The developing world’s recovery from the coronavirus pandemic presents an opportunity for a greener, more sustainable future, and Israeli technology will play a key part in the process, said Israel’s envoy to the World Bank, Yovav Gavish.
Israel’s history of coping with environmental challenges and its creative startup culture have sparked the interest of the World Bank and put Israeli firms in a good position to secure lucrative investments and make an impact, Gavish said.
“There is huge potential there because Israel has faced many of the challenges that developing countries are now facing. Drought, water shortages, energy dependency,” he said.
Gavish spoke with The Times of Israel shortly before he accompanied the bank’s president, David Malpass, on a Wednesday visit to Israel to meet with Prime Minister Naftali Bennett and other top officials.
The bank, founded in 1944, counts 189 countries as members and seeks to alleviate extreme poverty and promote sustainable prosperity by providing financial assistance to poorer countries, among other measures. It is one of the leading sources of financing and knowledge for developing countries.
COVID-19 rolled back years of progress in the developing world, pushing roughly 100 million more people into extreme poverty in 2020, 161 million more people into food shortages and 1.6 billion children out of school, the bank said in a recent report. Over 100 million more people are expected to fall into extreme poverty, living on under $1.90 per day, in 2021.
The vaccination rate for many developing countries remains in the single digits, and governments lack the resources for the kind of hefty stimulus packages that have spurred economic recovery in wealthier nations.
The World Bank has deployed $157 billion to combat the pandemic’s toll and is working in 142 countries. The bank defines a country as low income if it has a gross national per capita income of under $1,045, while lower-middle-income countries earn up to $4,095 per capita. Twenty-seven countries are designated as low-income economies, and 55 are considered lower-middle-income.
The pandemic, alongside the climate chaos of the past year, has opened some opportunities, said Gavish, who holds a board position with the bank, where he deals with international projects and handles bank issues related to Israel, including investments and international cooperative efforts.
The bank has developed a plan, dubbed the Green, Resilient and Inclusive Development (GRID) strategy, for pandemic recovery.
“We look at it as an opportunity because, first, it’s a wake-up call for many how important the green agenda is, and we see it today with all the climate-related cases, whether it’s fires, flooding, hurricanes, drought,” Gavish said. “Since we have to start the economy again we see it as an opportunity for increasing investment in a more climate-friendly and inclusive way.”
The plan is in accord with the 2015 Paris Agreement to combat climate change and aims to help fulfill the agreement’s sustainable development goals.
Reaching those goals would cost over $3 trillion per year, necessitating private sector investment and new technology, Gavish said.
“We cannot rely on traditional technologies. There needs to be some kind of a disruption, and this is where we see Israel and Israeli solutions come into play,” he said, adding that Israel has coped with many of those issues with innovativeness and creativity in the fields of agricultural technology, water technology, digital health and other areas.
The World Bank Group’s International Finance Corporation (IFC) provides loans, equity and advisory services to boost private sector investments in developing countries. The IFC is one of the world’s leading investors in emerging markets; it made $22 billion in long-term financial commitments in 2020. Around $1.5 billion of that sum went to startups and disruptive technologies for smaller firms with both higher risk and greater potential.
The organization has become more interested in Israeli technologies, mainly in the fields of agriculture, water and digital health, which all intersect with the climate crisis, along with energy technology.
The World Bank has focused its attention on Africa more than any other area, with around 30 percent of its portfolio in the region, since poverty will grow the most there in the coming decade. Many startups are eager to work in Africa, where there is less competition but significant capital investment from governments, multinational companies and aid organizations that work with small farmers.
Digital health has become a focus for the IFC, and although Israel is a leader in the field, most of the Israeli technology is geared toward countries with more advanced infrastructure, limiting its usefulness in developing countries.
For startups, investments from the IFC provide funding, prestige and opportunity, Gavish said.
“It’s not only the environmental impact, but there’s a huge business opportunity for technologies that can do carbon capture, for renewable energies, agriculture, water, you name it,” he said.
World Bank president Malpass met with Bennett, Finance Minister Avigdor Liberman, Foreign Minister Yair Lapid, Health Minister Nitzan Horowitz and a roundtable of digital health startups to discuss regional cooperation, trade facilitation and collaboration on health and technology during his whirlwind visit on Wednesday. Earlier in the week, he visited Sudan, Jordan and the West Bank.
IFC investments in Israel so far include the agriculture technology companies SeeTree and Netafim.
SeeTree provides services to farmers, powered by artificial intelligence, that identify the health and growth rate of trees and provide information for growth plans, including tracking for pests and diseases and the best time to harvest. The technology greatly improves yields, which in turn increases farmer income and allows for better planning and marketing. The IFC invested $8 million in the company.
The organization committed $69 million to Netafim, a global leader in irrigation technology, to help the company expand into sub-Saharan Africa, China and Turkey. Netafim’s drip irrigation enables greater agricultural yields with less water, which will help water-scarce areas better meet food demands, become more resilient to drought and boost income.
At the IFC’s Transformational Business Awards event for 2020, 11 of the 35 finalists were from Israel, and in 2019, six Israeli startups were chosen out of 270 global firms for awards in a number of categories.
Israel has also funded a program the IFC managed called TechEmerge that matches innovative technology solutions with emerging markets. Eight Israeli firms have been shortlisted for pilot programs through the initiative.
“The trend globally for impact investing is growing, and in Israel there are so many opportunities emerging, so I think there is a huge opportunity to be an impact nation and not just a startup nation,” Gavish said.
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