BY FERID BEHAJ
As the coronavirus sweeps across the Middle East and North Africa (MENA) region, uncertainty and fear are gripping the streets. Citizens are turning to their governments to act; however, lack of transparency over decades has bred distrust and, in many instances, undermined state credibility. People cannot be certain if daily reporting and updates are true. As someone aptly described the leadership response to the pandemic: “When you lose people’s trust, even when you tell the truth, people won’t believe you.” Governments need to be reminded of this sad reality.
As if a global pandemic amid social unrest were not enough, more than any other region MENA is confronting two distinct but related shocks. Alongside the spread of the virus, oil prices collapsed. This is putting pressure directly on incomes and fiscal accounts of oil exporters; and it is indirectly, but heavily, affecting the region’s developing economies that rely on worker remittances, foreign direct investment, and transfers from high-income neighbors.
As we fight the spread of the virus, policies designed to contain the pandemic, such as generalized social distancing, are having at least short-term recessionary consequences with potentially grave economic costs. The World Bank Group is committed to helping countries weather these shocks with financing and expertise, with the intention of leaving no one behind.
We have put together a coronavirus emergency financing facility of $14 billion, and are working tirelessly to ramp up our operations. On March 25, President David Malpass committed $160 billion over the next 15 months to finance support operations tailored to the needs of each country, with an emphasis on policy-based financing and protecting the poorest households and the environment.
Yet soon, together with our partners in MENA, we will come out of emergency mode. We will need to come out stronger than ever, with a hopeful vision for a brighter future for the region.
MENA stands out as the only region that has dropped in data capacity and transparency since 2005, as many countries in the region have either lagged in their ability to generate data or have prevented access to data altogether.
To bring new hope to people, we must learn and change. After all, when the virus arrived, the region, and I mean all of it — its leaders, entrepreneurs, educated youth, broader civil society — was already engaged in difficult debates about the past, and the future development of their countries. All of society seemed to be at stake, from the nature of political systems to technical aspects of social and macroeconomic policies.
Our new regional economic update contributes important details to these debates by examining the importance of government transparency. If there is a single lesson to draw from the pandemic, it is that transparency in public information can save lives and improve economic outcomes, partly by enhancing societal trust in the state.
Unfortunately, the region has under-performed for years, if not decades, in the transparency department. MENA stands out as the only region that has dropped in data capacity and transparency since 2005, as many countries in the region have either lagged in their ability to generate data or have prevented access to data altogether.
Reliable data and transparency help improve public policies and enhance people’s trust in government. Conversely, lack of data and transparency could be at least partly responsible for the region’s chronic low-growth syndrome. Since the beginning of the
21st century, growth of output per capita across MENA has been lower than what is typical for economies with the same levels of development. The new report argues that if MENA had grown at the typical rate observed in the rest of the world, the region would be at least 20 percent richer than it is today.
Our economists also found that lack of transparency hurts even more when systems are under stress by potent threats such as the current pandemic. The region’s declining data transparency has resulted in losses of income per person ranging between 7 percent and 14 percent. So, it is plausible that the lion’s share of income losses during the 21st century have been due to lack of transparency.
It is difficult to think of more important, long-term challenges for MENA than raising the pace of economic growth, solving fiscal vulnerabilities, and improving the performance of labor markets across the region. Yet, these are areas with missing information or ambiguous data. This latest research helps shed light in dark corners of crucial policy debates.
The grievances that sparked protests across MENA can only be addressed by rebuilding trust. The coronavirus pandemic has put in stark relief what is at stake: Nothing less than human lives and prosperity. –AN
