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Promoting private sector, transparency essential for MENA to recover from coronavirus: ERF study

The pandemic and collapsing oil prices brought to light the flaws of MENA economies

Doaa A.Moneim , Wednesday 3 Jun 2020
A man wearing a protective face mask to prevent the spread of the coronavirus disease (COVID-19) walks after Egypt's government made wearing masks mandatory in public places and public transport, in Cairo, Egypt May 31, 2020. Picture taken May 31, 2020. REUTERS

As the Middle East and North Africa (MENA) region has limited resources, it will have to count on innovative design and development of low-cost and scalable ways in order to contain the spread of the COVID-19 pandemic and its related implications, found the latest study published by the Economic Research Forum (ERF) on Tuesday.

The study was drafted by the Chief Economist for MENA at the World Bank Rabah Arezki and the UN Special Envoy for Financing Sustainable Development and Professor of Economies at Cairo University Mahmoud Mohieldin.

The study was originally published on OECD Insights.

According to the study, the dual shock of the COVID-19 and the collapsing oil prices have brought to light the underlying flaws of economies in the region, the flaws that the authorities have to deal with if the region is to prosper.

MENA countries are facing a number of challenges in addition to the pandemic, including the modest adoption of technology, especially digital payments.

Moreover, according to the study, the region risks facing dramatic repercussions if the governments do not become more transparent and raise the information flow.

“By helping ensure that cash transfers actually get to their targets, and not to government cronies, increased transparency and data disclosure will not only strengthen government legitimacy, but also accelerate economic recovery and curb the rise in poverty,” the study asserted.

The study also suggested that health issues, amid the COVID-19 crisis, cannot be tackled without coping with the underlying flaws of MENA economies and societies, including the production systems that are limited by policies which promote overvalued exchange rates and lack of fair competition.

In addition, highly educated young people, especially women, are hampered by the lack of access to digital technology and a poor business climate, according to the study.

In this regard, the study suggested that governments should encourage emerging innovations and leave an ample room for the private sector as the new and sustainable driver of growth.

Touching upon the social implications, the study said that the COVID-19 crisis and its related implications have left the informal sector flatfooted, making it a serious source of unrest than before the pandemic emerged.

Thus, according to the study, MENA countries have to simplify and boost a universal social protection system to replace the current fragmented systems that benefit the few and exclude the many, and they must provide a universal basic income for all and universal health systems as well. MENA is dominated by rent-seeking behaviour, which hampered growth in the region. Having a more efficient and accountable public administration focused on key state functions, including promoting universal health and other social services as well as ensuring the fair competition, will empower MENA countries to ride the wave of innovation towards prosperity, according to the study.


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