How are Governments in the Middle East and North Africa Failing to Enable Youth Economic Opportunities?

Introduction: The Middle East region remains plagued by considerable obstacles when it comes to providing economic opportunities for its youth population. Despite their potential and aspirations, young people in the region encounter numerous challenges in finding suitable employment and establishing successful businesses. This article aims to provide a comprehensive analysis supported by recent statistics, shedding light on the failures of governments in the Middle East that hinder economic opportunities for the youth. Youth unemployment rates in the Middle East and North Africa (MENA) region are among the highest in the world. According to data from the International Labour Organization (ILO) in 2021, the youth unemployment rate in the region stood at a staggering 24.1%, almost three times the global average. This alarming figure underscores the pressing need to address the barriers that impede the youth from accessing economic opportunities.

Additionally, youth make up a significant portion of the population in the Middle East, with approximately 30% of the region's population falling between the ages of 15 and 29. This demographic dividend presents a valuable opportunity for economic growth and development. However, various factors contribute to the challenges faced by young people, limiting their potential contribution to the region's economies.

Governments in the Middle East have struggled to effectively address these challenges, resulting in missed opportunities for youth empowerment and inclusive economic growth. By examining recent statistics and analysis, we can identify the key government failures that hinder economic opportunities for the youth in the region. Through a deeper exploration of these failures, we can gain insights into the critical areas that require attention and reform. By understanding the specific shortcomings of governments in the Middle East, policymakers and stakeholders can work towards implementing targeted solutions that enable youth to thrive and contribute to their nations' economies.

A) Lack of Transparency: A Major Obstacle to Direct Investment and Economic Growth. Transparency remains a critical factor in attracting foreign direct investment (FDI) and fostering economic growth. However, many governments in the Middle East still struggle with transparency issues. According to the 2020 Corruption Perceptions Index by Transparency International, several countries in the region received low scores. For instance, Iraq ranked 160th out of 180 countries, Syria ranked 178th, and Yemen ranked 179th. These low rankings reflect the lack of transparency in policies, regulations, and decision-making processes, which creates uncertainties and inhibits investment.

B) State-Owned Enterprises Impede Youth Entrepreneurship in Key Sectors. State-owned enterprises continue to dominate various sectors in the Middle East, posing significant barriers to youth entrepreneurship. These enterprises often enjoy monopolistic positions, limiting competition and hindering innovation. According to the World Bank's Enterprise Surveys, in countries like Egypt, Jordan, and Lebanon, state-owned enterprises account for a significant portion of the economy, making it difficult for young entrepreneurs to enter the market. This lack of competition stifles the development of a dynamic entrepreneurial ecosystem, restricting economic opportunities for the youth.

C) Poor Government Policies in Education and Skill Development. The quality and relevance of education remain crucial factors in enhancing youth employability and fostering economic development. However, many Middle Eastern countries face challenges in aligning their education systems with market needs. The World Economic Forum's GlobalCompetitiveness Report 2020-2021 highlights these issues, revealing low scores for several countries in the region. For instance, Yemen ranked 141st out of 141 countries in terms of the quality of primary education, while Egypt ranked119th and Iraq ranked 138th. These low scores indicate the need for significant improvements in education policies to equip graduates with the necessary skillsdemanded by the job market.

D) Governments Prioritize Political Power over Equitable Wealth Distribution. In some cases, governments in the Middle East prioritize political power over equitable wealth distribution, exacerbating income inequality and limiting economic mobility, particularly for the youth. Recent data from the World Inequality Database indicates persistently high levels of income inequality in the region. For instance, as of 2022, the top 1% in the Middle East and North Africa region held approximately 22.9% of the national income, reflecting a significant concentration of wealth. This concentration of wealth restricts economic opportunities for the youth and hampers inclusive growth.

E) Conflict as an Obstacle to Economic Boost Prolonged conflicts and instabilitycontinue to impede economic growth and opportunities for the youth in the Middle East. The ongoing conflicts in countries like Syria, Yemen, and Libyahave devastating consequences on the economy and hinder the creation of sustainable economic opportunities. According to the World Bank, the conflicts in the region have resulted in significant economic losses. For example, the Syrian conflict has caused an estimated $226 billion economic loss, with lasting impacts on employment and investment prospects. These conflicts hamper economic development and limit the potential for youth entrepreneurship and employment.

F) Lack of Peaceful Transition of Power and Democratic Processes. Smooth transitions of power and robust democratic processes are essential for creating a conducive business environment and fostering sustainable economic growth. However, the Middle East continues to face challenges in these areas. The Democracy Index 2020 by the Economist Intelligence Unit highlights the limited progress in democratic development in the region. Several countries ranked low on the index, such as Saudi Arabia at 166th out of 167 countries and Syria at 165th. These rankings reflect the lack of stability, political freedoms, and inclusive governance that hinder economic growth and restrict business opportunities for the youth.

 G) Lack of Public Trust Hinders Tax Compliance and Adherence to Regulations. The lack of public trust in the system poses a significant challenge in terms of tax compliance and adherence to regulations among the youth in the Middle East. When individuals do not trust the government to utilize tax revenues effectively or provide adequate support and opportunities, they may be less inclined to pay taxes willingly. This lack of tax compliance limits the government's ability to fund public services and invest in initiatives that benefit the youth. According to the World Bank's Worldwide Governance Indicators, several countries in the region score low in terms of government effectiveness and control of corruption, indicating the erosion of public trust. Moreover, the lack of trust also leads to a significant number of youth engaging in the informal sector, where they can operate outside the formal system. The informal sector typically offers limited growth prospects and lacks the benefits and protections provided by the formal economy. According to the International Labour Organization (ILO), the informal sector in the Middle East and North Africa region employs a substantial portion of the workforce, with rates as high as 70% in some countries. This phenomenon further restricts youth access to meaningful growth opportunities and hampers their ability to secure stable and productive careers.

H) Financial System Geared Toward Established Businesses and Risk Aversion. The financial system in the Middle East and North Africa region is often geared toward established businesses and displays a high level of risk aversion. Financial institutions generally perceive youth as high-risk and non-bankable due to their limited credit history, collateral, and business experience. As a result, youth face significant challenges in accessing financial services and obtaining loans to start or expand their businesses. This limited access to finance hampers youth entrepreneurship and economic growth in the region. According to the Global Entrepreneurship Monitor (GEM) report, only a small percentage of youth in the Middle East and North Africa region have access to formal financial services for entrepreneurial purposes. This lack of access to financing options limits their ability to invest in their ideas, expand their businesses, and contribute to economic development. Additionally, risk-averse financial institutions often prioritize collateral-based lending, which further restricts the youth's access to capital. To address these challenges, there is a need for financial institutions to develop innovative and inclusive financial products and services tailored to the specific needs of youth entrepreneurs. This can involve alternative lending models, such as peer-to-peer lending platforms or microfinance programs targeted at youth. Governments and stakeholders should also work towards building trust, enhancing financial literacy, and implementing supportive policies to encourage financial institutions to cater to the needs of the youth and mitigate risk perceptions.

Conclusion: To overcome the challenges hindering youth economic opportunities in the Middle East, governments and stakeholders must prioritize building public trust, ensuring transparent governance, and implementing inclusive policies. Simultaneously, financial institutions need to develop innovative financial products and services tailored to the needs of youth entrepreneurs, ensuring equitable access to finance. By addressing these barriers and fostering an enabling environment, the Middle East can unlock the untapped potential of its youth population, driving sustainable economic growth and prosperity for all. It is imperative that concerted efforts are made to empower the youth and create a conducive ecosystem for their success, ultimately leading to a brighter future for the region.

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** Hisham Jabi is an international development specialist based in Washington, DC. He is the CEO of Jabi Consulting in Washington, DC andand MENA “www.jabiconsulting.com” He can be reached at hjabi@jabiconsulting.com