World Bank urges market access for Mena’s non-government enterprises
Ensuring market access to the private sector and giving it the freedom to compete with government-run businesses are essential for sustainable job creation in the Middle East and North Africa, the World Bank has said.
The region requires a more “vibrant” private sector as well as regulatory reforms for the labour and product markets, the Washington-based lender said in a report.
“Governments must reshape their relationships towards the private sector, towards workers, and, equally important, towards women,” Ferid Belhaj, the World Bank’s Mena vice president, said.
The report, which was released on Monday, recommended an incremental approach to structural changes and urged governments to focus initially on emerging sectors such as the digital economy and green economy, which have fewer incumbents and powerful interest groups, to minimise political challenges. Employment in Mena countries rose by 1 per cent annually, within private-sector firms, but the female labour force participation of 20 per cent is the lowest in the world, the lender said.
The youth unemployment rate, estimated at 26 per cent, is the highest. Nearly one in three young people (32 per cent) aged between 15 and 24 in Mena are not engaged in employment, education or training, according to the report.
More than half the region’s population – nearly 250 million people – are under the age of 30. They are educated and ambitious, looking outward to their peers around the world and demanding decent lives and better government services, it said.
“Instead of being active in economic sectors, the state must enable a well-regulated competitive private sector,” Mr Belhaj said.
Most of the region’s economies lack market contestability, the report said. One of the major causes is state-owned enterprises that “play a dominant role and receive preferential treatment” regarding taxes, financing and subsidies.
Several Mena countries rely on middle-skill occupations, and their workers perform fewer tasks that require skills essential for the jobs of the future, such as technical and socio-behavioural skills, the report said.
“Governments in the Mena region can avoid another lost decade for current and future generations by enacting brave and politically feasible reforms,” said the report’s co-author, Federica Saliola, lead economist with the social protection and jobs global practice at the World Bank.
The report also recommended that governments reduce the dominance of state-owned enterprises.
“A dynamic private sector is the cornerstone of good jobs,” said co-author Asif Islam, a senior economist in Office of the Chief Economist, Mena region, at the World Bank.
“Young people are energised as they participate in the private sector, learn valuable skills and gain a sense of purpose as they become stewards of their own destiny.”