19 June 2012

New AfDB Report Analyses Arab Spring and Options for Future

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A new report from the African Development Bank (AfDB) analyses the causes of the various political events in 2011 in various North African countries, or the Arab Spring. It goes on to suggest various policy options to policy makers in the countries under transition.

The report, entitled 'Jobs, Justice and the Arab Spring: Inclusive Growth in North Africa' is produced by the AfDB's North Africa department.

North Africa has been the epicentre of the Arab Spring. Long-entrenched regimes in Egypt, Libya and Tunisia have fallen. In addition to the rejection of decades of political repression, two common economic themes "jobs and justice" - have underpinned the revolutions. Surveys indicate that lack of economic opportunity, the rising cost of living and the growing gap between the rich and the poor were among the main drivers of popular discontent.

The political origins of the Arab Spring are straightforward: Egypt, Libya and Tunisia failed to develop pluralistic and open political systems. But it also had economic underpinnings: governments in the region failed to create jobs especially for the young, and the economic policies which formed the basis for inclusive growth after independence started to unravel.

The North African economies have failed to grow fast enough to create sufficient good jobs. With slow economic growth, low employment and a rapidly growing youth population in North Africa the countries faced an unsustainable trajectory which came to a head in early 2011.

The main objective of this report is to bring out clearly the causes of the 'Arab Spring' namely the lack of good jobs and the failure of a moribund economic model that did not promote inclusive growth. To date, little seems to have been done on structural reforms. This is not altogether surprising. The history of transitions in other countries suggests that early transitional governments tend to shy away from changes to the legal and regulatory system beyond attempts to eliminate the worst manifestations of the insider dealing that characterized previous regimes. Fragility in the banking system also limits the scope for financial sector reforms.

Restoring business confidence will depend on establishing trust between the government and the private sector in a more open environment. A first step toward building trust can be undertaken by developing institutions that support transparent, rule-based interaction between business and government.

Also, North African governments have at their disposal a number of public policies and actions to develop new strategies for inclusive growth. Among these are: improved access to jobs for the young, reform of education, decentralization of public expenditure and improvements in service delivery.

The report concludes by outlining how using regional agreements to integrate more fully with the global economy represents an important tool to complement national economic policy and how although solutions to the twin problems of jobs and justice will ultimately need to come from the societies that fostered the Arab Spring, the international community has a potentially strong complementary role to play.

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