ESG investments gain momentum in Middle East

ESG investments gain momentum in Middle East

Elia Preto Martini stating in Al-Monitor that ESG investments gain momentum in Middle East is a description of how the region is moving into ESGs through investments.

ESG investments gain momentum in Middle East

Many Middle Eastern investors consider sustainable assets attractive from an ethical perspective, though some ambiguity clouds their economic benefits.
The above image is of Exhibitors and visitors attend the Saudi Arabia Renewable Energy Investment Forum on April 17, 2017, in Riyadh, Saudi Arabia. – FAYEZ NURELDINE/AFP via Getty Images

Investments adhering to environmental, social and governance (ESG) criteria are capturing increasing interest in the Middle East. A 2020 survey carried out by multinational bank HSBC revealed that 41% of regional investors wished to adopt an effective ESG investment policy. A May 2022 PWC report confirmed this trend, adding that Middle Eastern companies’ top three sustainability priorities are diversity and equality, climate change and safety.

The region has long lagged in ESG investments. For example, in the Gulf Cooperation Council (GCC) countries, an economic model highly reliant on non-renewable energy exports has limited interest in ESG practices, especially environmental ones. However, in recent years, Saudi Arabia and the United Arab Emirates have been leading the way in matters of sustainable development, devising national plans to overcome hydrocarbons dependence, increase the share of renewable resources in their energy mix and boost the private sector.

Alena Dique is the founder of ESG Insights Middle East, a regional ESG databank. She told Al-Monitor, “ESG investments in the Middle East have boomed since the pandemic, and this trend will probably remain popular until 2030. Social investing is largely pushed forward by investors who want long-lasting, sustainable contributions left behind as their legacy. At the same time, environmental investments present a huge opportunity for the Middle East, especially with the region hosting both COP27 and 28. However, there is still a long way to go regarding the governance aspect, even though the Middle East is no stranger to responsible investing, ethical practices or sharia-compliant strategies.”

In addition to the ethical aspects, many Middle Eastern investors consider sustainable assets attractive from an economic perspective. A recent GIB asset management report highlights that ESG-compliant investments generally have higher long-term profits. “This is difficult to evaluate as ESG is both qualitative and quantitative. We need to look at how investors choose to assess ESG risk and what areas they look to emphasize. ESG rating might not evaluate all companies the same way or give a true depiction of return on investment all the time. Still, there is no denying that sustainability evaluation exists and can impact the flow of investments,” Dique added.

The increasing interest in ESGs — both at the private and the government levels — has also introduced changes in Middle Eastern business practices. “In the region, ESG strategy has been embraced as a mechanism to drive companies to demonstrate their sustainability credentials alongside their global peers,” said Dique. “New trends, such as creating ESG positions or adopting green policies, show a growing interest in sustainability issues. Regional governments are hands-on with the transition of energy and natural resources, human capital and economic development and now have taken ESG on board too. Change is challenging, but transition takes time — and that can be monitored and measured.”

The Dubai Investment Fund, one of the largest independent investment funds worldwide in terms of assets under management, recently announced the creation of an ESG investment department aiming to track the local and global market and discover the most profitable sustainability assets. ESGs are also gaining momentum in other corners of the GCC, such as Kuwait. In recent months, the National Bank of Kuwait adopted a sustainable financing framework to support the national plan to tackle climate change and integrate ESG standards in all the bank’s operations.

Despite the growing enthusiasm, finance experts argue that ESG funds worldwide have a poor track record in financial performance. Corporate executives should naturally pay attention to employee, community and environmental concerns, but setting ESG targets on this basis may distort the decision-making process and force managers to focus on sustainability issues beyond their relevance for long-term shareholders’ interests.

Even from a regional perspective, some investors are still skeptical about the potential of ESGs. “The Gulf was rather late adopting ESG initiatives, which isn’t necessarily bad, as it is a rather ambiguous and subjective term. The current energy crisis demonstrates what can happen when an initially reasonable idea is taken too far. In this case, the overall shortfall in hydrocarbon capital expenditure can become counterproductive in the long run,” said Ali Al-Salim, Co-Founder at Arkan Partners, an independent investment consulting firm based in the Gulf.

Experts and entrepreneurs also criticize ESG investment because of the lack of clear measures to define what is sustainable and what is not. They claim that ESGs have an ambiguous — and problematic — definition leading to various regulatory approaches in different jurisdictions, which means that there is no standard legal framework to deal with them. “A dose of common sense and a holistic approach to ESG investing — thinking about unintended consequences — is critical for regional investors to consider,” Al-Salim concluded.

Read more: https://www.al-monitor.com

 

 

 

The world retracting from globalisation

The world retracting from globalisation

Connectivity will drive the world’s exchange of goods and services as it were from home, in the future, notably in those emerging countries of the Middle East.  In the meantime, let us know why the world retracting from globalisation.

The above-featured image is of the Fourth wave of globalisation saw China’s increasing role as a global powerhouse.  Getty Images

Is the world retracting from globalisation, setting it up for a fifth wave?

By Elsabe Loots, University of Pretoria
Over the past 25 years there has been lots of research and debate about the concept, the history and state of globalisation, its various dimensions and benefits.

The World Economic Forum has set out the case that the world has experienced four waves of globalisation. In a 2019 publication it summarised them as follows.

The first wave is seen as the period since the late 19th century, boosted by the industrial revolution associated with the improvements in transportation and communication, and ended in 1914. The second wave commenced after WW2 in 1945 and ended in 1989. The third commenced with the fall of the Berlin Wall in 1989 and the disbanding of the former Soviet Union in 1991, and ended with the global financial crises in 2008.

The fourth wave kicked off in 2010 with the recovery of the impact of the global financial crises, the rising of the digital economy, artificial intelligence and, among others, the increasing role of China as a global powerhouse.

More recent debates on the topic focus on whether the world is now experiencing a retraction from the fourth wave and whether it is ready for the take-off of the fifth wave.

The similarities between the retraction period of the first wave and the current global dynamics a century later are startling. But do these similarities mean that a retraction from globalisation is evident? Is there sufficient evidence of de-globalisation or rather “slowbalisation”?

Parallels

The drawn-out retreat from globalisation during the 30-year period – 1914 to 1945 – was characterised by the geopolitical and economic impact of WWI and WWII. Other factors were the 1918-1920 Spanish Flu pandemic ; the Stock Market Crash of 1929 followed by the Great Depression of the 1930s; and the rise of the Communist Bloc under Stalin in the 1940s.

This period was further typified by protectionist sentiments, increases in tariffs and other trade barriers and a general retraction in international trade.

Looking at the current global context, the parallels are remarkable. The world is still fighting the COVID pandemic that had devastating effects on the world economy, global supply chains and people’s lives and well-being.

For its part, the Russia-Ukraine war has caused major global uncertainties and food shortages. It has also led to increases in gas and fuel prices, further disruptions in global value chains and political polarisation.

The increase in the price of various consumer goods and in energy have put pressure on the general price level. World inflation is aggressively on the rise for the first time in 40 years. Monetary authorities worldwide are trying to fight inflation.

Global governance institutions like the World Trade Organisation and the UN, which functioned well in the post-WWII period, now have less influence while the Russian-Ukraine war has split the world politically into three groups. They are the Russian invasion supporters, the neutral countries and those opposing, a group dominated by the US, EU and the UK. This split is contributing to complex geopolitical challenges, which are slowly leading to changes in trade partnerships and regionalism.

Europe is already looking for new suppliers for oil and gas and early indications of the potential expansion of the Chinese influence in Asia are evident.

A less connected world

De-globalisation is seen as

a movement towards a less connected world, characterised by powerful nation states, local solutions and border controls rather than global institutions, treaties, and free movement.

There’s now talk of slowbalisation. The term was first used by trendwatcher and futurologist Adjiedji Bakas in 2015 to describe the phenomenon as the

continued integration of the global economy via trade, financial and other flows, albeit at a significant slower pace.

The data on economic globalisation paint an interesting picture. They show that, even before the COVID pandemic hit the world in 2020, a deceleration in the intensity of globalisation is evident. The data which represent broad measures of globalisation, includes:

  • World exports of goods and services. As a percentage of world GDP, these reached an all-time high of 31% in 2008 at the end of the third globalisation wave. Exports fell as a percentage of global GDP and only recovered to that level during the early stages of the fourth wave in 2011. Exports then slowly started to regress to 28% of global GDP in 2019 and further to a low of 26% during the first Covid-19 year in 2020.
  • The volume of foreign direct investment inflows. These reached a peak of US$2 trillion in 2016 before trending lower, reaching US$1.48 trillion in 2019. Although the 2020 foreign direct investment inflows of US$963 billion are a staggering 20% below the 2009 financial crises level, they recovered to US$1.58 billion in 2021.
  • Foreign direct investment as percentage of GDP started to increase from a mere 1% in 1989 to a peak of 5,3% in 2007. After a retraction following the global financial crises, it peaked again in 2015 and 2016 at around 3,5%. It then declined to 1,7% in 2019 and 1,4% in 2020.
  • Multinational enterprises have been the major vehicle for economic globalisation over time. The number of them indicates the willingness of companies to invest outside their home countries. In 2008 the UN Conference on Trade and Development reported approximately 82 000. The number declined to 60 000 in 2017.
  • Data on world private capital flows (including foreign direct investment, portfolio equity flows, remittances and private sector borrowing) are not readily available. However, Organisation for Economic Co-operation and Development data show that private capital flows for reporting countries reached an all-time high of US$414 billion in 2014, followed by a declining trend to US$229 billion in 2019 and a negative outflow of US$8 billion in 2020.

These declining trends are further substantiated by the evidence of deeper fragmentation in economic relations caused by Brexit and the problematic US/China relations, in particular during the Trump era.

What next?

The question now is whether the latest data is:

  • indicative of either a retraction from globalisation similar to that experienced after the first wave a century ago;
  • or it is merely a process of de-globalisation;
  • or slowbalisation in anticipation of the world economy’s recovery from the impact of Covid-19 pandemic and the war in Ukraine?

The similarities between the first wave of globalisation and the existing global events are certainly significant, although embedded in a total different world order.

The current dynamics shaping the world such as the advancement of technology, the digital era and the speed with which technology and information is spread, will certainly influence the intensity of the retraction of the already embedded dependence on globalisation.

Nation states realise that blindly entering into contracts and agreements with companies in other countries, may be problematic and that trade and investment partners need to be chosen carefully. The events over the past three years have certainly shown that economies around the world are deeply integrated and, despite examples of protectionism and threats of more inward-looking policies, it will not be possible to retract in totality.

What may occur is fragmentation where supply chains becoming more regionalised. Nobel prize winning economist Joseph Stiglitz refers to the move to “friend shoring” of production, a phrase coined by US Treasury Secretary Janet Yellen.

It is becoming obvious that the process of globalisation certainly shows characteristics of both de-globalisation and slowbalisation. It’s also clear that the global external shocks require a total rethink, repurpose and reform of the process of globalisation. This will most probably lead the world into the fifth wave of globalisation.The Conversation

Elsabe Loots, Professor of Economics and former Dean of the Faculty of Economic and Management Sciences, University of Pretoria

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The UN’s Sustainable Development Goals, Threatening Peace & Security

The UN’s Sustainable Development Goals, Threatening Peace & Security

An IPS‘s OPINION b

The IMF had recently sounded some alarm over growing debt sustainability problems in many low-income countries well before the coronavirus pandemic.  The MENA countries don’t escape this potential trauma in the making as more than two years afterwards, the debt situation deteriorated significantly.  A big debt crisis is brewing in the Global South because according to still the IMF, 60% of low-income countries are now at high risk of debt distress.  Together with a growing number of middle-income countries are suffering from high debt service burdens.  Could all this be the root cause of the following?

Intersecting Crises are Impeding the UN’s Sustainable Development Goals, Threatening Peace & Security

 

UNITED NATIONS, Jul 8 2022 (IPS) – This week marks the mid-way point to the 2030 Agenda on Sustainable Development and with it the release of the UN’s Sustainable Development Goals Report 2022.

While we would like to trumpet success stories and report that we are on track in eradicating poverty and hunger and improving health and education in this report, the reality is, we cannot.

Instead, the data show that cascading and intersecting global crises are creating spin-off impacts on food and nutrition, health, education, the environment, and peace and security, presenting existential threats to the planet, and have already undone some of the initial accomplishments towards the SDGs.

In fact, the results of the report reflect a deepening and impending climate catastrophe; a war that is sparking one of the largest refugee crises of modern time; shows the impacts of the pandemic through increased child labour, child marriage, and violence against women; as well as food supply disruptions that threaten global food security; and a health pandemic that has interrupted the education of millions of students.

The report sounds an alarm that people and the planet are in serious challenges, rather than reading as the successful story of progress that we would have hoped for when launching the Sustainable Development Goals (SDGs) in 2015.

The COVID-19 pandemic has halted or reversed years of development progress. As of end of 2021, nearly 15 million people worldwide had died directly or indirectly due to COVID-19. More than four years of progress in alleviating extreme poverty have been wiped out, and 150 million more people facing hunger in 2021 than in 2019.

An estimated 147 million children missed more than half of their in-person instruction over the past two years. The pandemic severely disrupted essential health services. Immunization coverage dropped for the first time in a decade and deaths from tuberculosis and malaria increased.

 

The UN’s Sustainable Development Goals, Threatening Peace & Security

Stefan Schweinfest

As grim as the scenario sounds, we shall set a course for achieving the implementation of the 2030 Agenda through recovery and response: enact new ways of thinking and open up new possibilities.

 

During COVID-19, responses sped up the adoption of digital technologies and innovative approaches. There are some examples of positive trends coming out of the report: There has been a surge in the number of internet users due to the pandemic, increasing by 782 million people to reach 4.9 billion people in 2021, up from 4.1 billion in 2019.

Global manufacturing production grew by 7.2 per cent in 2021, surpassing its pre-pandemic level. Higher-technology manufacturing industries fared better than lower-tech industries during the pandemic, and therefore recovered faster.

In addition, before the pandemic, progress was being made in many important SDGs, such as reducing poverty, improving maternal and child health, increasing access to electricity, improving access to water and sanitation, and advancing gender equality.

War in Ukraine

The war in Ukraine is creating one of the largest refugee crises we have seen in modern time, which pushed the already record-high global refugee number even higher. As of May 2022, over 100 million people worldwide have been forcibly displaced from their homes.

The crisis has caused food, fuel and fertilizer prices to skyrocket, further disrupted supply chains and global trade, roiled financial markets, and threatened global food security and aid flows.

Projected global economic growth for 2022 was cut by 0.9 percentage point, due to the war in Ukraine and potential new waves of the pandemic.

The world’s most vulnerable countries and population groups are disproportionately impacted by the multiple and interlinked crises. Developing countries are battling record inflation, rising interest rates and looming debt burdens.

With competing priorities and limited fiscal space, many are finding it harder than ever to recover economically. In least developed countries, economic growth remains sluggish and the unemployment rate is worsening.

Women have suffered a greater share of job losses combined with increased care work at home. Exiting evidence suggests that violence against women has been exacerbated by the pandemic. Anxiety and depression among adolescents and young people have increased significantly.

Climate Emergency

Low-carbon, resilient and inclusive development pathways will reduce carbon emissions, conserve natural resources, transform our food systems, create better jobs and advance the transition to a greener, more inclusive and just economy.

The world is on the verge of a climate catastrophe where billions of people are already feeling the consequences. Energy-related CO2 emissions for 2021 rose by 6 per cent, reaching their highest level ever and completely wiping out pandemic-related declines.

To avoid the worst effects of climate change, as set out in the Paris Agreement, global greenhouse gas emissions will need to peak before 2025 and then decline by 43 per cent by 2030 from 2010 level, falling to net zero by 2050.

Instead, under current voluntary national commitments to climate action, greenhouse gas emissions will rise by nearly 14 per cent by 2030.

A Road Map out of Crises

The road map laid out in establishing the Sustainable Development Goals has always been clear. Just as the impact of crises is compounded when they are linked, so are the solutions.

In taking action to strengthen social protection systems, improve public services and invest in clean energy, we address the root causes of increasing inequality, environmental degradation and climate change.

We have a valuable tool in the release of The Sustainable Development Goals Report 2022 to understand our current state of affairs. What’s more, in order to understand where we are and where we are headed, significant investment in our data and information infrastructure is required.

Policies, programmes and resources aimed at protecting people during this most challenging time will inevitably fall short without the evidence needed to focus interventions.

Timely, high-quality and disaggregated data can help trigger more targeted responses, anticipate future needs, and hone the design of urgently needed actions. To emerge stronger from the crisis and prepare for unknown challenges ahead, funding statistical development must be a priority for national governments and the international community.

As the SDG Report 2022 underscores the severity and magnitude of the challenges before us, this requires accelerated global-scale action that is committed to and follows the SDG roadmap.

We know the solutions and we have the roadmap to guide us in weathering the storm and coming out stronger and better together.

Stefan Schweinfest is Director of the Statistics Division in the United Nation’s Department of Economic and Social Affairs (UN DESA). Under his leadership, the Division compiles and disseminates global statistical information, develops standards and norms for statistical activities including the integration of geospatial, statistical and other information, and supports countries’ efforts to strengthen their national statistical and geospatial systems.

Read more on original IPS UN Bureau

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Technical standards have a key role in achieving the SDGs

Technical standards have a key role in achieving the SDGs

“Standards are a hidden part of the information and communications technology networks and devices we all use daily”. This is how according to Chaesub Lee the technical standards have a vital role in achieving all SDGs.
We all know that ; then this is perhaps a way out of this traumatic vicious circle.

 

Opinion: Technical standards have a key role in achieving the SDGs

By 

Devex, 7 July 2022
Technical standards have a key role in achieving the SDGs
Technical standards can help address some of the most pressing needs of the planet. Photo by: Matthew Horwood / Alamy

Standards are a hidden part of the information and communications technology networks and devices that we all use every day. Though rarely perceived by users, they are vital in enabling the interconnection and interoperability of ICT equipment and devices manufactured by hundreds of thousands of different companies around the world.

For example, 95% of internet traffic is on fiber, built on standards from the International Telecommunication Union, a specialized agency of the United Nations for ICT. ITU has also played a leading role in managing the radio spectrum and developing globally applicable standards for 5G cellular networks.

But while technical standards are clearly indispensable for business and society to work in our industrialized world, it is also becoming clear that technical standards have a key role in addressing the Sustainable Development Goals.

Indeed, the focus of the recent ITU Global Standards Symposium, which brought together more than 700 industry leaders and policymakers, was how standards can help address some of the most pressing needs of the planet, such as eradicating poverty or hunger and mitigating climate change.

To address SDGs 1 and 2 on ending poverty and hunger, an ITU focus group on “Artificial Intelligence (AI) and Internet of Things (IoT) for Digital Agriculture” is working toward new standards to support global improvements in the precision and sustainability of farming techniques.

Under ITU and the World Health Organization, a focus group on “Artificial Intelligence for Health” aims to establish an “open code” benchmarking platform, highlighting the type of metrics that could help developers and health regulators certify future AI solutions in the same way as is done for medical equipment. Also, standards for medical-grade digital health devices — such as connected blood pressure cuffs, glucose monitors, or weight scales — are helping prevent and manage chronic conditions such as diabetes, high blood pressure, and heart disease.

Standards are helping bring broadband to rural communities with lightweight optical cable that can be deployed on the ground’s surface with minimal expense and environmental impact. The installation of ultrahigh-speed optical networks typically comes with a great deal of cost and complexity. Standards can change that equation by providing a solution able to be deployed at low cost with everyday tools.

To address SDG 11 on sustainable cities and communities, more than 150 cities around the world have started evaluating their progress toward smart-city objectives and alignment with the SDGs using so-called key performance indicators based on tech standards. These cities are supported by United for Smart Sustainable Cities, an initiative backed by ITU and 16 other U.N. partners.

 

International standards, recognized around the world, are essential for making technologies … accessible and useful to everyone, everywhere.

 

Addressing SDGs related to climate action and green energy, ITU standards for green ICT include sustainable power-feeding solutions for 5G networks, as well as smart energy solutions for telecom sites and data centers that prioritize the intake of power from renewable energy sources. They also cover the use of AI and big data to optimize data center energy efficiency and innovative techniques to reduce energy needs for data center cooling.

Financial inclusion is another key area of action to achieve SDG 1 on ending poverty. Digital channels are bringing life-changing financial services to millions of people for the very first time. Enormous advances have been made within the Financial Inclusion Global Initiative and the associated development of technical standards in support of secure financial applications and services, as well as reliable digital infrastructure and the resulting consumer trust that our money and digital identities are safe.

However, the complexity of global problems requires numerous organizations with different objectives and profiles to work toward common goals. Leading developers of international ICT standards need to work together to address the SDGs, using frameworks such as the World Standards Cooperation, with the support of mechanisms such as the Standards Programme Coordination Group — reviewing activities, identifying standards gaps and opportunities, and ensuring comprehensive standardization solutions to global challenges.

Including a greater variety of voices in standards discussions is crucial. It is particularly important that low- and middle-income countries are heard and that a multistakeholder approach is made a priority to have a successful and inclusive digital transformation.

Uncoordinated and noninclusive standardization can spell lasting harm for countries that already struggle to afford long-term socioeconomic investments. Without global and regional coordination, today’s digital revolution could produce uneven results, making it imperative that all standards bodies work cohesively.

Sustainable digital transformation requires political will. It was notable that last year in Italy for the first time, leaders from the G-20 group of nations used their final communiqué to acknowledge the importance of international consensus-based standards to digital transformation and sustainable development.

This important step could not have been made by one standards body alone.

Cities, governments, and companies face a significant learning curve while adopting new tech as part of low-carbon, sustainable, citizen-centric development strategies to meet the challenge of addressing the SDGs. International standards, recognized around the world, are essential for making technologies in areas like digital health and 5G — combined with bigger and better data use — accessible and useful to everyone, everywhere.

The views in this opinion piece do not necessarily reflect Devex’s editorial views.
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About the author
Technical standards have a key role in achieving the SDGs

Chaesub Lee

Chaesub Lee is the director of the Telecommunication Standardization Bureau at the International Telecommunication Union, a specialized agency of the United Nations for ICT. Lee has contributed to ICT standardization for over 30 years, specializing in areas such as integrated services digital networks, global information infrastructure, internet protocol, next-generation networks, internet protocol television, and cloud computing.

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Arab Human Development Report 2022: Expanding Opportunities

Arab Human Development Report 2022: Expanding Opportunities

Arab Human Development Report 2022: Expanding Opportunities for an Inclusive and Resilient Recovery in the Post-Covid Era

Post-Covid Recovery, an opportunity to boost development in the region. Responsive governance, more diversified economies, inclusive societies, and a green transformation critical to achieving sustainable, inclusive development and prevent future shocks and disasters

29 June 2022

 

 

The report contends that a sound recovery from the impact of the pandemic in the region will require a concerted effort to protect the vulnerable, empower citizens, strengthen human rights, ensure the rule of law, and make systems more effective and responsive.

UNDP PAPP

 

 

New York – As they pursue pathways to recover from the impacts of the Covid-19 pandemic, Arab States should strengthen capacities and build effective and trustworthy institutional structures that can support a new social contract and enable societies to cope with future shocks and disasters—according to the Arab Human Development Report (AHDR) 2022 that the United Nations Development Programme (UNDP) launched today.

“Many countries in the Arab States region are still struggling to contend with the devastating socio-economic effects of COVID-19, now compounded by an unprecedented global food, energy and finance crisis that is being precipitated by the tragic war in Ukraine,” says Achim Steiner, UNDP Administrator. “This new report analyses how countries across the region can get hard-won human development gains back on track through concerted efforts in four key areas. That includes building diversified and competitive economies; shaping accountable and responsive governments founded upon the protection of human rights; nurturing inclusive and cohesive societies; and driving forward a green recovery with sustainable human development at its core.”

Produced by UNDP’s Regional Bureau for Arab States (RBAS), the AHDR 2022 is entitled “Expanding Opportunities for an Inclusive and Resilient Recovery in the Post-Covid Era.” It is the seventh in the AHDR series, marking 20 years of keen analysis of development challenges and opportunities across the Arab States region since the launch of the seminal AHDR in 2002.

The report reviews impacts of the pandemic on human development across the region, as well as actions taken by Arab States to contain the outbreak and mitigate its most adverse impacts on people and the economy.  The AHDR 2022 argues that getting human development back on track in the post-pandemic era will require greater efforts to make governance systems more accountable and re­sponsive, economies more diversified and competi­tive, and societies more cohesive and inclusive—in order to ensure a resilient recovery for all.

“The Arab States region has been experiencing various vulnerabilities and is notable for a diverse range of development contexts– but the rapid onset of the global pandemic challenged all to varying degrees, presenting new challenges, and exacerbating vulnerabilities. But as the report tells us, vulnerabilities are not our destiny” said Khalida Bouzar, UNDP Assistant Administrator and Director of RBAS. “Full of potential and brimming with innovative efforts, the region adopted many positive response measures that could be expanded and scaled-up beyond the Covid response. Knowledge and solutions to tackle the region’s challenges exist. Many are known and have been tested and shown to work. Our collective endeavour now is to create the conditions to allow these efforts to blossom and reach fruition.”

The AHDR 2022 contends that human ca­pabilities and human freedoms are enhanced by ac­countable and responsive governments, diversified and resilient economies, and cohesive and inclusive societies. Hence, the report’s focus on examining impacts of the Covid-19 pandemic and measures adopted to contain its implications across the spheres of governance, economy, society, and the environment—considering underlying long-standing development challenges that the region has struggled with prior to the pandemic.

Trust in government is critical to Covid response

The report observes that the efficacy of responses to the pandemic across the diverse development contexts in the region was related to levels of institutional capacity and coordination between government agencies.

For example, Gulf Cooperation Council governments succeed­ed in bringing the pandemic outbreak under control, displaying an average recovery rate that was significantly higher than the global aver­age. Middle-income countries such as Jordan, Lebanon and Tunisia were relatively successful in handling the first wave of the outbreak but loosened their control afterward. Countries in crises had limited capacity to mitigate impacts of Covid-19 outbreaks because of the destruction of their health in­frastructure, displacement or migration of health-care workers, breakdown of social relations and accumulating economic challenges.

During Covid, limited trust in government institutions was reflected in pushback against Covid-19 containment measures and high rates of vaccine hesitancy, a trend observed across different regions globally.

The report also notes that some governments expanded their executive pow­ers through emergency regulations to respond to Covid-19 and protect communities from its impacts. This was sometimes done, given the rapidly evolving context, with limited oversight mechanisms in place. Some put in place new meas­ures that affect civic freedoms, including regulations that expanded digital surveillance of citizens in certain instances. Others applied greater controls of free expression and the media, including social media, under the guise of fighting misinformation. The report cites that the percentage of citizens who believe that freedom of speech is guaranteed to a great or medium extent has declined by 20 percentage points since 2016, from 63 percent to 43 percent in the region.

Rising debt levels may last for a while

The report underscores that the region’s economy contracted by around 4.5 percent in 2020, with fragile and conflict-affected countries experiencing the larg­est average drop—around 15 percent. Despite positive signs at the end of 2021, the report notes that an ac­celerated recovery in 2022 is unlikely, given emerging challenges facing the region. With an average expected growth rate of 5.5 percent for the whole re­gion, driven mainly by the performance of oil-exporting countries, economic growth may continue to be challenging.

During the first year of the pandemic, existing large fiscal deficits widened further across the region, with falling revenues, due to dwindling oil demand, and rising financing needs for containing the pandemic and its economic impacts on households and businesses. In 2020, the average overall deficit widened by 7 percentage points, to 9.2 percent of GDP, while in 2021 the region’s average fiscal deficit narrowed to 2.3 percent and is expected to turn into a surplus of 4.1 percent of GDP in 2022.

Large fiscal deficits have increased government debt, worsening an already vulnerable debt position. In 2020, the region’s overall average government debt peaked at 60 percent of GDP, up around 13 percentage points from 2019. Over the medium term, government debt as a percentage of GDP is projected to rise sub­stantially and remain above 2019 levels for the ma­jority of countries in the region. Net flows of foreign direct investment (FDI) to the re­gion fell by 6 percent in 2020.

In 2021, unemploy­ment rose to 12.6 in the Arab States region, more than double the world average of 6.2 percent. Female labour force participation rates were among the lowest in the world, at 20.3 percent in the Arab States region in 2019. Women’s unemployment rate remained at 24 percent the Arab States region, still three to four times the world average.

In 2021, the region had the world’s highest youth unemployment rate (15-24 years old), at 28.6 percent, rising steeply from 25.3 percent in 2019. The unemployment rate among young women was also the highest in the world, and over twice the figure among young men, reaching 49.1 in 2021 from 44.7 percent in 2019 (compared to 23.8 percent among young men in 2021 and 20.8 percent in 2019).

It is important to note that many of these challenges mirror global trends in the currently volatile context, with a slump in global growth forecast for 2022 and growth across many regions decelerating even further than in the Arab States region.

Widening inequalities

The pandemic has led to widening existing inequalities and exacerbated exclusion, particularly from access to healthcare and education. The report points out that prior to the pandemic, inadequate public financ­ing had placed the burden of healthcare on patients. Out-of-pocket spending averaged 28 percent of household spending in the region, compared with 18 percent worldwide—but with significant var­iations from a low of 6.6 percent in Oman to a high of 81 percent in Yemen.

This reflects the severity of the impact of the pandemic, given this increasing burden was witnessed despite the Arab States region being one of the only regions in the developing world to increase health spending as a share of GDP in the decade prior to the pandemic.

Large percentages of the region’s sizeable refugee and internally dis­placed populations experienced greater difficulty getting medical care during the pandemic outbreak. Host governments in the Arab States re­gion did not include refugees in their national Covid-19 plans, with the notable exception of Jordan.

Following the pandemic outbreak, school closures and the transition to distance education led to the exclusion of significant segments of society. For example, only 55 percent of surveyed children who were enrolled in education in Algeria, Egypt, Jor­dan, Morocco, Qatar, Syria, and Tunisia prior to the pandemic were able to access some form of remote learning after schools were physically closed. Access to distance learning has been higher among students in private schools than public schools. Major inequali­ties in internet access between and within Arab States meant that school closures had a disproportionate negative impact on more vulnerable households, rural and marginalized communities, including refu­gee and IDP children and children with disabilities—increasing the risk of child labour and early marriage among girls.

The report highlights that prior to the pandemic, the inadequacy of care policies, social care service provision, and gendered social norms have contributed to women’s disproportionate burden of unpaid care work in the region, with women devoting 5.1–6.2 times more time than men to unpaid care work in West Asia and North Africa, which is much higher than the world average of 3.2 times. Consistent with global trends, the pandemic has led to a rise in unpaid care responsibili­ties in households across the region, with most of the burden falling on women. The report also records the alarming trend of rising rates of domestic violence targeting women associated with pandemic-induced mobility restrictions, finan­cial stress, and disruptions in access to support services.

Many of these challenges are also witnessed across multiple regions. Governments in the Arab States could take advantage of the current multiple crises to ensure that the recovery promotes sustainable and equitable development.

Opportunity for a green transition

The report estimates that the pandemic resulted in a 5 percent increase in water demand in 2020 for intensified hygiene practices, adding pressures on already scare water supplies across the region, where 18 of the 22 Arab States face serious levels of water scarcity and the average person receives just one-eighth of the global average renewable water per person. The report calls for prioritizing improved water governance and enhanced waste management as key components for post-Covid recovery to be sustainable and resilient.

The AHDR 2022 views with optimism, a growing momentum in the region to diversify beyond the fossil fuel economy and accelerate the transition to renewable energy and energy-efficient solutions. The renewable energy sector has been the only segment of the Arab energy market to experience notable growth, due to its cost-effectiveness and strategic value for carbon-constrained economies. The report singles out solar energy as a strategic asset for diversifying energy consumption, enhancing energy security and building the knowledge-based, high-tech, youth employment–generating economy of the future.

Mainstreaming green solutions into recovery strategies of Arab States is an important opportunity, which can help the region slow negative ecological change and build resilience against future shocks. The report suggests that Global summits can be instrumental in studying the challenges of climate change and envi­ronmental degradation and advancing tangible solu­tions, as with the upcoming United Nations Climate Change Conferences of the Parties (COP) that will be hosted by Egypt in 2022 (COP27) and the United Arab Emirates in 2023 (COP28).

Glimmers of hope

The Report records notable examples of positive responses to the Covid-19 pandemic across the Arab States region. It points to instances where rapid gov­ernment action mitigated some of the worst devel­opment impacts. This included adopting stimulus and support packages to support domestic economic activity; providing direct relief to enterprises, particularly small and medium ones; and financing measures to protect workers through paid leave, unemployment benefits and cash transfers, especially targeting informal workers.

The report also notes successes with effective governance solutions in response to the pandemic, such as the adoption of swift coordination measures to ensure multi-sectoral responses involving nationwide whole-of-government responses in high-income Arab countries. Similarly, other countries adopted arrangements to allow for inclusive participation of local government, civil society, private sector, and communities in national response plans, expanding authorities of local government to take measures to ensure continuity of essential services and to identify and reach out to vulnerable groups.

The report also traces how social solidarity movements and civil society organiza­tions quickly mobilized in response to the pandemic’s challenges, filling gaps in awareness raising, expanding community outreach efforts to help cushion the adverse impacts of the pandemic on the most marginalized and vulnerable groups, and unleashing the power of frontline volunteers to complement strained health and social services systems.

Many governments in the region effectively resorted to digitalization of services in response to Covid, using innovative technologies in such areas as the fast delivery of cash transfers for social protection; telemedicine; safeguarding the continuity of essential public administration services; securing educational continuity through online learning alternative solutions; facilitating remote and tele-working; and ensuring inclusive outreach for vaccination.

A human-development-centred recovery

Covid-19 started as a public health emergency that quickly deteriorated into an economic, social, and human emergency that required whole-of-society responses with strong coordination between responsible govern­ment agencies and meaningful collaboration with private firms, civil society organizations and international organizations.

The report contends that a sound recovery from the impact of the pandemic in the region will require a concerted effort to protect the vulnerable, empower citizens, strengthen human rights, ensure the rule of law, and make systems more effective and responsive. Countries of the region need new social contracts that pave the way to peace, justice, and stability, leaving no one behind, building more resilient, inclusive, accounta­ble and trusted institutions, and expanding human capabilities and freedoms.

The AHDR 2022 underscored that post-Covid recovery presents an opportunity for countries to evaluate and strengthen capabilities and make structural changes to prevent and cope with emerging shocks, including a looming global food crisis, and diminishing international resources for development financing, both related to the current war on Ukraine, as well as future shocks and disasters.

The report’s recommendations for an integrated and human-development-centred approach to recovery include:

  • Investment in enhancing accountability and responsiveness of governance systems and structures, through inclusive and participatory processes to rebuild citizens’ trust in government, strengthen freedoms, human rights and the rule of the law, and leave no one behind. These processes should engage local governments, the private sector, civil society, and citizens, as well as expand the role of local govern­ments in responding to citizen’s needs, delivering services, and combating poverty and inequality.
  • Fostering economic diversification and resilience, by focusing investments on high-productivity goods and services, expanding exports through greater integration with global value chains, and tackling persistent unemploy­ment and labour mar­kets challenges through promoting job creation in the private sector, with decent working conditions, especially for women. This also entails improving the investment climate, strengthening public financial management through enhanced tax man­agement, and boosting social spending to protect the poor and vulnerable.
  • Enhancing social cohesion and inclusion, through inclusive and equitable access to quality social, health and education services; pursuing social cohesion and consensus-building initiatives; enabling greater civic participation and negotiation in the workplace; promoting gender-responsive laws and investing in care policies and services; and ensuring inclusion of marginalized and vulnerable groups in all aspects of the recovery, especially women, migrants, refugees and people with disabilities.
  • Ensuring that recovery pathways are green, through accelerating and scaling-up clean energy transition initiatives; expanding green transportation and infrastructure in­vestments; closing gaps in water and waste services; incorporating circular economy solutions into local development; and advancing ecological restoration and safeguards for biological systems. The report underlines that, if prop­erly planned, green recovery measures can help diversify economies and contribute to growth, generating new and sustainable forms of revenue, creating green job opportunities, and enhancing resilience for commu­nities and the ecosystems on which they depend for people’s lives and livelihoods.

For inquires please contact: Noeman AlSayyad | Communication Advisor | UNDP-RBAS | noeman.alsayyad@undp.org | +962(79)5672901

Read the original UNDP article.


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