Afternoon Tea in Jerusalem Blog

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

The latest OECD predictions for the Israeli economy forecast a growth rate of 2.8% for 2016.

On the down side, this is way less than the average for the past decade and it barely matches the current natural increase in population. However, it is similar to what Israel’s own Finance Ministry has begun to predict. And compared to many other members of the OECD – USA 2.3% and the EU 1.6% – this is a relatively healthy stat.

For me, these predictive models raise a far more important issue. Over the past 18 months, I have become increasingly critical and worried over the way the government has been handling (or more precisely, not handling) the changes in the Israeli economy. So I would like to present here three practical proposals that could make a significant and positive difference to the structure of the economy in the Holy Land.

First, I will borrow the conclusions of John Chambers, the CEO of Cisco, a company which has purchased 12 Israeli start-ups in recent years. Speaking at a convention in California, featuring the achievements of the Israeli start up scene, his thoughts are pertinent.

Chambers is adamant that for Israel to remain at the forefront of the high-tech revolution, it must ensure the more members of the ultraorthodox Jewish community and also the non-Jewish sectors have clearer opportunities to become entrepreneurs. For this to happen, the education system has to become more adventurous. To date, while there are some moves on this front, it is evident that the government needs to do a lot more. It is drastically behind the ballgame, as others like France catch up.

Second, at the same conference, the mayor of Jerusalem, Nir Barkat, spoke of the plans to treble the number of start ups in Jerusalem. He also spoke of his aim to ensure that the number of tourists visiting the city leaps from two million annually to ten million.

A great vision. And this is a man with many talents. However, Mr. Mayor if you were to drive around key parts of the city, you will notice that the road system is antiquated. In an average working day, the flow does not….well, does nor flow! For example, if you want to enter or leave the Har Hotzvim industrial zone, which includes a large Intel factory, there are invariably traffic jams at many hours of the day. That is not sustainable. There must be a better approach, as this is costing time and money.

And my third category is that old subject of bureaucracy. As a business mentor with many SME clients, I see how they suffer. Just today, one customer was seeking a change to his banking arrangements. He was asked to supply a wad of signed documents from his accountant. This cost him hours. And I myself was told yesterday, in the age of notarised digital signatures, that a new client will not work with me until I hand in some paperwork with an original signature.

Such demands are pathetic and restrictive. Change them and small businesses will begin to breath that bit more easily. And remember that SMEs comprise over 90% of the economy.

Is the Israeli government looking to do anything serious about these three issues? For all the talk, nothing definitive is likely to happen. The demands of coalition politics forces those at the top not to decide. It is safer that way.

And that is why Israel’s economy will continue to plop along at around a weak 2.8% annual growth rate, …..until somebody has the courage to shout “enough”.

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