Bursting at the seams with potential

Textile factory in Gaza. Photo by Mohammed Azaiza, Gisha.

Nahed Al-Safadi is the owner of a longstanding textile factory in the Gaza Strip. Before the closure was imposed in 2007, the factory employed 120 people and its products were mostly marketed in Israel. The closure brought the factory’s operations to a virtual standstill; by 2014, the number of workers had dropped to 15, working in part-time positions for no more than three days per week, mostly to maintain equipment. In 2015, Al-Safadi and others in the textile industry would be given reason to hope for recovery of the sector following important policy changes, but two and a half years later, that hope is still unfulfilled.

The textile industry has always been an important sector in Gaza’s economy. In 2000, the industry employed around 37,000 workers in some 900 factories and workshops. The closure on Gaza all but devastated the sector; production dropped by about 85 percent and in 2014, it only provided approximately 2,500 jobs.

After Operation Protective Edge in the summer of 2014, textile industrialists were given hope for a change of course. In October 2014, Israel again permitted marketing of textile from Gaza in the West Bank, and in March 2015, permission was extended to include Israel itself. The sector began showing signs of recovery. Today, there are 5,000 employees working in 164 sewing workshops, factories and textile supply companies registered in the Strip.

Al-Safadi tells Gisha that once sales in Israel were allowed to resume, he was granted a three-month merchant permit, which allowed him to travel through Erez Crossing. Quick to take advantage of the opportunity, and hoping to renew his business ties in Israel, Al-Safadi traveled to meet with the Israeli companies that he had worked with in the past and visit potential customers. He presented his products and services and worked on restoring his business partnerships in Israel and the West Bank. “Just as I was beginning to see the fruits of my efforts, and re-establish the company’s position in the market, without any prior notice, the application to renew my merchant permit was denied on the claim there was a security block. I’ve been without a permit since December 2016, and every time I make an application for one, I am refused on the grounds that there is a security block, without any further details or explanation. The inability to travel for meetings with suppliers in the West Bank and Israel makes it difficult for me to close deals, and increases customers’ reservations about my ability to fulfill commitments and deliver the goods on time. I’m forced to take any offer, even if the return is very low.”

Al-Safadi’s story is indicative of one of the main impediments to the sector’s recovery, similarly described by other Gaza textile suppliers. According to data received by Gisha from the Palestinian Federation of Garment and Textile Industries, 106 merchants from the sector obtained exit permits in 2015. The number dropped to 87 in 2016, and in 2017, only 20 merchants received permits. These permits are not necessarily valid for the entire year, and can always be revoked come renewal time. While figures provided by the federation show that the change of policy on access for goods in 2014 did set recovery in motion – the number of Gaza companies marketing products in the West Bank rose from 11 in 2015 to 30 in 2016, and 44 in 2017, experts agree that growth in the sector could be far more significant if it were not for the restrictions on movement of Gaza merchants, imposed by Israel.

The first direct shipment of textiles to Israel left Gaza on August 28, 2017. Until then, goods were sold in Israel indirectly, through the West Bank, due to difficulties in issuing tax invoices introduced by the Palestinian Authority. In recent months, Gaza textile industrialists reached an agreement with tax authorities in Ramallah, clearing the way for direct shipments to Israel. Sales through the West Bank increased shipping costs, which are high as it is, but Gaza textile traders were determined to do business in Israel despite the relatively low profit margin. They are now looking to expand business in Israel, with buyers showing considerable interest.

Nabil Bawab is the owner of Unipal, a Gaza textile company, which employed 400 workers until 2007 and sold most of its products in Israel. Since the closure was imposed, the factory drastically scaled down its operations, and Bawab opened a factory in Egypt. When news of renewed permission to market in Israel arrived, he increased operations in Gaza, and his factory currently employs 200 workers.

Bawab sells to stores and fashion chains in Israel (including Discreet and Unidress). He says that one of the biggest challenges these days is the electricity crisis. Bawab spends 700 ILS every day on fuel for the generator he is forced to rely on during power outages. Another issue is the conditions at Gaza’s sole commercial crossing, Kerem Shalom, where a suitable shelter for products in transit has yet to be erected. Waterproofing products for delivery on rainy days further increases costs.

According to reports by the Palestinian Federation of Garment and Textile Industries, sales in the textile sector rose from 1.48 million USD in 2015 to 2.88 million in 2016. Sales during 2017 have already reached 5.36 million USD (January-August).

The efforts and entrepreneurship of textile industrialists have allowed an important but only partial revival of the Gaza’s textile sector. Sales are still much lower than the projected potential. In a research project conducted by Gisha before the Israeli and West Bank markets were made accessible again in late 2014 and early 2015, veteran textile merchants from Gaza estimated that should restrictions be lifted, they would be able to ship out 30 trucks of textiles per month. In reality, since the beginning of the year, an average of no more than three or four trucks carrying textile to the West Bank and Israel exited Gaza per month. Al-Safadi puts it simply: “Companies in Israel and the West Bank are happy with our products. They trust us and like working with us. But we have to be able to go and meet with them.”

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