Technology for Youth and Jobs Additional Financing

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The project creates new market opportunities for the Palestinian IT services sector by strengthening the supply and demand, providing it with a supportive business infrastructure, and by enabling access to markets and investments. The additional financing will scale up all existing components of the project. No additional geographical locations will be covered under the AF.Component 1: Improving IT service capabilitiesThe AF will increase the funding for Human Capital Improvement Stipends (sub-component 1.1) to allow more Palestinians IT workers to gain the skills they need to be competitive for international commercial IT services contracts. This funding will be available through three funding windows: internships stipends, on-the-job training stipends, and expatriate stipends. Advisory services to enhance managerial capabilities (sub-component 1.2) will be expanded to close the managerial and organizational gaps that hold back the productivity of Palestinian IT sector SMEs. This sub-component will scale up the ability of the project to provide technical assistance (TA) on management, organizational development, strategy, and leadership and where needed and relevant, energy efficiency, through a structured program. The TA will build both general good managerial practices as well as those required specifically by existing and potential clients. The interventions to identify and address gender imbalances in the IT sector (sub-component 1.3) will be scaled up as a means to help the sector reach its full potential. This sub-component will expand the support for the gender assessment and allocate additional resources towards the potential interventions to address these challenges.Component 2: Improving the IT services ecosystem The seed grant program for stimulating private investment (sub-component 2.1) will be expanded to build on momentum to date and accelerate the process of enhancing the competitiveness of the Palestinian IT ecosystem. All three windows will be expanded to allow for an all-of-ecosystem approach to expanding opportunities. The grant program for shared R&D hubs (sub-component 2.2) will be expanded to accelerate the Palestinian IT firms’ transition from price competition to competing on skill and expertise. Improved shared R&D capabilities will help build more advanced skills among firms and unlock new and more business opportunities, in particular from large international clients, which in turn will enable firm growth and job creation. The IT business infrastructure grant program (sub-component 2.3) will be scaled up, particularly in Gaza, to provide more businesses with the minimum infrastructure needed to operate high-quality IT service firms. Scaling up this grant program will allow more firms in Gaza’s context of fragility, conflict, and violence (FCV) with exorbitant unemployment rates to access equipment that help improve their competitiveness and create additional good and sustainable jobs. Component 3: Improving market access and increasing demand and investments Increased resources for awareness raising and market linkages (sub-component 3.1) will accelerate the increase in IT exports by scaling up the matching of qualified Palestinian IT firms to international buyers. By scaling up matchmaking services between international buyers and qualified Palestinian IT services firms to boost IT exports and improve the Palestinian image as a n outsourcing destination. Scaling up promotion and facilitation of FDI in the IT Palestinian ecosystem (sub-component 3.2) will further strengthen the capabilities of key agencies to manage the entire FDI cycle. The AF will allow the strategic investor outreach campaign to reach more prospective investors and build a stronger investment funnel. It will also allow for strengthening of the investment process including navigating the launch of local entities in the WB&G.Component 4: Project management and implementation supportProject management and implementation support will be increased to further strengthen the capacity of both the PIA and MTIT in overseeing the expanded project activities. Project management cost will increase proportionally with the amount of the AF to allow the PIA to manage an increased number of grant applications, their evaluations, and disbursements.The proposed additional financing will not result in a change in the Project Development Objective (PDO) or implementation arrangements. The PDO indicators will not change either, but their results targets will be updated and increased, as will some of the intermediary indicators. No additional safeguards policies will be triggered and there will be no change in the project’s safeguards category. Project Management Cost will be increased to allow the Project Implementation Agency (PIA) to manage an increased number of grants applications, their evaluations, and disbursements. A Grants Officer, Tech Investment and Partnerships Specialist will be included in the PIA staff to support the delivery of the additional support to private sector.