Given the ongoing fragility and conflict in the region, the World Bank Group launched a new regional strategy for the Middle East and North Africa in October 2015.
Even as the outlook for growth is positive in the medium term, the strategy remains relevant as the World Bank Group focused on supporting countries in the region recover from instability and lay the foundations for inclusive growth.
Instead of taking conflict and violence as given and working around it, this new strategy, entitled - "Economic and Social Inclusion for Peace and Stability in the Middle East and North Africa: A New Strategy for the World Bank Group" - puts the goal of promoting peace and social stability in the MENA region at its center.
The strategy is built around four pillars (“the 4 R’s”) that respond to both the underlying causes of conflict and violence as well as their consequences through development interventions that foster inclusion and shared prosperity. The four pillars of the strategy are as follows:
(i) Renewing the social contract – to generate a new development model that is built on greater citizen trust; more effective protection of the poor and vulnerable; inclusive and accountable service delivery; and a stronger private sector that can create jobs and opportunities for MENA’s youth;
(ii) Regional cooperation – particularly around regional public goods and sectors such as education, water, and energy so as to foster greater trust and collaboration across MENA countries;
(iii) Resilience - to refugee and migration shocks by promoting the welfare of refugees, internally displaced persons (IDPs), and host communities by focusing on building trust and building their assets; and
(iv) Reconstruction and recovery – through a dynamic approach that brings in external partners, leverages large scale financing, and move beyond humanitarian response to longer-term development wherever and whenever conflict subsides.
In implementing this strategy, the WBG is relying heavily on both deepening and expanding partnerships with national, regional, and global actors, especially the United Nations (UN) and the Islamic Development Bank (IsDB).
With respect to financing, the WBG will continue to expand its investment in the region, but in addition to our own funds, the WBG is working with the UN and IsDB on leveraging and mobilizing global resources through a new MENA Financing Initiative to meet the extraordinary financing needs of the region. Finally, our knowledge work (including our growing RAS program) will be of prime importance in informing and mobilizing the support for the strategy and will lead (rather than follow) our lending.
RECENT LENDING AND ANALYTICAL WORK
Demand for World Bank financing continues to expand in the region, from US$2.8 billion in FY2014 to US$5.9 billion in FY2017 with lending of US$4 billion to date in FY2018. The growing demand reflects the expanded post-2011 fragility in the region and is due to badly needed economic reforms and critical investments, including on social safety nets (Egypt, Tunisia and Morocco), reconstruction and reforms (Iraq), refugee flows (Jordan and Lebanon) and the impact of ongoing conflict (Yemen).
In FY17 Egypt’s US$500 million Upper Egypt Local Development supported the most vulnerable region, while the US$1 billion Fiscal Consolidation and Energy loan supported reforms in subsidies and private sector infrastructure. The latter represented a significant step toward implementing the Maximizing Finance for Development (MFD) agenda, which aims to leverage the private sector to help finance development, while optimizing the use of scarce public resources. The latter was followed by a second US$1.15 billion loan and a $500 million education loan in FY18.
Iraq’s US$1.4 billion Expenditure Rationalization and Energy loan supported macro stability and reforms in the energy and the private sectors. In FY18, Iraq has so far received two loans totaling US$1.1 billion for reconstruction, water utilities and two for social protection. In FY17 Yemen received 5 loans totaling US$783 million in health and nutrition as well a social protection.
Projects focused on refugees and host communities included a US$249 million Employment Opportunities concessional loan to Jordan and a US$36 million concessional loan for health using the Global Concessional Financing Facility (GCFF). A US$147 million education reform loan also supported both countries. In FY17 Lebanon, a US$154 million roads loan supported employment for refugees and host communities and a US$100 million education reform loan also targeted both countries.
A number of analytical studies have been published recently by the Bank addressing key challenges as the region struggles with major political and economic transitions.
The WBG’s latest Middle East and North Africa Economic Monitor examines the opportunities posed by low oil prices and the shift toward renewable energy for the region to leverage new technologies and its comparative advantages to launch a new engine of growth and job creation.
The Toll of War: The Economic and Social Consequences of the Conflict in Syria which examines the impact of the conflict as of early 2017, and finds the biggest loss is from the disruption of economic activity.
Beyond Scarcity: Water Security in the Middle East and North Africa finds that the inadequate supply of water and sanitation is costing the MENA region around US$21 billion per year in economic losses and maps out measures needed to improve water management and distribution.
Shedding Light on Electricity Utilities in the Middle East and North Africa finds that improvements in the efficiency of electricity utilities could cover the average investment urgently needed in the region’s electricity sector, estimated at 3 percent of GDP.
Last Updated: Apr 20, 2018