The solution to Israel’s economic crisis is not only about finances but also about breaking through stagnation and rigidity. Although I typically focus on the North and its recovery, and the widespread impact on its residents, the issue of the economy and welfare is extremely concerning. This is a big issue for us as a nation, as the numbers are alarming.
According to the National Insurance Institute’s poverty report released this week, nearly 1.98 million people in Israel live below the poverty line, including about 158,000 elderly citizens and 872,000 children, representing 27.9% of all children in Israel. The report indicates that children make up 44% of the poor population, despite constituting only 32.5% of the general population.
What does this mean for us as a society and a nation? First and foremost, it means we must pay attention to these numbers and not bury our heads in the sand.
The concept of “tightening the belt” is fundamentally flawed because for far too many children in Israel, it means giving up on a school trip, a nutritious dinner, or even a simple meal after school. It means being left home alone for hours because parents simply cannot afford to pay for after-school programs but also cannot afford to lose working hours.
It means there are self-employed individuals who return from military service to a half-empty fridge because the option is either to buy additional food (which gets more expensive on a weekly basis now) with money they don’t have or send the child without a sandwich. This is happening right here among us.
And yes, there is no free budget for the state because the funds are directed to more “pressing” ministries, as well as justified needs for arming in preparation for the next round of conflict and the rebuilding of the North. Still, money is not the sole solution to poverty, however absurd this may sound. But when you think about it, trying to solve a lack of resources with those very lacking resources is an oxymoron.
So, what resources can we use? Creativity. Creativity that has been applied by many developing countries, on which we tend to look down. But being at the bottom of the OECD is nothing to brag about. So, we’ve been left with creativity and openness as solutions.
Easing regulations is crucial
MANY COUNTRIES have demonstrated that supporting small businesses and easing regulations on them are crucial tools for combating poverty and driving economic growth.
Bangladesh is a prominent example, with the Grameen Bank offering small loans to poor individuals, primarily women. These loans enabled the establishment of small businesses in pottery, sewing, and agriculture, leading to significant improvements in the living standards of millions of families.
Rwanda also reduced poverty through support for local entrepreneurship, incorporating digital microfinance for rural women, helping them establish businesses and support their communities.
In other countries, the approach of encouraging small businesses has led to economic flourishing. Brazil achieved impressive results with its Bolsa Família program, in which families received conditional grants used for creating small businesses and local job opportunities.
Estonia also encouraged small businesses through technological reforms such as online company registration and support for global initiatives via e-Residency, which led to the flourishing of a thriving digital economy.
These examples show that small businesses are not just a source of livelihood but a vital engine for growth that can save a country’s economy.
Now, turning back to Israel and particularly the situation of small businesses in the North, what can we learn about their condition and how we can support them? We can see how supporting small businesses and easing their burdens could serve as an essential solution for their survival and growth.
Microfinancing and relief funds: Like Bangladesh with Grameen Bank, we can create microfinancing funds that support small businesses, especially during times of crisis. These businesses cannot always take on large loans, but small loans with favorable terms can help them survive difficult periods without shutting down.
Support for digital innovation: Like Estonia, Israel could promote technological reforms, such as online business registration and support for digital initiatives, which would allow small businesses to continue operating even during times of crisis.
Regulatory easing: As seen in Rwanda and Brazil, easing regulatory burdens on small businesses is essential. For example, easing taxes and licensing requirements would allow businesses and individuals who are truly willing to work hard to make a living with dignity.
Local support and community collaboration: In small businesses, which often involve family and community ties, local support can be revitalized and transformed into a resource for growth. Like Brazil’s use of the Bolsa Família program to encourage small business creation, local support and grants could be offered to struggling small businesses, such as family-run restaurants.
In conclusion, Israel can learn from global models and guide the country to support small businesses not only through loans but also through technological initiatives, regulatory easing, and local support, so that businesses will not need to close their doors during a crisis and can continue contributing to the local economy and strengthening the community.
Every business that closes costs the state much more: unemployment, the difficulty of finding new jobs for the unemployed, negative growth, and increased demand for food vouchers. It doesn’t require millions to solve this, just a heart and an open mind from the country’s leadership.
Small businesses are not a burden, as they are often perceived, but rather the very heart of the Israeli economy.
The author works in the media sector and is a writer and blogger.