Ensuring the private sector can gain access to markets and compete equally with government-run businesses is vital for countries across the Middle East and North Africa (MENA) to create jobs in a region with the highest youth unemployment in the world, according to a new World Bank report.
The report, titled “Jobs Undone: Reshaping the Role of Governments Toward Markets and Workers in the Middle East and North Africa,” offers policy recommendations for how MENA governments can overcome continuing labor market stagnation that undermines economic development and social progress a decade after the Arab Spring uprising.
Crippling joblessness, especially among MENA youth and women, requires a more prominent and vibrant private sector as well as regulatory reforms for the labor and product markets, says the flagship report.
“This report argues that governments must reshape their relationships toward the private sector, toward workers, and, equally important, toward women,” said Ferid Belhaj, World Bank Vice President for the Middle East and North Africa. “Instead of being active in economic sectors, the state must enable a well-regulated competitive private sector. Instead of controlling worker transitions through an outdated labor code, the state must re-think its social protection and labor market programs. And instead of guarding the legacy of some historical and social norms, the state in the MENA region must be the faithful guardian of gender equity.”
Employment in MENA countries grew one percent per year on average within private sector firms, which is much lower than the five percent average among middle-income peers. Female labor force participation of 20% is the lowest in the world, along with the high youth unemployment rate estimated at 26%.
Using two rounds of World Bank Enterprise Surveys (WBES) available for the first time for the MENA region, the report offers a new perspective on the challenges facing private sector development that is crucial for job creation.
In particular, the report shows how the number and quality of jobs in the economy depend on contestable markets – those in which there is ease of entry and exit of firms, and where the pressure of potential competition always exists. It presents new evidence on product market regulations — which cover policies promoting or inhibiting market contestability — in Egypt, Jordan, Kuwait, Morocco, Saudi Arabia, Tunisia, the United Arab Emirates, and West Bank/Gaza that for the first time enables comparisons within MENA and with 51 countries outside the region.
Most of the region’s economies lack market contestability, the report says, and a major reason is state-owned enterprises that play a dominant role and receive preferential treatment regarding taxes, financing, and subsidies. In addition, many MENA countries have agencies that act as both government regulators and operators in state-owned enterprises, which weakens competition, while price controls and subsidies reduce incentives for private sector participation.
MENA countries also still rely on middle-skill occupations, arguably driven by their very large public sectors, with workers performing significantly fewer tasks that require skills essential for the jobs of the future, such as higher-order cognitive (technical) and socio-behavioral skills, according to the report.
“Governments in the MENA region can avoid another lost decade for current and future generations, by enacting brave and politically feasible reforms,” said report co-author Federica Saliola, lead economist with the Social Protection and Jobs Global Practice at the World Bank. “The COVID-19 pandemic, as difficult as it has been, is an opportunity to support a resilient and inclusive recovery that generates better jobs while addressing both the immediate devastation wrought by the disease and longer-term challenges.”
To improve market contestability, the report says governments should reduce the dominance of state-owned enterprises, for example, by eliminating exclusions and exceptions from competition, procurement and tax laws that are applied to private operators.
The report also calls for reforms in some countries to address restrictions on women working in specific industries, as well as limited working hours for women, unequal pay compared to men, and the need for women to obtain spousal permission to get jobs.
“A dynamic private sector is the cornerstone of good jobs,” said co-author Asif Islam, a senior economist in the MENA Office of the Chief Economist at the World Bank. “The spirit of entrepreneurship and innovation can propel economies down serendipitous paths of prosperity. Young people are energized as they participate in the private sector, learn valuable skills, and gain a sense of purpose as they become stewards of their own destiny. But for far too long, this has not been the case for the Middle East and North Africa region.”
Noting the potential political and social opposition to such reforms, the report advocates an incremental approach to structural changes and focusing initially on emerging sectors such as the digital economy and green economy — which have fewer incumbents and powerful interest groups — to minimize the political challenges.
To demonstrate the opportunities that already exist, the report includes seven case studies of young entrepreneurs who have launched job-creating businesses in recent years, despite the challenging environment compounded by the COVID-19 pandemic. The case studies document how these men and women from Egypt, Jordan, Lebanon, Morocco, Saudi Arabia, Tunisia, and West Bank/Gaza overcame obstacles, including difficulty obtaining financing and onerous regulations to launch their businesses.
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A new white paper, published on World Ocean Day by the World Economic Forum, outlines critical steps to channel funding to support the health of the ocean and those who depend on it.
SDG14 Financing Landscape Scan: Tracking funds to realize sustainable outcomes for the ocean highlights the fragmented nature of current data on ocean financing and points to the need for innovative tools to track commitments towards and investment in the Sustainable Development Goal for the ocean, SDG14, with better traceability and granularity of information on financial commitments for the ocean.
SDG14 remains the least funded of all 17 global goals, yet achieving it will have significant exponential benefits for people and the planet. Key targets in SDG14 include ending overfishing and harmful fisheries subsidies, tackling marine pollution and minimizing ocean acidification, protecting and restoring ocean ecosystems, and supporting artisanal fishers and Small Island Developing States.
“When accomplished, SDG14 will have impacts that extend far beyond the ocean itself, by boosting food and job security, bolstering our ability to tackle the climate crisis, strengthening coastal defences, and enhancing health and wellbeing for people everywhere,” said Kristian Teleki, Director of Friends of Ocean Action at the World Economic Forum. “We cannot afford to waste precious time or money, and need to direct financing to the areas that need it most. This landscape report is intended to help us do just this.”
Emerging from this new landscape scan is the need to improve the resolution and integration of current data systems and in parallel move towards outcome-based financing. Doing so will require a substantial shift across multiple institutions that track and report on funding. It is also essential to improve SDG14 data capacity at the national and trans-national level. Existing funding streams for SDG14 must be optimized, and critical resources for ocean health must be directed to promote gender equity, target least developed areas, and efficiently leverage funding across sectors to support a sustainable blue economy.
“Our research shows that we must shift to tracking output rather than boosting input in order to overcome the challenges of transparency, traceability, optimization and personalization of financing data,” said Jillian Conrad, Lead Author of the report and Student Fellow at the Nippon Foundation Ocean Nexus Center at UW EarthLab. “The ocean needs ambitious funding and results if we are to promote equitable development of marine systems to benefit coastal communities and stop the decline in ocean health, which has knock-on detrimental effects on us all.
“With a dynamic tool tracking how financing ties to impact, the global community can better direct SDG14 funding with greatest possible positive impact for people and the ocean alike,” she added.
A Friends of Ocean Action statement released earlier this year – No Healthy Planet without a Healthy Ocean – also calls for global action around critical opportunities in 2022 to advance progress for a thriving ocean and stop the decline in its health.
The global community is convening for the UN Ocean Conference from 27 June to 1 July 2022 in Lisbon, Portugal, co-hosted by the governments of Portugal and Kenya. This is a critical opportunity to advance ocean financing and progress towards achieving SDG14.
Ports in the Middle East took four of the top five spots in the second edition of the global Container Port Performance Index (CPPI) developed by the World Bank and S&P Global Market Intelligence. CPPI is a comparable index of global container port performance intended to serve as a reference point for key stakeholders in the global economy.
Saudi Arabia’s King Abdullah Port tops the ranking in 2021, with regional competitors Port Salalah in Oman, Hamad Port in Qatar and Khalifa Port in Abu Dhabi rounding out the top five. Saudi Arabia’s Jeddah Islamic Port also featured strongly in eighth place overall.
The ranking is based on time vessels needed to spend in port to complete workloads over the course of 2021, a year that saw unprecedented port congestion and disruption to global supply chains.
“Increasing the use of digital technology and green fuel alternatives are two ways countries can modernize their ports and make maritime supply chains more resilient,” said Martin Humphreys, Lead Transport Economist at the World Bank and one of the researchers behind the index. “Inefficient ports represent a significant risk for many developing countries in that they can hinder economic growth, harm employment, and increase costs for importers and exporters. In the Middle East, heavy investments in container port infrastructure and technology are proving to be effective.”
The new report also highlights the resilience of East Asian ports and the capacity of Chinese ports in particular to effectively handle challenges brought about by the pandemic.
Three of the large Chinese gateways, Shanghai (Yangshan), Ningbo and the southern port of Guangzhou, feature in the top ten, while last year’s most efficient port — Yokohama in Japan — dropped to 10th place overall.
The index and underlying data are intended to identify gaps and opportunities for improvement that would benefit all key stakeholders in global trade, including governments, shipping lines, port and terminal operators, shippers, logistics companies and consumers.
Key port performance metrics show large discrepancies in global port efficiency in 2021, with top performers such as King Abdullah Port achieving an average of 97 container moves per hour of vessel port time compared with just 26 container moves per hour at the main ports on North America’s West Coast.
More than four-fifths of global merchandise trade by volume are carried by sea, and approximately 35 percent of total volumes and over 60 percent of commercial value is shipped in containers.
“The pandemic highlighted in stark terms the pivotal role port performance plays in the timely supply of goods to countries and their populations. The effects of the pandemic on key global gateways and associated supply chains are very worrying and continue to cause severe supply delays and shortages of goods, leading to higher prices and negatively impacting the financial situation of many companies,” said Turloch Mooney, Associate Director, Maritime and Trade at S&P Global Market Intelligence.
In 23rd place, the Port of Virginia is the top ranked port in North America, followed by Miami (29) and Halifax in Canada (46).
The Moroccan port of Tanger-Med, in 6th place, is the highest ranked port in Europe and North Africa. Cartagena in Colombia (12)ranks highest in Latin America and the Caribbean, while Port Matadi in the Democratic Republic of the Congo (171) is the best performing port in Sub-Saharan Africa.
The Container Port Performance Index is based on total port hours per ship call, defined as the elapsed time between when a ship reaches a port to its departure from the berth having completed its cargo exchange. Greater or lesser workloads are accounted for by examining the underlying data within ten different call size ranges. Five distinct ship size groups are accounted for in the methodology given the potential for greater fuel and emissions savings on larger vessels.
The World Bank has released its new Systematic Country Diagnostic (SCD) report for Uzbekistan, which analyzes key challenges and opportunities for the country’s development. The SCD contains policy recommendations for removing barriers to private sector growth, reducing the state’s role in the economy, focusing on people and their human capital, and transitioning to a green economy. The report provides the foundation for selecting priority areas for the World Bank Group’s cooperation with the Government of Uzbekistan throughout the 2022-2026 period.
In April 2022, the World Bank Group completed work on its second Systematic Country Diagnostic for Uzbekistan, following the first one that was produced in 2016. This flagship report is produced for a partner country every five years to identify key challenges and opportunities to ending poverty and boosting shared prosperity.
Since 2017, the Government of Uzbekistan has implemented transformative reforms to liberalize the economy and business environment, improve the well-being of citizens, and steer the state towards meeting people’s needs, most of which are analyzed in the SCD.
Planning the next generation of reforms, Uzbekistan has set ambitious goals of becoming an upper-middle-income country by 2030 and reducing poverty by half by 2026. Achieving these goals requires much higher economic growth than the current level through faster job creation and reduced economic exclusion— especially among youth, women, and people with disabilities.
“The World Bank’s SCD is a rigorous analysis of the key opportunities and challenges we face as a country. As the report notes, the analysis was prepared under a new era of openness, data transparency, and collaboration between the World Bank, the Government, and other development partners. The priority areas it identifies are fully aligned with Uzbekistan’s development strategy for 2022-2026,” noted Djamshid Kuchkarov, Deputy Prime Minister and Minister of Economic Development and Poverty Reduction of Uzbekistan.
The new SCD sets out four development pathways that can help Uzbekistan achieve these ambitious goals: 1) encouraging more private sector growth and job creation; 2) reforming the role of the state in the economy; 3) investing in people-focused policies and human capital; and 4) building an environmentally sustainable and resilient future.
The report also outlines thirteen priority policy areas that emerged from the analysis in the SCD. Some of the key policy priorities recommended by the World Bank focus on the following areas:
Encouraging private sector growth. The authorities should improve the allocation of land, labor, and finance, as well as the legal and regulatory framework for competition across the private sector; adopt trade and investment policies that favor the private sector’s global integration; establish strong private sector support services; accelerate agricultural market reforms that, among other things, will end the state’s interference in the agricultural market.
Strengthening the market enabling role of the state. The authorities should accelerate the state’s transition from producer to market enabler with fewer and better performing state-owned enterprises; address infrastructure gaps; reduce corruption and improve governance across the state institutions; decentralize government functions; increase public accountability.
Improving human capital. The authorities should address gaps in education quality; improve access to early childhood and tertiary education; strengthen the performance and affordability of the health system; improve water and sanitation services across the country; improve poverty measurement, policy, and targeting; develop labor market policies encouraging the inclusion of vulnerable groups; increase the coverage and adequacy of social safety nets for those in need.
Building an environmentally sustainable and resilient future for Uzbekistan. The authorities should manage natural resources more effectively, including water and land, more efficiently; take measures to decarbonize and modernize the economy, including the energy sector; improve natural disaster management.
“We are grateful to the Government for their close collaboration and for making available all necessary data needed to prepare the SCD. The report serves as an important foundation for the World Bank Group’s new Country Partnership Framework (CPF) for Uzbekistan, which will outline our financial and analytical support to Uzbekistan in implementing crucial reforms in the next five years,” said Marco Mantovanelli, World Bank Country Manager for Uzbekistan.
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