In their understanding of good governance and its role in sustainable development, Gulf Business addresses this theme only within the business world of the MENA region, specifically within the Gulf area countries. Let us see what it is all about.
Insights: Understanding good governance and its role in sustainable development
By Dr Ashraf Gamal Eldin
Good corporate governance fosters fair competition, enables efficient utilisation of resources, increases employment opportunities, and develops domestic and regional capital markets.
11 November 2022
Dr Ashraf Gamal Eldin
The term ‘governance’ refers to all forms of regulations, including that of institutions, procedures, and practices used to decide on and regulate matters of public concern. In its most basic sense, governance is about providing direction and ensuring that an institution operates efficiently.
Good governance, however, adds a normative or evaluative attribute to this process. In simple terms, good governance refers to the institutional and political outcomes necessary to achieve developmental objectives. The concept has become increasingly important in recent years, emerging as one of the essential components for growth and sustainable development. The key measure of good governance is the extent to which it upholds human rights, including civil, cultural, economic, political, and social indicators. As a result, it is important to understand good governance and its significance in sustainable development.
Good governance reassures stakeholders that an organisation fulfills its obligations to all of its stakeholders, it treats everyone with respect and dignity, by being transparent about its operations, finances, and conduct. In fact, a major indicator of an institution’s quality and excellence is how committed it is to adopt the principles of good governance in all facets of its operations and decision-making. This is even more important, as it significantly supports sustainable development in institutions. It is widely observed that the inability to uphold these principles can have negative effects on welfare, efficiency, and operational excellence, thereby affecting the long-term success of organisations.
The private sector is growing rapidly in the Middle East and North Africa (MENA) region. Despite the fact that every country is unique, forward-thinking companies throughout the region see better corporate governance as a competitive advantage in their quest for growth and profitability. Consequently, countries in the MENA region are at various stages of developing unique corporate governance frameworks. This could be further driven by making strenuous efforts to create a national environment that supports and encourages corporate governance in the region. The UAE ranked first in the Middle East and 24th globally on the Good Governance Index 2022, which was released by the Chandler Institute for Governance, a non-profit organisation that works with governments to strengthen their capabilities.
Sustainable development argues that the current use of resources should minimize the level of harm to the future generations’ share of resources. ‘Good Governance’ is capable of common sense and the versatile planning that is required for sustainable development.
A good corporate governance system fosters fair competition, enables more efficient utilisation of resources, increases employment opportunities, and the development of domestic and regional capital markets. With governance playing a crucial role in driving efforts to meet institutional goals, it has been referred to as the fourth pillar of sustainable development alongside social, environmental, and economic factors. As there is a strong emphasis on minimising future harm from the current use of resources, governance will certainly aid in shaping versatile strategies that ensure sustainable development across organisations.
Good governance is not a luxury, it creates a competitive edge for companies and economies.
Dr Ashraf Gamal Eldin is the CEO of Hawkamah Institute for Corporate Governance
In a would-be factbox enumeration, what became of the ‘Arab Spring’ by Reuters is explored in the aftermath of the not-so-well-mediatised people’s mass movements in specific countries of the MENA, Here is perhaps the exception give or take a few other countries such as Algeria, Sudan, Iraq, etc.
July 25 (Reuters) – Tunisian President Kais Saied is set to secure more power under a new constitution that is expected to pass in a referendum on Monday, in what critics fear is a march to one-man rule over a country that rose up against dictatorship in 2010. read more
Saied’s opponents fear the changes will deal a major blow to democracy in Tunisia, widely seen as the only success story of the “Arab Spring” uprisings against autocratic rule that elsewhere ended in renewed repression and civil wars.
Here’s a recap of how the Arab Spring panned out for the countries affected:
TUNISIA
Fruit seller Mohammed Bouazizi set himself on fire on Dec. 17, 2010 after a local official confiscated his barrow.
Protests spread from his town, Sidi Bouzid, across the country, turning deadly. President Zine el-Abidine Ben Ali fled on Jan. 14, 2011, inspiring revolts elsewhere.
Police officers control the crowd while surrounding a man suspected to be involved in opening fire on a beachside hotel in Sousse, as a woman reacts, Tunisia June 26, 2015. REUTERS/Amine Ben Aziza
Tunisia held a first democratic election that October, won by the moderate Islamist Ennahda which had been banned under Ben Ali.
A new constitution establishing a parliamentary system was agreed in 2014, and Tunisians choose their lawmakers and president in free and fair elections, most recently in 2019.
However, economic troubles caused hardship and disillusionment. Illegal emigration to Europe increased. The economy, heavily dependent on tourism, was hit particularly hard by COVID-19.
In July 2021, President Kais Saied froze parliament and sacked the government – moves his opponents called a coup but which were welcomed by those Tunisians who were fed up with political bickering and paralysis. read more
A year later, Saied called a referendum on a new constitution that strengthened the presidency, capping what his opponents called a march to one-man rule. Saied has said freedoms will be protected. read more
EGYPT
President Hosni Mubarak had been in power since 1981, but massive anti-government protests began on Jan. 25, 2011 as activists called a “day of rage”, inspired by Tunisia. As hundreds of thousands of protesters massed after Friday prayers three days later, Mubarak deployed the military.
Egyptians rally at Tahrir Square in downtown Cairo February 1, 2011. REUTERS/Amr Abdallah Dalsh
Protests gathered momentum, and the army pulled its forces from the protests and Mubarak stepped down – to be tried in August on charges of abusing power and killing demonstrators.
The once-banned Muslim Brotherhood won the 2012 election but a year later the military, encouraged by anti-Brotherhood protests, toppled the new president, Mohamed Mursi, who was put in prison and died in 2019.
Army chief Abdel Fattah el-Sisi replaced him as president. Rights groups documented abuses in a crackdown on dissent and the military faced a long-running insurgency from Islamist militants in Sinai.
Mubarak died a free man in 2020 aged 91, the case against him having been dropped in 2014.
YEMEN
Crowds took to the streets against President Ali Abdullah Saleh from Jan. 29, 2011, aggravating splits in the army and between political blocs. Saleh was hurt in an assassination attempt in June 2011, forcing him to seek treatment in Saudi Arabia.
Gulf states brokered a transition deal including a “national dialogue” aimed at resolving Yemen’s problems, with Saleh’s old deputy Abd-Rabbu Mansour Hadi to be president until elections.
With an al Qaeda insurgency raging in the east, Sanaa faced new problems in the north from the Iran-allied Houthi group and from a revived southern secessionist movement.
In 2015, after the Houthis seized Sanaa, Saudi Arabia and its allies began a military campaign to keep Hadi in power – a war that soon reached bloody stalemate, aggravating food shortages and cholera outbreaks.
Ex-president Saleh was killed in a roadside attack in 2017 after switching sides, abandoning the Iran-aligned Houthis for the Saudi-led coalition.
A U.N.-backed ceasefire took effect in April, 2022 and Hadi, who had spent years in exile in Saudi Arabia, was replaced by a presidential council.
LIBYA
In first Benghazi and then Misrata, protests broke out in February, 2011, soon turning to armed revolt against Muammar Gaddafi’s 42-year rule.
In March, the United Nations Security Council declared a no-fly zone to protect civilians from Gaddafi’s forces and NATO started air strikes to halt their advance on Benghazi.
By August, rebels had seized Tripoli and in October Gaddafi was captured hiding in a drainpipe outside his hometown of Sirte and killed.
Local militias seized hold of territory and, as chaos took hold, the country split in 2014 between western and eastern factions. The U.N. helped broker a political agreement in 2015, but in practice the country stayed divided and Islamic State seized control of Sirte for more than a year.
In 2019 eastern commander Khalifa Haftar launched a new war, assaulting Tripoli for 14 months before his forces turned back. By now the conflict was international, with Russia, the UAE and Egypt backing Haftar and Turkey the Tripoli government.
A U.N.-backed election – part of a peace process aimed at knitting Libya back together – was cancelled in December, 2021 for reasons including disputes over the rules.
In March 2022, the Sirte-based parliament appointed a new prime minister but the government based in Tripoli refused to step down, leaving Libya split between rival administrations.
BAHRAIN
On Feb. 14, 2011, the biggest protests in years erupted in Bahrain as demonstrators echoed the Egyptian crowd’s call for a “day of rage” to demand the ruling monarchy grant democracy.
As protesters and police clashed over the coming weeks, sectarian tensions rose in a country where many majority Shi’ite Muslims had long chafed against the Sunni ruling dynasty.
On March 14, neighbouring Sunni kingdom Saudi Arabia sent tanks across the causeway linking it to Bahrain to guard major installations. The authorities declared martial law and cleared protesters from the camp that had become their symbol.
Protests continued for months, leading to at least 35 deaths, but the monarchy suppressed the uprising and restored control.
SYRIA
When the first protests began to spread through Syria in March, 2011, President Bashar al-Assad sent in security forces and there was a wave of arrests and shootings.
A youth with his back painted with the colours of Syria’s opposition flag marches during a demonstration demanding that relatives of former president Ali Abdullah Saleh be dismissed from senior army and police posts in Sanaa May 14, 2012. REUTERS/Khaled Abdullah
By July, protesters were taking up arms and army units were joining the gathering revolt, later backed by Gulf monarchies and Turkey, as Assad hit back with air strikes. Full-blown war erupted.
As chaos engulfed the country, the Islamic State group in 2014 seized a swathe of territory, drawing a U.S.-led coalition to back Kurdish fighters in the northeast.
Support from Russia, Iran and Lebanon’s Shi’ite Hezbollah movement helped Assad claw back control over much of the country, defeating the rebels in areas including Aleppo and Eastern Ghouta from 2015-18.
By the end of the decade, hundreds of thousands were dead and more than half the country’s pre-war population was displaced with the country partitioned between Assad, Turkey-backed rebels and Kurdish-led groups.
Writing by Angus McDowall and Tom Perry; Editing by William Maclean
Academic and policy-based research demonstrates that women and youth in most Middle East and North Africa (MENA) countries face legal, regulatory, and socio-cultural barriers to entering the formal labor market and generating income. The economic role of MENA women and youth is vital, as they represent the demographic majority and are highly educated. Nonetheless, they control fewer assets than men.1
Entrepreneurship can be a viable alternative for MENA women and youth because of its prestige in the region and its ability to catalyze inclusive growth.2 Women and youth, however, are less likely to own small businesses and experience greater difficulty in starting and sustaining them. MENA women have lower entrepreneurship rates than men and this has been trending downward over the past decade despite increases in overall entrepreneurship rates. This brief draws on research and evidence to formulate policy advice on how support for entrepreneurship can enhance the economic security of women and youth in what will be a slow and painful post-pandemic recovery.
Prior to the pandemic, extreme poverty was trending downward globally, except in MENA. Extreme poverty in general is likely to worsen as the COVID-19 pandemic persists. The pandemic has compounded the pre-existing economic hardship of both women and youth (age 15-24) in MENA, although individuals in some countries are faring better than others. The MENA region faces rising unemployment, declining household incomes, and deteriorating livelihoods. Furthermore, countries like Iraq, Jordan, and Lebanon are hosting millions of refugees, and Syria and Yemen have a significant portion of their population internally displaced. The prospects of a very uneven two-speed global economic recovery and rapidly rising public debt will limit MENA governments’ spending on social protection for their citizens and refugees alike. As a recent World Bank report notes, the MENA region is expected to face rising poverty, exclusion, inequality, food insecurity, and growing gender divides.
The Political Economy of Protest, Violence, and Extremism
A decade on, the drivers of the Arab Spring, such as youth unemployment, worsening socioeconomic conditions, and dim future prospects, have not been addressed. As noted, the pandemic has only worsened these regional trends. Considering that life satisfaction in MENA was falling over the past decade while the global average was rising prior to the pandemic, the prognosis for MENA’s current political instability must be considered as part of recovery support efforts. It is notable that a majority of MENA academic experts (76% of 1,293) believe that the region is still in a state of protest or will experience another mass wave of protests within the next 10 years. Indeed, many young people recently surveyed by Arab Barometer have continued to say they have lost trust and confidence in their governments.
Research suggests a correlation between higher economic security and lower rates of conflict. Moreover, inclusive governance that promotes transparency and accountability demonstrably improves economic performance. Inversely, corruption and loss of public trust in governments exacerbate political instability and economic stagnation. Hence, regional specialists concur that the Arab Spring was an expression of discontent with governments’ economic policies, which led to unequitable wealth distribution, stagnant social mobility, and the ascent of oligarchic crony capitalists. In essence, a strong and widespread societal perception of economic and political exclusion can contribute to conflict and unrest; when people perceive their prospects of economic security to be deteriorating and they lack hope that things will improve, they are prone to unrest, violent conflict, and protest. This was a contributing factor to the Arab Spring.
While academic studies show that economic insecurity can lead to youth (and wider social) protest, it rarely explains radicalization and violent extremism. Nonetheless, youth perceptions of governments being unjust and corrupt can partly explain radicalization; for example, many ISIS members were attracted by its perceived moral clarity and commitments to economic justice. Disaffected youth who blame the state for their economic insecurity are a powder keg and need more attention from global and regional actors. Improving the livelihood and economic security of women and youth can mitigate civil disorder and stem irregular migrant flows. Moreover, women’s economic empowerment improves their agency and advances women’s rights, promoting economic growth and inclusive governance.
Entrepreneurship among women and youth can be a pathway to the prevention of conflict and inclusive growth. Entrepreneurship can help improve inclusive governance by disrupting rent-seeking crony capitalism whereby economic elites have been protected by political authorities.3 Entrepreneurs push for liberalizing the regulatory environment and removing rent-seeking advantages that insulate crony capitalists from free-market forces. Enhancing inclusive governance can mitigate against political instability and radicalization by promoting transparency, reducing corruption, and raising people’s hope for a better future. As the joint U.N. and World Bank Pathways to Peace report aptly notes, preventing conflict and instability is not only a moral responsibility, it is also far more cost-effective than responding to violence and instability after the fact. The report notes, prevention is best realized through “investment in inclusive and sustainable development. For all countries, addressing inequalities and exclusion, making institutions more inclusive, and ensuring that development strategies are risk-informed are central to preventing the fraying of the social fabric that could erupt into crisis.”
With this appreciation of the political and economic forces currently at work in the MENA, this policy brief draws on academic research and related literature and includes input from internal consultations with Global Affairs Canada (GAC) officials on the challenges of women and youth in advancing their economic security through meaningful employment and income generation. This brief also argues that success on this front can help to address the main drivers of political instability across many countries in this diverse region. This brief identifies avenues for supporting entrepreneurship to advance both inclusive growth for everyone and gender equality and empowerment. In MENA, attention to these opportunities can catalyze a more inclusive recovery from the pandemic while also demonstrating the wider economic benefits for society from progressive reforms and shifts in gender norms.
To this end, development assistance policies, as well as trade promotion and diplomatic engagement, must consider MENA’s social and cultural norms. Both family honor and social respectability are highly valued, and entrepreneurship has a positive socio-cultural connotation in many MENA societies. Supporting MENA women and youth entrepreneurship provides a niche for Canada and other Western countries’ international assistance and related policies in the region and this brief demonstrates the ways in which it can catalyze economic security more broadly.
Key Findings
While women in MENA surpass men in post-secondary education, their labor force participation is the lowest globally and these figures have barely budged in a decade. While more men than women work in the informal sector — which in MENA accounts for 68% of total employment and is predominantly in the agricultural sector — these vulnerable workers may be unreported and undercounted. Similarly, MENA youth are far more educated than previous generations, but their unemployment rates are often double their countries’ national averages and double the world average (13.6%) with an unemployment rate of 28.1% in 2018. Until the post-COVID recovery becomes firmly entrenched, labor market participation rates of women and youth will certainly worsen before they improve.
Why are women and youth under/unemployment rates so high? There are socio-cultural barriers that prompt women and youth to choose not to work. For example, the phenomenon of “reservation wages,” or the lowest wage one is willing to accept, can be relatively high in the region, distorting incentives in the labor market. They are higher for relatively wealthier MENA women and youth such that they are voluntarily unemployed. Reservation wages are often higher for young MENA women than for young men; reservation wages are also higher for married MENA women than for unmarried women. Moreover, MENA women with post-secondary education are more likely to be unemployed than women without post-secondary education. Women who obtain post-secondary education thus represent a significant underutilized knowledge and skills resource. Moreover, this also suggests that reservation wages are higher for middle-class MENA women than for poor, rural women. Consequently, introducing more MENA women and youth into the labor market requires an understanding of intersectional and demographic identities; there is no one-size-fits-all approach.
Another factor in MENA women and youth unemployment is their common preference for working in the public sector, which is bloated and unable to absorb additional labor. Often MENA women prefer to work in the lower-paid public sector (although Gulf countries’ public sector wages are higher than the private sector) because of shorter workdays for those with care responsibilities. Similarly, MENA youth have historically preferred to work in the public sector for its perceived security. That said, these attitudes are rapidly changing, particularly outside of the Arab Gulf countries.
Women wearing face masks walk on a street in Amman, Jordan, on March 24, 2020. Photo by Mohammad Abu Ghosh/Xinhua via Getty Images.
Despite high reservation wages and preferences for public sector jobs, there are very strong favorable socio-cultural attitudes toward entrepreneurship in MENA.4 Notably, the region is second only to sub-Saharan Africa in the favorability of public attitudes toward entrepreneurship: 73.4% of the surveyed MENA public believed that “starting a business is considered a good career choice” and 77.8% believed that “persons growing a successful new business receive high status.” Youth in MENA have high aspirations to start a business; 84% want to be entrepreneurs. A persistent challenge, however, is involving MENA women and youth in entrepreneurial activity; while aspirations and respect for starting a business are high, actual entrepreneurship rates are relatively low compared to other developing regions. Identifying and addressing the impediments is an urgent priority for economic security and for an inclusive and sustainable recovery.
Many entrepreneurs gain valuable employment experience before starting their own businesses. Yet, for both women and youth, there are socio-cultural, legal, and regulatory barriers to participating in the labor market. Moreover, these barriers are often worse for women in MENA than in any other region of the world. Persistent legal and regulatory barriers across MENA that disadvantage women include low public sector retirement ages (50 to 55 years), which can impede women from entering the labor force after rearing children, inadequate childcare benefits and maternity leave, and the absence of legislation (in 70% of MENA countries) protecting women from workplace harassment. In a survey of young MENA women, they noted that flexible working hours (part-time and home-based work), nursery and daycare facilities, soft skills training, and on-the-job training would help them to enter and stay in the workforce
The absence of safe public transportation in MENA is a notable impediment to women’s full labor force participation in two respects. First, women are in general subject to physical and verbal harassment by men when riding buses and minibuses. Second, safe public transport is often unavailable into the evening hours when private sector owners expect their employees to continue working. Notably, in 55% of MENA countries, women are legally restricted from working night hours. Certainly, gender norms remain conservative throughout the MENA: Women experience the “double burden” of trying to balance paid employment and unpaid domestic work, and find childcare challenging. Women’s income is perceived as disposable rather than necessary, as men are still perceived as responsible for providing for their families. Successful entrepreneurship by women can help shift these norms in a more progressive and inclusive direction.
Policy Insights
Policy research suggests that when entrepreneurs take off, they can be valuable sources of new job creation. Indeed, early-stage entrepreneurs in MENA noted that they expect to employ 45 individuals in the first five years of their operations. Research finds that women-led micro, small, and midsized enterprises (MSMEs) can improve household welfare more than men-led businesses, provide women the flexibility to work from home, and enhance their empowerment and stature in households and society. Increasing rates of entrepreneurship among women and youth in MENA requires a multifaceted approach that includes promoting business development literacy, providing mentorship programs for less experienced entrepreneurs, and encouraging incubator-like programs in both the public and private sectors.
Many MENA countries have improved considerably in the World Bank’s Doing Business indices in the past decade, particularly in the Gulf. Nevertheless, there remain many gendered impediments: 13 MENA countries have regulations for women entrepreneurs that men do not face. In a survey of 1,210 MENA women entrepreneurs in select countries, they noted that their most significant barriers were accessing financing, lack of personal business or other work experience, and absence of networks and contacts. This ease of doing business, from business registration to obtaining financing, can facilitate or hinder entrepreneurs’ success. Without regulatory reforms, the environment for private sector-led sustainable economic growth remains constrained.
Accessing credit remains more difficult for women and youth in the MENA region than anywhere else in the world. On average, it costs MENA entrepreneurs 26% of income per capita to start a small business compared, for example, to just 3% in OECD countries. MENA youth and women report that financial support, such as accessing microcredit loans in mainstream banks, remains the greatest impediment to starting and expanding a business. MENA women’s MSMEs have the second highest financing gap after East Asia and the Pacific region: 29% of total finance gap amounting to an estimated $ 16 billion compared to 37% of $103 billion. MENA’s women entrepreneurs concentrate in personal services, creative sectors, and health care. Venture capitalist rarely invest in these areas, but banking loans are difficult to access due to high interest rates and requirements for collateral assets against potential insolvency. These requirements are known to disadvantage women and young clients, particularly because of wide and persistent gender gaps in asset ownership. Only 38% of MENA women have bank accounts, and gender discrimination in both investment and inheritance laws hinder potential women entrepreneurs from accessing the resources their businesses need to take off.
While most entrepreneurial activity is currently in wholesale and retail, followed by professional and other services, communications, financial services, and information technology are growing rapidly. Nearly 37% of MENA entrepreneurial businesses are deploying new technologies and 25% are offering new services or products to the market. When compared to other regions, the MENA has a far higher technology orientation. Most of the region is online, yet digitized services remain untapped, including e-commerce.
Concluding Note
This policy brief provides a review of entrepreneurship in the MENA region as a promising entry point for policy dialogue, programs, and trade and investment promotion. As labor market participation of youth and women in MENA remains stagnant, entrepreneurship can be a viable alternative and catalyst to the promotion of economic security among these groups. Policy options should be tailored to reflect the size and scale of firms and consider the intersectionality of entrepreneurs. Foreign countries have an important role to play in fostering entrepreneurship for women and youth in MENA. Canada has programming experience in this space, such as the Launching Economic Achievement Program for Women in Jordan (LEAP), that can inform its policy toward the region. As MENA faces a tough recovery from the pandemic, preventing conflict and instability are cost-effective and smart. International assistance entails programs that can give people in the region hope that their livelihoods will improve. There is still much to do to provide a positive ecosystem for entrepreneurs in MENA countries, and Canada and other Western nations can convene donors to share best entrepreneurial practices that can assist MENA’s economic and socio-political development. The MENA region needs specialized tools for women and youth to enhance their financial inclusion, break down regulatory barriers, access microfinance, and acquire valuable skills. Western countries can deploy their international and regional leverage in this crucial policy area.
Dr. Bessma Momani is Full Professor in the Department of Political Science and Assistant Vice-President, Research and International in the Office of Research at the University of Waterloo. She is a senior fellow at the Centre for International Governance Innovation, a non-resident fellow at the Arab Gulf States’ Institute in Washington, DC, a Fulbright Scholar, and a member of the Advisory Council for MEI’s Program on Economics and Energy. Dr. Momani was the second Global Affairs Canada International Assistance Visiting Scholar in 2021 and Global Affairs Canada provided financial support for this brief. The views expressed in it are her own and the content is the sole responsibility of the author.
Photo by Morteza Nikoubazl/NurPhoto via Getty Images
Endnotes
Women and youth have some shared realities as demographic groups that have least access to formal economic labor markets, but there is great variation between them, and this brief acknowledges that the intersectionality of both groups is important to devising better policies.
National and regional data shows strong support and respect for entrepreneurship; however, this varies between countries and within countries.
Disrupting rent-seeking is more difficult for microenterprises than it is for medium-sized enterprises, nevertheless over time when successful firms scale up, rent-seeking is challenged, and this may lead to a disruption of crony-capitalism. This linear argument is not a guaranteed outcome but is a theoretical proposition. There is, perhaps then, a positive role for donors to assist microenterprises and small enterprises to scale up.
Regarding the scale and size of entrepreneurs, it is important to note that entrepreneurs are likely to start and remain micro-sized and small, and few grow to become medium-sized enterprises (MSE). Self-employed businesses or microenterprises may generally be home-based or solo-operated businesses with lower income to supplement paid work, while SMEs can have substantial revenues. Microenterprises and SMEs have been labeled MSMEs. Starting an MSME is usually done by an entrepreneur, and hence the interchangeable use of the terms. This policy briefing will use the term entrepreneur to mean MSMEs. Generally, the MENA region defines MSMEs based on the number of employees in an enterprise. These numbers can vary across the region, but generally micro implies fewer than 10 employees, small implies fewer than 50, and medium implies fewer than 200. Large companies often have 200 employees or more. MENA countries have more microenterprises than SMEs, and even fewer large companies. Policy interventions to assist these entrepreneurs need to be tailored to take size and scale into consideration.
The MENA countries where socio-political monopolization is fundamentally due to low levels of democracy and obscure political transparency have generated over the years Corruption. All attempts to strengthen business integrity and fight corruption were in vain. Chatham House‘s post on the subject of Tackling corruption is the focus for MENA in 2022 is worth going through. Here it is.
Integrity is central to the development of competitive and open economies in which growth and opportunities are sustainably and equitably distributed.
To tackle corruption in the MENA region, the international community must prioritize accountability over stability.
Tackling entrenched corruption will be a key focus of the political discourse in the Middle East and North Africa in 2022. International policymakers will look to anti-corruption as a framework that can be used to help stabilize conflict countries, support economic reform, or to pressure adversarial regimes. Pressure to deal with corruption also stems from popular anger in countries that suffer from poor governance as corruption can have very serious – even fatal – consequences, as the deadly hospital fires Iraq suffered last year illustrate.
Corruption can have very serious – even fatal – consequences, as the deadly hospital fires Iraq suffered last year illustrate
Across the region, anti-corruption processes are meant to signal accountability. However, they can also be weaponized by elites to consolidate power and target opponents, particularly in countries where the political system itself is built on politically sanctioned corruption. This makes anti-corruption efforts unlikely to succeed. These dynamics highlight the need for international policymakers to develop strategies that promote accountability and transparency over the long term instead of prioritizing political expediency.
Anti-corruption efforts not what they appear
At first glance, anti-corruption processes underway across the Middle East and North Africa appear to suggest that states in the region are serious about combatting graft. In Libya, a recent wave of arrests by the attorney general has seen two sitting ministers, a former deputy prime minister and a former head of a state-owned investment vehicle detained on charges of corruption. In Iraq, the commission of integrity and the prime minister’s special committee have arrested dozens of former and current officials on charges of corruption.
Across the GCC, governments are seeking to double down on their economic diversification plans. Against the rising tide of nationalism and populism, anti-corruption efforts will feature as part of a good governance agenda that serves a domestic audience by targeting elites and patronage networks. The UAE is the GCC’s most nimble economic player and leads the pack in efforts to stamp out corruption. In Lebanon, political competition and initiatives by members of the judiciary have resulted in investigations of alleged corrupt practices by the heads of major state institutions such as the central bank.
The case of Lebanon has clearly illustrated that appeasing elites does not deliver stability, and countries such as Iraq and Libya could potentially face a similar fate.
But appearances can be deceiving. In none of these countries have anti-corruption efforts led to meaningful change. In Libya, past efforts have petered out and officials have all too rarely faced trial, let alone been convicted. There is little to suggest this round will be any different as the government is unlikely to support the attorney general’s cause. In Iraq, this year’s top story will be the protracted government formation process following last year’s elections – a process rife with politically sanctioned corruption as the usual cast of characters come together to negotiate their share of power and money. Despite the 2019 October revolution that called for reform of Iraq’s ethno-sectarian political system (muhassasa), not much has changed.
Saudi Arabia, which is pushing ahead with its Vision 2030 targets, has an anti-corruption agenda but will face challenges in connecting its legal framework and process, led by the Oversight and Anti-Corruption Authority (Nazaha), with realities on the ground. Many sectors suffer from a lack of transparency when it comes to decision-making, yet the importance of personal and social connections (wasta) remains high in Saudi society.
Weaponizing anti-corruption processes
The darker side of the anti-corruption drive is the weaponization of such processes, whereby corruption allegations can be used to settle political scores, especially by those who are politically dominant. In Lebanon, this can be seen in the growing standoff between the governor of the central bank and Hezbollah and its allies, who see him as a political opponent.
The darker side of the anti-corruption drive is the weaponization of such processes, whereby corruption allegations can be used to settle political scores.
In Iran, under pressure from US-imposed sanctions, President Ebrahim Raisi will continue to promote anti-corruption measures to demonstrate good governance and accountability to help distract from the economic pain of sanctions. However, these efforts will by no means root out entrenched corruption. The Islamic Revolutionary Guard Corps (IRGC) and various parastatal entities have used predatory sanctions-busting strategies to ensure their economic survival, while crowding out the private sector. Without meaningful reform of the economic system, the government will likely see more protests and unrest.
The scale of the challenge facing the international community
There is no doubt that these problems will be difficult to tackle. Corruption stretches far beyond the upper levels of government. Where corruption has become politically sanctioned, such as in Iraq, the elite has shifted its focus away from formal government roles, such as cabinet ministers, who are now by design independent and technocratic, but weak. Instead, the key to state power has become the almost 1,000 senior civil servants under the special grades scheme, who do the elite’s bidding in government ministries and agencies without any transparency or accountability. They may not be the minister in charge, but these director generals and deputies make the decisions when it comes to government contracts and procurement, helping to generate huge sums of money for those whose interests they serve.
Any successful anti-corruption strategy must go beyond sanctions on individuals to address the core of the problem – the economic system of governance.
The international community have opportunities to address some of these entrenched problems this year. But its record to date is mixed. In Libya, the international community’s credibility on corruption has been greatly damaged by it prioritizing stability over accountability. A long-awaited audit of the Central Bank of Libya drew ‘no conclusion or determination’ over ‘any fraud or misappropriation’, while a UN report into allegations of vote-buying at the UN-created Libyan Political Dialogue Forum that selected the current government has not been made public. These developments have only strengthened the impression that Libyan officials enjoy impunity. As the Libyan political process is reshaped in 2022, measures to ensure accountability and transparency must take a much more prominent place in the architecture of international efforts.
Lebanon is perhaps the greatest test of the international community’s commitment to tackling widespread graft. In need of an economic rescue plan to reverse the severe depreciation of its currency and decline in GDP and foreign reserves, there is hope that a deal with the IMF and international assistance could materialize this year. The IMF and international bodies like the EU insist that any aid will come with conditionality regarding reforms, but there are fears they may soften their stance. They must hold firm. If their current position softens, this will damage both Lebanon and the credibility of the international community.
The international community must prioritize the legitimate grievances of MENA citizens, rather than pleas by entrenched elites to help maintain ‘stability’. The case of Lebanon has clearly illustrated that appeasing elites does not deliver stability, and countries such as Iraq and Libya could potentially face a similar fate.
Any successful anti-corruption strategy must go beyond sanctions on individuals to address the core of the problem – the economic system of governance.
The image above is of Image — A man checks electrical wires in Baghdad, 13 September 2017. For years Iraqis have denounced the bad management and financial negligence that have stifled the country and let its infrastructure fall apart. Photo: AHMAD AL-RUBAYE/AFP via Getty Images.
Authors:
Tim Eaton, Senior Research Fellow, Dr Lina Khatib, Director, Dr Renad Mansour, Senior Research Fellow, Project Director, Iraq Initiative and Dr Sanam Vakil, Deputy Director and Senior Research Fellow, all of Middle East and North Africa Programme.
In so far as the MENA region countries are concerned, Democracy being vital for prosperity and sustainable development or the lack of it, has been demonstrated over and over the millennia. Let us see what it means in today’s world for the rest of the world with Androulla Kaminara.
The above image is for illustration and is of the FDSD.
Democracy vital for prosperity and sustainable development
Transparency and reliability of how elections are carried out are key to ensuring that the winners enjoy legitimacy.
On 15 September, we are marking International Day of Democracy. Since the pillars of democracy around the world are threatened as new challenges emerge, this day is perhaps more pertinent than ever. Democracy is a dynamic concept that has evolved over time, as have the challenges facing it. To those challenges, new challenges have been added of late, including by the impact of the Covid-19 pandemic deepening existing inequalities, spreading disinformation and distrust, and undermining women’s rights. In addition, the fast evolution of new technologies and their impact on all walks of life has also had a profound impact on democratic processes around the world.
As the world took emergency measures to address the Covid-19 crisis, concerns began to emerge that these actions could infringe on civil and human rights of citizens. Covid-19 also highlighted and aggravated inequalities within societies, including in social protection, increased discrimination and violence against women as well as disinformation. The pandemic was accompanied by a global infodemic that poses a direct threat to one of the pillars of democracy: the right to access to information.
The answer is — ‘to build back better’ — to build a society that works for all and that represents the will of the people is the objective. Democracy is built on inclusion, equal treatment and participation — is a fundamental building block of a progressive, stable and peaceful society that enables sustainable development, human rights and economic justice for all.
Democracy is one of the core values of the European Union, together with human rights and the rule of law. The EU is taking steps to safeguard and strengthen democracy inside our Union since no democratic system is perfect and continuous efforts are need for improvement. In the EU, we practise our rights, also through regular elections both at individual Member State level — local, regional and national elections — as well as at the European Union level. The elections to the European Parliament are one of the largest democratic exercises in the world, with over 400 million citizens being represented.
The European Union also takes a leading role in promoting democracy around the world through the implementation of relevant projects and through Electoral Observation Missions (EOM).
In 2019, cooperation projects in support of democracy amounted to €147 million in 37 countries. Over the last 7 years, the EU has implemented projects of €618 million in Pakistan and currently, the EU supports the National Assembly, Senate and four provincial assemblies by strengthening their functioning in terms of capacity, transparency and accessibility as well as accountability towards Pakistani citizens with a project of €9 million.
Since 2019, the EU deployed over 20 observation missions globally as part of its commitment to democracy, human rights and the rule of law across the world and these offer a comprehensive and impartial assessment of electoral processes. In addition, EOMs publish recommendations aiming to improve future elections and strengthen democratic institutions.
In Pakistan, the EU so far has deployed four observation missions since 2002 upon the invitation of the respective governments. The EOM of 2018 put forward a set of thirty recommendations for electoral processes and framework reforms. It is encouraging to note that several of these recommendations are reflected in the 3rd Strategic Plan of the Election Commission of Pakistan.
However, other recommendations are still pending. Among those is the need to ensure a full level playing field for women: registration of women voters and women representatives in parliaments as well as in the media. In Pakistan, there are 63 million registered male voters and 50 million female voters, clearly indicating that about 13 million women voters are missing. The report argues that stronger involvement of women in political decision-making leads to more accountability, better use of public resources, as well as stability and peace. The fact that a large number of women are not eligible to vote leads to alienation of a significant part of the population. Ensuring their inclusion in the electoral process as well as adequate representation for marginalised groups is key to a more inclusive and fair democratic system.
We recognise the difficulties in implementation of some of the EOM’s 2018 recommendations which are public. Nonetheless, as Pakistan is approaching its next general elections, it is paramount to keep the reform momentum and maintain efforts to further strengthen the electoral system and practice. In this context, the role of a fully functioning Election Commission of Pakistan supported by all is crucial.
The experience within the European Union and elsewhere shows that for democracy to work, trust in the democratic process, including the electoral mechanism, is vital. Transparency and reliability of how elections are carried out are key to ensuring that the winners enjoy legitimacy and support from the electorate. Without democracy, peace and stability, sustainable development and prosperity cannot exist.
The EU continues to be committed to safeguarding and strengthening democracy within its borders and across the world, and we work with all our partner countries including Pakistan in this endeavour.
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