World Bank: Tunisia proved addressing unemployment should be top regional priority

Salma El-Wardani , Tuesday 18 Jan 2011

In an interview with Ahram Online on the eve of the Arab Economic Summit, World Bank MENA vice-president, Shamshad Akhtar, warns against high rates of unemployment and slow rates of growth

Shamshad Akhtar

Ahram Online: How do you think the recent crises that has hit the Arab region will affect the World Bank's work with MENA countries?

Shamshad Akhtar: Well, it might be very early to give my comments on these very recent developments, because we’ve to do first assessment studies of the situation. Whatever the results are, we’re going to support the people of Tunisia, and prop up their cause.

Do you think the Tunisian uprising will lead to structural economic changes in the region and will reshape the economic policies in the next phase?

Well, I think the good thing about the Tunisian crisis is that it will urge leaders to address the issue of unemployment. The region has for many years recorded very low rates of economic growth, which remains 4.5% on average for MENA since 2000. The crisis has proved unemployment is the main biggest challenge. Studies by the World Bank estimate the rate of unemployment to have been above 10% throughout the past 10 years. That high rate is because growth remained below its potential when compared to other regions.

Away from the crisis, can you outline the Arab region's achievements and development challenges?

First of all there is the problem of unemployment. Second, there is the week quality of education in the region, and that needs to be urgently addressed. Also, most of the Arab countries have failed to achieve a technological boost, with industrial exports accounting for only 0.6% of total exports. Countries like Egypt, Tunisia and Jordan have achieved little progress.

Nevertheless, there are still many positive points that we should highlight. For example, the region has proved stable in times of severe crisis. MENA has largely improved access to basic services, progressed on millennium development goals agenda .

Also, most of the region’s economies, including Tunisia, have managed to attain “middle income status” with some few already achieving high income.

What’s the way out?

I think, the region needs to systematically develop knowledge-based economies. Arab countries should have a comprehensive analysis of trends in the growth of trade in goods and services of relevance for the region, through identifying the promising trade and foreign investment opportunities using technology.

The role of private sector and small and medium and micro enterprises should be expanded to the maximum to improve industry competitiveness and the environment of investment.

They also need to be focused on deepening regional integration by minimizing inter-tarriff barriers, and developing the system of regional infrastructure to help facilitate the flow of energy resources, plus improving transport services.

And, how do you think the Bank could help face such challenges?

We have direct contacts with governments of the region, what the bank can do is focus more in the next phase on collective action with Arab governments to address causes for recent crises including unemployment, better use of economic, energy and trade diversification.
Also, across Arab countries work is being launched on providing technical and knowledge support, and analytical researches that help identify the challenges and offer recommendations.

As for financial support, the Bank has, for the first time, with support of public and private sector, developed the Arab Infrastructure Financing Facility in partnership with the Islamic Development Bank. A large concentrated solar power development package is being launched.

How do you think the memorandum the WB signed on Tuesday with the Arab League could foster economic growth?

Through the Arab World Initiative, adopted by the bank in 2007, the Bank will support  the top proirities of the region in areas of human development, infrastructure and job-creation, micro, small and medium enterprises, fostering Arab cooperation and helping the region face unemployment, by providing finance, technical support and advisory for members in the Arab League.

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