainable economic growth in a post-crisis landscape.
