The Otef sells more than before the war: what the numbers show and what they miss

Three years after 7 October, the businesses of the Gaza envelope sell more than they did before the war. In the first half of 2023, businesses in the Otef took in about NIS 8 billion; in the first half of 2026 the figure reached almost NIS 9.7 billion, an increase of more than 20% in three years.¹ The population grew with it: about 60,000 residents before 7 October 2023, more than 65,000 by the end of June 2026. Four communities have returned only in part or have not yet begun to return.¹ The southern recovery plan runs to 2028.¹

Fronterra Investments made its first investment in the Otef in 2022. After 7 October, it stayed and rebuilt the businesses there. The turnover figure is the business case in one number. What it does not show is why the number moved, where the pain still is, and what a buyer of a plant in the south should check first. Daniel Zelkind, Fronterra's Founding Partner, answers from the ground.

Fronterra Investments is a private equity fund taking control positions in profitable industrial and agri-industrial businesses in Israel's southern periphery.

What do the turnover numbers not show?

Zelkind is careful to call it his own reading:

"I offer this as my own reading, not as data. Something has changed in the motivation of the people who live and work in the region, and in the appetite of investors to engage with it. I cannot point to a single cause, place or date. What I can say is that the region has moved up a gear."

Turnover measures what was sold. It does not measure what moved the owners, the workers and the investors who decided to stay or to come. Fronterra's own answer to "why the south" is in our first update: post-conflict recovery is a business case, held to the same tests as any other investment.

What is the hardest problem a profitable plant in the south faces today?

Labour, in Zelkind's view:

"Labour is where it hurts. Industry in the south was built on a large Palestinian workforce, and replacing it with foreign workers is a slow process. The cost is felt in training, in retention, in added bureaucracy and in production delays. Margins absorb it first, and prices follow."

A turnover figure 20% above 2023 does not say what it cost to produce. In a plant, the labour gap shows up as training time, staff turnover, paperwork and late deliveries, and it reaches the margin before it reaches the top line.

What does Fronterra check first in a plant in the south?

The first tests have not changed since 2022, and the labour question sharpens them:

"Leverage is the first warning sign. After that I look at how the management team has been built and kept together, and at the business character of the owners. These are simple first indicators, and they decide whether a deeper look is worth the time."

Fronterra's tests, as he set them out in the first update: the people first, then solid unit economics, healthy revenue distribution and close to zero debt. A plant that kept its managers through three hard years says something a balance sheet does not.

What does an owner gain from a partner who already works in the south?

"Israel is a small country, and the south is smaller still. In a region this size, knowing the area, the people and the suppliers, and knowing what to avoid, is worth real money. It shortens the path to a decision and protects the capital once it is committed."

Most of the businesses Fronterra talks to in the Negev and the Gaza envelope are family businesses facing a generational transfer (our second update). For their owners, a partner's knowledge of the region is part of the succession plan, not a detail of the price.

What changed in the south between 2022 and today?

Asked what he would tell an investor in one minute, Zelkind answers with a condition and a view:

"The size of the opportunity. If an investor shares the view that the current period is drawing to a close and that post-war prosperity will follow within three years, then the time to buy a business here is now."

That is his view on the timing of acquisitions in the region, stated with its condition. It is not a promise of any result. The numbers say the Otef already sells more than it did before the war. The judgement on what comes next is each investor's own.

What does the number mean for a buyer of a plant in the south?

Fronterra reads the turnover figure the way it reads a plant: as a starting point for questions, not as an answer. The people, the leverage, the labour and the local knowledge decide whether a business in the south is a business case. That has not changed since 2022.

Sources

1. Idan Eretz, "Three years after 7 October: how far has the economy really recovered?", Globes, 7 October 2026, republished on N12 (Hebrew), read 25 October 2026.