80248 May 2013 - Number 99 MENA REGIONAL BRIEF MENA External Affairs (MNAEX)1 A Backgrounder on MENA: MENA has a population of 355 million, with 85 percent Introduction: The process of political change living in middle-income countries, eight and transition across much of the Middle East percent in high-income countries and seven and North Africa (MENA) continued into 2013, percent in low-income countries. The MENA with a great degree of heterogeneity across region came into the Arab Spring with multiple countries. Violence in Syria has escalated, with strengths: a young and educated population; a spillover effects to Lebanon and Jordan. strong resource base and economic resilience Security in Yemen is fragile but a national that helped it weather the 2008/9 global dialogue has started which includes the financial crisis. Economies across the region drafting of a new constitution in advance of were rebounding. Tunisia and Egypt had national elections. In MENA’s transitioning strong reserve cushions and had benefitted countries drafting of new constitutions remains from tourism and foreign direct investment a critical pending issue. Citizens have not been flows. Absolute poverty was low with silent. Their voices continue to be heard across approximately four percent of the population the region calling for greater public living under US$1.25 a day. But the benefits of participation and open government. growth were not shared equally, and systems in which economic opportunities were In the tumult of the transition process, public monopolized by a privileged few led to social expectation are high and maintaining the frustration and widespread protests. stability needed to allow the transitions to succeed will depend in large part on the ability 2013 Growth Prospects: In 2013, growth in of new governments to deliver significant MENA is expected to slow to 3.8 percent from improvements in the lives of their citizens. 6.4 percent in 2012, when the region was Creating the right environment for growth will recovering from the political turmoil of 2011. be critical as only growth can drive job creation The growth deceleration into 2013 largely for the large numbers of unemployed, reflects a return to more sustainable growth in especially young people and women. Recent some oil exporting countries. Egypt’s growth political changes will only be meaningful if will weaken relative to 2012, but growth of all they lead to concrete social and economic other oil importers will likely accelerate relative improvements, but to date few election to 2012. In the short run, weakened promises have translated into effective policies macroeconomic fundamentals in MENA’s and outcomes. developing economies are a key challenge. Fiscal vulnerabilities have increased, reflecting 1This MENA K&L Quick Note is based on the Regional sustained, high public spending in response to Brief prepared by MNAEX for the April 2013 IMF and political upheaval. External deficits have World Bank Spring Meetings. widened and currencies have weakened, promoting climate-friendly growth to despite moves by governments to avoid manage stresses on natural resources. currency depreciation by drawing down on foreign exchange reserves. In the longer term, These are complemented with a focus on the MENA countries still face the structural cross-cutting themes of Gender, Regional problems that predate the ‘Arab Spring.’ Integration, and fostering a Competitive Private Sector. The region’s main challenge is to create sustainable growth that delivers the quantity Building a Knowledge Base for the and quality of jobs needed. An inclusive and Transition2: A number of reports were competitive private sector has proven to be one produced to assist governments in meeting the of the most effective and long-term solutions defining challenges the region faces during the for unemployment, and will be critical in current period of transition. Jobs for Shared tackling the scale of the problem in MENA. Prosperity: Time for action in MENA focuses on the reforms needed to stimulate growth and the Regional Strategy: In response to the changing jobs that come with it, as well as creating a clear political climate in the region, the World Bank path from school to work. The Way Forward for Group has developed a new framework for Social Safety Nets in MENA offers guidelines for engagement. Along with listening to new shifting limited public funds away from governments to build programs of support that expensive and ineffective universal subsidies meet their specific development goals, the Bank toward systems of targeted cash transfers that has also expanded its consultations to include a better protect the poor, and ultimately help broad range of stakeholders across civil society them climb out of poverty. Opening Doors: whose voices were less accessible under earlier Gender Equality and Development in MENA regimes. Building on the demands of the Arab provides policy proposals for removing the Spring and the reform efforts underway, the obstacles that have produced the world's lowest new framework is based on four main pillars: rate of female participation in the labor force. From Political to Economic Awakening in the Arab  Strengthening Governance through World is directed at both MENA countries and transparency and accountability measures external partners, with an analysis of how the to help create responsive states that are latter can support the political and economic held accountable for their actions; transformations underway in the region. Natural Resource Abundance, Growth, and  Increasing Social and Economic Inclusion Diversification in MENA investigates how the of disadvantaged groups through economic region can overcome dependence on oil which measures and enhanced voice and represents close to 85 percent of merchandise participation (e.g. women and minority exports and encourage greater economic groups); diversification. These were complemented by a range of other reports tackling critical issues  Creating Jobs, including for youth and such as adaptation to climate change and women, by providing an enabling managing the rapid growth of the region's environment for opportunity, competition, cities. innovation and entrepreneurship; and  Accelerating Sustainable Growth through 2 short and long-term policy actions All the documents referenced here can be accessed by using the search function at worldbank.org May 2013 · Number 99· 2 Individual strategies and programs developed activated country advisory teams. The teams for the different countries of the region were include civil society, media, private sector and each designed to meet the specific needs of government representatives to inform the four World Bank clients including oil importers, strategic pillars of the network, Access to non-GCC oil exporters, the technical assistance Information, Service Delivery, Budget needs of the GCC countries and support to the Transparency and Freedom of Associations. To Palestinian territories. date, ANSA-Arab World's Facebook Page has 10,000 users and "Friends of Fans" numbers has Recent IBRD/IDA Financial Support to the reached 208,002. Region: IBRD/IDA lending decreased from US$2 billion in FY11 to US$1.79 billion in FY12 Results from Financial Support: The World as political circumstances slowed World Bank Bank and our partners have a diverse loan programs in the region. FY 13 lending is portfolio. Here are just a few examples of expected to be $2.7 billion of which $2.45 billion results since 2011: from the IBRD and $250 million from IDA. As of April 2013, the International Development Support to poor and vulnerable citizens: Association (IDA), the Bank's fund for the US$100 million in support of Morocco’s Human poorest countries, current active commitment Development program benefitted five million to Djibouti is US$52 million, and to Yemen, people in underdeveloped regions through US$911 million. High-value knowledge services 22,000 sub-projects, with over half the income- to MENA increased from US$8 million in FY11 generating projects focused on women. to a projected $14.5 million in FY13. The number of non-lending economic analytic and Private Sector Development: Through the advisory products also increased from Enhancing Access to Finance for Micro and approximately 120 in FY11 to more than 140 in Small Enterprises, a US$300 million investment FY12. loan to Egypt has started to show results with Results in MENA an initial 4,000 micro and small enterprises in Egypt benefitting from expanded access to Exchanging Ideas, Searching for Solutions : In credit, including 1,000 rural women who now January 2012, MENA Vice President Inger have finance to develop their businesses. Andersen hosted a ‘live chat’ on how to refor m education and foster political freedom while Gender: a US$1 million pilot project in Jordan, maintaining stability. The second online New Opportunities for Women (NOW), tested discussion was held in September 2012 and options for the school to work transition for 673 focused on jobs in the region. The most recent young female graduates who received either online chat in March 2013 was held in honor of training or job vouchers as part of the financial international women’s day and focused on incentives and skills training program. what’s holding women back from economic empowerment in the region. This ongoing Renewable Energy: An integrated Solar dialogue has continued via the MENA Blog and Combined Cycle (ISCC) power plant in Facebook platforms. Kureimat became fully operational at the end of June 2011, and has since increased the share of The Affiliated Network for Social solar-based electricity generation in Egypt by Accountability-Arab World (ANSA-AW) 20 megawatts (MW). The El Kureimat Solar launched in March 2012 has established a Thermal Power Plant had a total project cost of transparently-elected governance structure and US$328 million and included a Global May 2013 · Number 99· 3 Environmental Facility (GEF)3 grant of $US$50 Japan, Kuwait, Russia, Qatar, Turkey and the million. United Arab Emirates. The MENA Multi Donor Trust Fund (MDTF), established in 2012 Governance: A US$ 500 million loan to Tunisia is a World Bank administered technical supported the enactment of reforms to lift assistance facility which provides catalytic restrictions on information and promote support to countries in the MENA region that increased transparency and accountability. are currently undergoing historic transition and Tunisian web sites have increased by 33 percent reform. Aside from the World Bank, funding is and previously unavailable data is now being provided by Denmark, Finland, Norway and made publicly available. the UK. Youth: The Jordan Mainstreaming At Risk Less traditional partnerships are just as crucial. Youth program funded through a grant from One of the sharp lessons of the recent political the japan Social Development Fund ensured awakening has been the urgent need to reach that 100,000 school dropouts in Jordan went out more consistently and consult across a wide back to school and 12,000 at-risk youth received spectrum of civil society, including, among mentoring while 2,500 volunteers have been others, academics, NGOs, unions and the trained to help. private sector. The World Bank is taking advantage of this new space for broader Urban Transport: The US$115 million (US$65 engagement with the conviction that MENA million from the IBRD) Urban Transport countries cannot be successful without good Development Project has meant that 1.3 million governance and the participation of its citizens; people in Beirut have an improved traffic development is richer and more sustainable if control system, reduced congestion on major everyone feels they have a say and a stake. corridors, and on-street parking management, all targeting lost productivity and deteriorating air quality. Partners: The World Bank Group stepped up its partnerships with bilateral and multilateral donors, regional development banks, Islamic financial institutions and emerging country donors. For example the MENA Transition Fund4 focuses on improving the lives of citizens in transition countries, and supports the transformation currently underway in several countries in the region by providing grants for technical cooperation to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms. Donors to this $176 million facility include the US, Saudi Arabia, the UK, Canada, France, 3 For more go to thegef.org 4 For more go to Menatransitionfund.org May 2013 · Number 99· 4