Steve January 14, 2021
the-arab-world-must-avoid-another-lost-decade

Ten years ago, the Tunisian people revolted against President Zine El Abidine Ben Ali and toppled him. They denounced his regime, his policies and his corrupt practices and called for jobs, freedom and dignity. This was the cry of millions of young people frustrated with the arrogance of cronyism, the widening gap in economic opportunity and the stifling of free speech.

Soon, the desire for change in North Africa and the Middle East triggered protest waves across the region. Those early waves of hope – which some labelled the “Arab Spring” – led to the fall of governments in Egypt, Libya and Yemen. But as we now know, the wave crashed into a maelstrom of disillusionment, political opportunism, authoritarianism, violence and civil war.

A decade after those dramatic events, what happened to dignity and freedom? What happened to economic opportunities? Are the youth of the MENA region better off today than they were a decade ago?

Despite increased aspirations and limited political opening achieved in some countries and despite substantial support from the international community, deep changes to economic governance and outcomes failed to materialise in the last decade.

With very few exceptions, MENA countries have run up unsustainable public debt and increased their dependence on capital inflows. While some in the region, mainly in the Gulf, have shown improvements in the ease of doing business, the overall competitiveness of MENA countries falls short of the region’s potential.

According to a new opinion poll by The Guardian and YouGov, a majority of those surveyed in Sudan, Tunisia, Algeria, Iraq and Egypt do not regret the protest. Yet, more than half of respondents in Syria, Yemen, Libya and Sudan say their lives are worse than before the uprising.

Even in Tunisia – arguably the closest country to a democratic success story – 50 percent say their lives are worse today, while only a little more than a quarter of respondents say their lives are better. And there is diminishing hope: a majority of those surveyed in Yemen, Syria, Iraq, Libya, Sudan and Tunisia believe their children will face worse futures than before the protests.

That future is far from inevitable. But without a sweeping change in trajectory, there will likely be another lost decade in the MENA region.

Building a new social contract

The discontent that impelled momentous shifts a decade ago is possibly even stronger today. The youth of MENA suffer from a lack of opportunities and have dim hopes for the future. To avoid another lost decade, MENA governments must fix a broken social contract and the distorting and corrupting role of the state in the economy.

By current demographic trends, the MENA region will need to generate 300 million new jobs by 2050. This is a far-reaching challenge but far from a distant one. There is no time to prepare. The World Bank estimates that MENA countries will need to begin creating 800,000 jobs per month – starting right now – just to keep pace with new workers entering the market.

These millions of new jobs will not be created by governments, nor can they be absorbed by the public sector. The only way to tap into the energy of the region’s youth is to revitalise economies, open more doors to the private sector, instil transparency, accountability and governance into the affairs of the state, and have government play its role as a fair regulator.

Unfortunately, challenges abound. Across much of the region, the education sector is still stuck using old curricula and outdated teaching methods. COVID-19 painfully revealed the weaknesses of health systems. Social protection programmes are cracking at the seams. The latest World Bank Human Capital Index report found that a child born today in MENA will be a little less than half as productive (57 percent) as they would be if they benefitted from complete education and full health.

Paradoxically, building human capital is one of the most crucial roles of the state. However, there is a yawning absence of state leadership in many MENA countries. Governments, playing their rightful role, need to make an immense effort to equip their youth to grow and compete in an ever more globalised world.

It must be more than a financial investment, because MENA is already spending large portions of its gross domestic product (GDP) on health and education, with largely unsatisfying outcomes. More rational use of resources and better governance of health and education systems is what the region needs.

Opening more opportunities for women and their economic empowerment is another fundamental axis of progress. In MENA, there remains a gender paradox: women are far more educated and better performing in academic settings than men, but only a fraction of them are economically active.

MENA governments must also rethink their approach to social protection, which currently relies on costly, misguided subsidies. For too long, states have chosen the politically easy and economically disastrous path to a flawed social contract, whereby basic goods and services are made available at “protected” prices to buy political allegiances and “social peace”.

These policies are no longer viable. Governments cannot keep up with the price tag and people – most notably the youth – are no longer accepting a quid pro quo that silences their grievances and stifles their aspirations.

The failure of this outdated and flawed social contract, in very large measure, brought about the unrest across the region 10 years ago. It is now past time to adopt empowering policies that would relieve the state from burdens it can no longer sustain and redirect scarce resources towards bolstering human capital and preparing today’s youth for the jobs of tomorrow.

Government’s role in the economy

In a healthy economy, the private sector and entrepreneurship need space to develop. The government plays a key role as the regulator of the economy. That entails setting clear and predictable rules, instilling market contestability to prevent monopolistic practices and empowering the justice system to enforce the rule of law. These are the basics for any open-market economy and the conditions to attract foreign and domestic investment.

There is a glimmer of hope with some countries working to bend their arc of development. Morocco stands out: it is on a path to opening the country to the world and investing heavily in modernity, while guarding its macroeconomic stability. With most of the world’s focus today on short-term management of the COVID-19 pandemic response, Morocco has been implementing key new reforms that could potentially help transform the future of the country and its people.

However, it is important to point out that macroeconomic indicators can be misleading. They can hide harsh social realities and weak governance, as was the case in Tunisia 10 years ago. Throughout MENA, wide-ranging economic and social reforms and a strong signal of zero tolerance for the sadly still rampant corrupt practices are in order.

Unfortunately, these policies are the exception rather than the rule. Large sectors of MENA’s economies are still mismanaged by state-owned entities that operate well outside of market realities. The region’s current economic landscape imposes a heavy burden on taxpayers and closes the door to far too many private investors.

No one is arguing for the automatic privatisation of state-owned enterprises. What MENA governments need to do is open markets to competition, introduce public-private partnerships and revitalise segments of their economies that have been inefficient or dormant altogether. Governments need to have the political courage and the legitimacy to explain these reforms and adopt social policies to protect anyone left behind.

A decade unbound

Ten years after the most significant shift in a century, nothing is resolved in the MENA region. The frustrations that ignited the Arab Spring predominate, compounded by more violence, social unrest, and – in many instances – weaker, more corrupt governments. More young people, many with university degrees, dream of a better future elsewhere in the world.

To avoid another lost decade, a loud call to take action needs to resonate all across MENA – from the “ocean to the Gulf”. The immediate task is to open the door to private enterprise, win over the resistance to liberalising economies and empower youth with opportunities to match their limitless potential.

Governments need to enact fair laws, adopt enabling regulations and enforce them fairly. That will unleash the energy of millions of young people who will choose to create opportunities and wealth at home rather than taking their talent abroad or risking their lives crossing the sea.

Countries in the region need to leave it to the entrepreneurs, the creators, the innovators and those ready to take high risks for high rewards to transform MENA’s economies. They will create jobs and instil hope in the region’s youth. Give them space and support, follow their lead and see what a decade unbound will look like across the region.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.

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