World Bank Vice President: Our Priorities are Education, Promoting the Private Sector

Interview

Washington – IMF and World Bank meetings come at a time when global growth rates are on the rise after almost 10 years of financial crisis, while growth in the Arab region is witnessing a decline due to the drop in oil prices, continuing conflicts, and geopolitical problems.

In his interview with Asharq Al-Awsat, Dr. Mahmoud Mohieldin, Senior Vice-President of the World Bank for Sustainable Development, reviews key issues raised at the 2017 Annual Meetings in Washington, new directions in financing and the means to stimulate the private sector to engage in projects traditionally undertaken by governments, as well as the association of funding with sustainable development goals.

“In 2016, the global growth rate was 3.2 percent and reached 3.6 percent in 2017; next year, it is expected to slightly improve to 3.7 percent,” according to Mohieldin.

However, he noted that international institutions have advised not to rush with optimism about a rising trend in growth rates for several factors, including the spread of “protectionist policies” in trade and investment.

“There are also non-economic factors that have been highlighted in some studies, including the impact of political disturbances and conflicts in some cities, the geopolitical dimensions of some areas and the high cost of fighting terrorism,” the World Bank official said.

As for the Middle East, a recent report by the IMF and the World Bank forecasts growth rates in the region at around 2.2 percent, Mohieldin noted.

He said that next year growth is expected to be close to 3 percent, which means that growth rates in the Arab region are below global growth rates.

“The reasons are varied, either because of issues related to the decline in oil prices of the oil-exporting countries, or to the Arab countries that made gains out of the decline in oil prices and did not compensate for the losses incurred by other countries, in addition to conflicts and crises in a number of Arab countries,” he explained.

Asked about this year’s focus on education, healthcare and the strengthening of the private sector, Mohieldin said that the World Bank has published the World Development Report, which includes a presentation on the education crisis.

He noted in this regard that the current crisis had three dimensions: “First, countries lose much when they do not measure well the outcomes of education. The old system of evaluation based on success and failure is a traditional method. There are international standards for measuring the quality of education and its degree of excellence in some fields, in particular when it comes to applied sciences.”

The second dimension, according to Mohieldin, is the means to make schools an adequate arena for learning.

He underlined the importance of going beyond school buildings by promoting the use of information technology, developing sciences to meet challenges of the present century, and competing with the digital economy that may reduce employment opportunities.

“The third dimension relates to the measures required by a country to invest in education. Not only in infrastructure, but also in human structure, health and nutrition, and there is evidence that malnutrition at early stages affects the child’s capacity to absorb, and thus his ability to work,” Mohliedin explained.

As for the strategy to reinforce the private sector, the World Bank official said: “The World Bank wants to encourage the private sector to undertake projects because any country has a ceiling in its financial portfolio. If the state runs out of funds in private sector projects, this will be at the expense of other vital projects that the private sector cannot or will not provide, such as rural girls’ education projects or rehabilitation projects for the poor. The World Bank will focus heavily on this area in the coming period.”

Asked whether Arab countries have moved towards the new era of technological intelligence and behavioral information and whether they had room for new investments, Mohieldin said: “In my view, Arab countries that were late to catch up with the old technology have a better chance of catching up with the new technology if good investment spending is made; it is important not to be a mere user or consumer, but to acquire the ideas behind this technology.”

Yemeni Government, World Bank to Discuss Reconstruction

Yemeni Minister of Industry and Trade Dr. Mohammed al-Maitami.

Riyadh- The Yemeni government and the World Bank are due to discuss Wednesday a document prepared by the bank on the reconstruction of Yemen, amid preliminary estimates that the cost of this project may amount up to $80 billion (SR 300 billion) as an impact of the devastation caused by the war.

Yemeni Minister of Industry and Trade Dr. Mohammed al-Maitami told Asharq Al-Awsat that his country’s government, represented by several ministries, will hold a meeting in Riyadh with experts from the World Bank.

The private sector will participate in the meeting, which will tackle the recovery and reconstruction process, Maitami said.

He explained that the meeting will discuss a document prepared by the World Bank several months ago in partnership with the brothers in the Gulf Cooperation Council, entitled “Detailed Plan for Recovery and Reconstruction in Yemen.”

It is expected to be attended by technicians to provide comments on the document, which includes reconstruction issues in vital areas such as health, electricity, water, housing, the return of displaced people and refugees as well as building the recovery system in the Yemeni society during the peace process.

According to the Minister, the World Bank’s regional department in Yemen and representatives of relevant Yemeni ministries will participate in the one-day workshop.

“We believe that this document is vital and that it is the most important peace-building document in Yemen’s future.”

“Peace can not last in any country if it does not have a national and clear vision for reconstruction and recovery. Since World War II, there have been 144 countries that have witnessed conflicts because they did not have an integrated and agreed vision from the societal parties on reconstruction and recovery, thus increasing the conflict situation,” he further noted.

World Bank: Reforming Education in Arab World Must Be Priority

Arab

London – The quality of education in the Arab world has dropped in comparison to other regions in the world, which demands immediate reform to tackle development needs and employment in the future, said a recent World Bank report on education in the Middle East and North Africa.

The report urged Arab countries to set education as a priority because it is the basis for any future economic and social development process.

The Arab region has not achieved remarkable progress in recent years in reducing illiteracy, compared to Asian and Latin American countries. The worst in this regard were Djibouti, Yemen and Egypt. Furthermore, the region is still behind from the rest of the world in erasing illiteracy among people above 15 years of age. The numbers of students enrolled at high schools and universities has also not improved.

The World Bank report did acknowledge that the gap in education between the genders in the Arab world is becoming smaller.

One of the compilers of the report said that the time has come for Arab countries to focus their energies on the quality of education and preparing students for the modern job market. They should also train students on problem-solving and critical and innovative thinking. Teachers themselves should also be re-trained in these skills.

Unemployment in the Middle East and North Africa lies at 14 percent, which is higher than the rest of the world, excluding some parts of Africa. The greatest levels of unemployment were registered in the Palestinian territories. A third of the population of 300 million is also illiterate.

Young society

The need for reform in the Arab world is highlighted by the youthful society, where 60 percent of the population is younger than 30 years of age. This means that the region will need to create 100 million job opportunities for the youths over the next two decades. Economic development in region relies heavily on educational reform.

The World Bank report hailed the efforts of Jordan and Kuwait to that end, but it did remark that the reform did not reach the desired level. It explained that the relation between education and the workforce remained weak, adding that the quality of education did not improve.

Investment with poor resources

For 40 years, Arab countries spent about five percent of their general domestic income on education and they have achieved several results from this investment. At present, the majority of children benefit from mandatory education and a good percentage of them reach the levels of higher education. The region has also improved in raising fertility and lowering mortality rates.

Despite this improvement, the general progress in the Middle East and North Africa region remained less than others. In addition, educational curricula still produce more graduates in the theoretical sciences than practical ones.

The region has also failed to take the best advantage of its available human resources. Unemployment remains high among graduates and many of them find work in the government The relationship between economic growth, the distribution of income and lowering levels of poverty remains weak. The current educational system in the region does not produce graduates with the necessary skills and experience to compete on the global level where knowledge is the key to progress.

Employment crisis

Despite government attempts to provide education to the greatest number of students through construction of schools and hiring teachers, they have failed in assessing the connection between the efforts of the teachers and the accomplishments of the students and monitoring the educational process.

The World Bank report also spoke of the gap between what educational institutions provide and what the job market demands. This gap does not simply revolve around failing to produce graduates with the demands of the market, but the market itself has not grown enough to accommodate those graduates. In some countries, this is reflected in high levels of unemployment.

The next level of developing education in the region appears difficult to achieve in that it needs to develop an accountability and assessment mechanism. It should also focus on reforming education and the job markets.

This process will not be the same in all of the countries in the region because some of them have taken great leaps in achieving educational reform. All these countries need, in one way or another, to set incentives and systems of accountability that will yield results in the reform process.

Facts and figures

UNESCO estimates that 76.9 percent of the Arab world is literate. The literacy levels in some countries, such as Lebanon, Jordan and the Gulf area, is above 90 percent, while it is less than 50 percent in Mauritania and Yemen.

Other education facts in the Arab region:

– About 100 million people are illiterate, two thirds of them women.

– A UN survey found that the average Arab reads only four pages a year.

– An Arab Thought Foundation report found that only eight percent of people in the Arab world want to improve their level of education.

– The Arab woman still suffers from a lack of education opportunities.

– There is no incentive system to encourage older illiterates to continue their education and improve their academic skills.

– Women face challenges in leaving the house and pursuing an education at schools due to social pressures.

World Bank Urges Middle East to Take ‘Urgent’ Action over Water Scarcity

water

The World Bank urged the Middle East and North Africa on Tuesday to take “urgent” action to prevent the negative consequences of inadequate supply of water and sanitation.

It said that the region loses about $21 billion over these issues, saying that urgent action will prevent detrimental ripple effects on growth and stability.

“As the current conflict and migration crisis unfolding in the Middle East and North Africa shows, failure to address water challenges can have severe impacts on people’s well-being and political stability,” the bank said in a report issued at the World Water Week conference in Stockholm, Sweden.

Poor management of water resources and sanitation in the world’s most water-scarce region costs about 1 percent of its annual gross domestic product, with conflict-hit states losing as much as 2 to 4 percent each year.

Deaths due to unsafe water and sanitation in some parts of the region, particularly countries affected by conflict, are higher than the global average, it added.

With the urban population in the region expected to double by 2050 to nearly 400 million, a combination of policy, technology and water management tools should be used to improve the water situation, the report said.

“Water productivity – in other words, how much return you get for every drop of water used – in the Middle East in general is the lowest on average in the world,” said Anders Jägerskog, a specialist in water resources management at the World Bank and one of the report’s authors.

Middle Eastern and North African countries are using far more water than can be replenished, said the report, dubbing the region “a global hotspot of unsustainable water use”.

To reverse the trend, technology and innovation are “essential but not enough”, Jägerskog told the Thomson Reuters Foundation. Water governance – in particular, water tariffs and subsidies – must also be addressed, he said.

The region has the world’s lowest water tariffs and spends the highest proportion of GDP on public water subsidies. Such policies lead to excessive use of already scarce water supplies and are not sustainable, said Jägerskog.

Water scarcity also can spark conflicts, the report warned.

Another challenge is that more than half of the wastewater collected in the region is fed back into the environment untreated.

“Along with better water management, there is room for increasing the supply through non-conventional methods such as desalination and recycling,” Guangzhe Chen, senior director of the World Bank’s global water practice, said in a statement.

Improved water management could bring considerable financial returns, the report noted. Jordan and Tunisia already safely reuse waste water in irrigation and to replenish supplies, according to the World Bank.

Governments could gain $10 billion annually by improving the storage and delivery of irrigation water to users, while increasing agricultural production by up to 8 percent, the report said.

Egypt, Syria and Iran – which have the largest proportion of irrigated land in the region – are the countries that could benefit most, it added.

World Bank Supports Establishment of Jordanian Innovative Startups Fund

Bank

Amman – The Ministry of Planning and International Cooperation signed Monday a $50 million facilitated loan agreement with the World Bank to support the establishment of the Innovative Startups Fund.

The Central Bank of Jordan (CBJ) is willing to support the fund with $48 million, Planning Minister Imad Fakhoury said at the signing ceremony on Monday.

Fakhoury added that the Jordanian government continues to put forth reform plans and programs aimed at boosting economic growth, despite the economic and financial challenges, as well as the political and security instability.

The fund translates one of the key and critical recommendations of the Economic Policy Council held in September 2016. It is also in line with Jordan 2025 vision and the recently adopted Jordan Economic Growth Plan 2018-2022, according to Fakhoury.

He added that Jordan Economic Growth Plan 2018-2022 also consisted of a chapter on support to SMEs projects. The chapter focuses on increasing job opportunities through supporting these projects and promoting entrepreneurship and innovation in various sectors.

The fund will help potential entrepreneurs in further developing their business ideas, connecting them with business incubators and providing venture capital to entrepreneurial small- and medium-sized businesses that prove their ability for sustainability and growth, Fakhoury continued.

The fund will be similar to funds established earlier in Lebanon and Morocco with the support of the World Bank.

Fakhoury said they expect the fund to support 200 innovative business ideas across the country, adding that innovative and entrepreneurial businesses have created 40 percent of the jobs in the Kingdom over the period 2006-2011.

World Bank: Reforms Bolster Trust in Saudi Economy

Riyadh – The World Bank said that Saudi reforms, which fall under the framework of Vision 2030, have increased the level of trust in the Kingdom’s economy, noting that growth rate is expected to rise by 2 percent between 2018 and 2019, compared to 0.6 percent this year due to low oil production.

“Saudi Arabia is leading the region through 10 strategic reform programs, including comprehensive structural reforms in public finance and economy,” Dr. Nader Mohammed, Middle East regional director for the World Bank, told Asharq Al-Awsat.

“Plans to build a social safety network will help mitigating the impact of reforms on low- and middle-income citizens,” he added.

The World Bank official warned, however, that the economic outlook for the region was exposed to risks under the foggy atmosphere resulting from the geopolitical developments in the region.

He underlined that OPEC’s reduction of the production ceiling could also be undermined by non-traditional energy producers in North America.

“Any disorder in the global financial markets could affect the cost of financing areas that still have huge financing needs,” Mohammed stated.

He pointed out that international changes and the decline in oil prices have had a direct and significant impact on the economies of the GCC countries over the recent years, despite the significant reform efforts aimed at restructuring the countries’ economies.

The Gulf economy is expected to witness a rising growth rate from 1.3 percent in 2017 to 2.6 percent in 2019, according to the World Bank regional director.

The rise in spending and the level of confidence in the non-oil sector are likely to be slow, in the wake of stable oil prices, a soft fiscal austerity and the implementation of major reforms planned for the region, he added.

Trump, Hariri Tackle Lebanese, Regional Affairs

Prime Minister Saad al-Hariri meets with a delegation from the US Senate in Washington

Beirut – Lebanese Prime Minister Saad al-Hariri is scheduled to meet on Tuesday in Washington with US President Donald Trump to discuss a number of issues concerning Lebanon, including the fight against terrorism and the support to the Lebanese Army, in addition to the new financial sanctions that the US Administration intends to impose on Hezbollah and the means to avoid their impact on the country’s banking system.

On the second day of his visit to Washington, Hariri met with Administration officials and members of the Senate and Congress, with whom he tackled the situation in the country and the region, efforts to counter terrorism and Lebanon’s aspirations with regards to international and US support at this critical stage, which sees the Army fighting terrorist groups along the Lebanese borders.

Hariri also met on Monday with the Lebanese staff at the World Bank and the International Monetary Fund (IMF).

In remarks on the occasion, the prime minister said: “Lebanon, as you know, is living a small miracle in a burning region. We were able to reach a kind of agreement to preserve the country especially that we see what is happening in Syria, Iraq and other Arab countries.”

“My only concern is to preserve Lebanon, try our best to protect its stability and improve the economy”, he added.

He stressed the need to promote partnerships with the World Bank in order to create job opportunities and to work on investment plans for the country’s infrastructure.

Meanwhile, Future Bloc MP Amin Wehbi underlined the importance of Hariri’s visit to the US, noting that it “indicates Lebanon’s central position in all international policies”.

“We study objectively and responsibly the importance of the role of Lebanon, in light of chaos sweeping many countries around the world,” he stated.

Meanwhile, sources said that the US Congress would soon adopt a new legislation to impose sanctions against Hezbollah.

In this regard, Lebanese Minister of Social Affairs Pierre Bou Assi said that Hezbollah was part of the Iranian system.

“After a big absence of the administration of former President Barack Obama from the Lebanese arena and the Middle East, President Donald Trump’s Administration came to settle things,” he stated.

Tunisia Mulls to Restructure Banking Sector

Tunisia- The Tunisian Central Bank has focused on restructuring the country’s banking sector during a forum organized on reforms for public banks, restructuring them and guaranteeing their financial integrity without losing them to privatization.

The forum’s attendees discussed how to accelerate the pace of these reforms.

Over the past years, Tunisia has witnessed a growing debate concerning the government’s possession of three big banks suffering from financial crises.

A solution supported by international institutions like the World Bank and the International Monetary Fund (IMF) suggested to sell those banks to the private sector. However, the Tunisian government had a different view, as it has sought to pump funds of 900 million dinars ($360 million) to save those banks and restore their performance.

The three public banks have recaptured some of their financial glories, which was shown in last year’s figures.

However, their contribution in boosting the Tunisian economy was disappointing and didn’t reflect decisive results concerning the financial reform process.

In this context, a consultant to the finance ministry Moez Al-Obaidi, who attended the event organized by the Tunisia Central Bank, said that the acceleration of the reform pace aims to reduce the burdens of the government intervention to rescue banks who suffer from problems, and especially the public ones.

During its visit to Tunisia, the IMF recommended a structural reform of the national economy, along with the reform of the financial and banking sector by committing to privatization of public institutions and banks.

However, according to national experts in the financial field, the IMF tackled the reasons behind the deficit in public institutions and the growing deficit in the government’s budget.

Aoun: Lebanon to Launch Comprehensive Economic Plan

Lebanon

Beirut – Lebanese President Michel Aoun said that Lebanon was in the process of launching a comprehensive economic plan that would seek to promote production sectors.

Aoun was speaking during his meeting at the Baabda Palace on Thursday with a delegation from the World Bank, headed by the new Regional Director, Saroj Kumar Jha.

The Lebanese president underlined the support provided by the World Bank to Lebanon, which he described as an evidence of confidence in the measures undertaken by the Lebanese state to promote its economy.

“Providing assistance to small and medium-sized enterprises (SMEs) is a priority nowadays, as a key step to increase economic capacities in the country,” he stated.

The president thanked the World Bank for its considerable input in Lebanon’s developmental projects, noting that contribution included hydro-electric projects, dams, roads, cleaning river drains, as well as establishing prisons and educational compounds.

Kumar Jha, for his part, stressed the World Bank’s commitment to its continual assistance to Lebanon and its willingness to promote excellent partnerships with the Middle-Eastern country.

“The World Bank shall continue to coordinate with the Lebanese team to this end,” he stated.

He added that granting support to SMEs would be at the core of the work of the World Bank to improve and develop the conditions of such companies.

The Chairman of the Finance and Budget Committee MP Ibrahim Kenaan, President’s Advisor for International Cooperation, Former Minister Elias Bou Saab, and Kumar Jha’s accompanying delegation attended the meeting.

World Bank: Third of Syria’s Housing, Half Medical, Educational Facilities Destroyed

World Bank

Washington – The conflict in Syria has inflicted significant damage to Syria’s physical capital stock with 7 percent housing stock destroyed and 20 percent partially damaged, according to a report published by the World Bank on Monday.

According to the report “The Toll of War: The Economic and Social Consequences of |The Conflict in Syria”, physical destruction is more noticed, but the “invisible” effects, such as disruptions in economic networks, increased rent seeking, and the erosion of social trust, play a greater role in explaining the collapse in economic activity.

The World Bank added that six-years of conflict has ravaged Syria’s infrastructure and caused losses to its economy of $226 billion, and led to large numbers of casualties and forced displacement.

The numbers estimate there are between 400,000 and 470,000 deaths and more than half of Syria’s 2010 population forcibly displaced.

“Syria has become the largest forced displacement crisis in the world since World War II,” described the report.

In addition, the report stated that from 2011 until the end of 2016, the cumulative losses in gross domestic product (GDP) have been estimated at $226 billion, about four times the Syrian GDP in 2010, and Syrian exports reduced by 92 percent between 2011 and 2015.

The World Bank said the destruction ran much deeper than death tolls or infrastructure damage alone could capture.

“The war in Syria is tearing apart the social and economic fabric of the country,” World Bank Vice President for the Middle East and North Africa Hafez Ghanem said in a statement.

“The number of casualties is devastating, but the war is also destroying the institutions and systems that societies need to function, and repairing them will be a greater challenge than rebuilding infrastructure, a challenge that will only grow as the war continues,” he said.

Rapidly shrinking job opportunities and scaled down social security programs have further aggravated a mounting humanitarian crisis. Since the onset of the conflict, jobs were destroyed at an estimated rate of approximately 538,000 per year on average between 2010 and 2015, adding 482,000 people to the unemployment pool every year.

“Unemployment among youth reached 78 percent in 2015,” the report stated.

Similarly, the destruction of the existing health infrastructure has led to a deterioration of health status across the country, with a reemergence of communicable diseases, heightened impact of noncommunicable diseases, and increasing burden of injuries.

The damage to the health sector has also had devastating effects, with the World Bank saying more people were estimated to have died from deficiencies in the medical system than directly from fighting in the war.

Educational system has also been affected due to the war now that education facilities have become military bases and targets during the conflict.

Schools have been used as military quarters and informal shelters for displaced community members

The report also mentioned that available evidence suggests that physical damage to the electricity infrastructure has been severe, but not devastating: all the country’s hydroelectric dams and six of 18 power plants remain operational, while four more power plants are partially damaged, and one has been destroyed.

“However, fuel shortages and conflict-driven constraints to operation and maintenance have led to a sharp drop in public power supply,” according to the World Bank.

It is worth mentioning that since 2011, all Bank operational activity and missions to Syria were halted.

However, the Bank monitors the impact of the conflict on the Syrian people and the economy. It also dialogues regularly with the international community working on Syria in an effort to make sure it is ready to support post-conflict recovery efforts.