The Palestinian economy needs to speed up its digital transformation, the World Bank said in a report published Wednesday, urging institutional reform and pointing the finger at Israeli restrictions.
The past decade has seen progress on internet access and the development of digital businesses and platforms in the Gaza Strip and the Israeli-occupied West Bank, the report said.
But "much remains to be done to bring about an innovation ecosystem that translates into growth and job creation", it added.
The World Bank said only around one-third of firms in the Palestinian territories had their own website, compared with an average of half in the Middle East and North Africa in 2019, while just 14 percent of adults had "made or received digital payments", according to 2017 data.
The report called for strengthened competition, for the Palestinians to develop and update legislation including on e-transactions and cybersecurity, and improve institutional coordination.
"A full-fledged digital transformation of the economy" will require "internal policy reforms and financial resources by the Palestinian Authority", a statement added, while the report urged the PA to increase the availability of online public services.
Israeli restrictions, including on technology imports and spectrum allocation, "have been a major impediment to the establishment of digital infrastructure, connectivity, and high-speed broadband access", the World Bank said.
It said that bandwidth was limited to 2G in Gaza and to 3G in the West Bank, at a time when Israel is moving towards 5G.
"Strengthening the Palestinian digital economy will require a sustainable political resolution with the government of Israel to remove current restrictions," the statement added.
World Bank country director for the West Bank and Gaza, Kanthan Shankar, said that "investing in the Palestinian digital economy is more important than ever".
"Many Palestinian businesses" had moved "toward online channels" during the coronavirus pandemic, he said.
Around 2.9 million Palestinians live in the West Bank, a Palestinian territory occupied by Israel's army since the 1967 Six-Day War, while the impoverished Gaza Strip, which is under Israeli blockade, is home to some 2.3 million others.
Unemployment stood at 16.9 percent in the West Bank in the second quarter of 2021, with the rate at 44.7 percent in Gaza, according to the report.
