According to a new World Bank report, the universal adoption of digital technologies in Middle Eastern and North African (MENA) countries might yield immense socio-economic benefits, with several hundred billion dollars each year the key, and the creation of the many jobs they currently lack.
The World Bank has just released an encouraging report for the countries of the Middle East and North Africa (MENA). Entitled “Digital Benefits for Countries in the Middle East and North Africa: Adoption of Digital Technologies Can Accelerate Growth and Create Jobs”, it accurately demonstrates how the widespread use of digital services , such as mobile money and dematerialized payments, is likely to strongly stimulate economic growth. This expansion effect is mainly explained by the fact that digital technologies reduce the information costs which hamper economic transactions, these costs being all the lower as the number of users increases.
A 46% increase in GDP in 30 years
According to the report, the complete digitalization of the economy might lead to an increase in GDP per capita of at least 46% over 30 years, which would represent an estimated long-term gain of at least $1.6 trillion for the region. In the first year, the report estimates, the gain in GDP would amount to nearly 300 billion dollars. The growth gains would be more marked in low-income countries, where they would reach at least 71%, knowing that they stem from the reduction of the digital divide, which is less pronounced in high-income countries.
“The benefits of moving to a more digital economy are exponential and governments should do everything in their power to remove the barriers that are holding this transition back. The gains will be all the more important as the transition is rapid, ”underlines Farid Belhaj, vice-president of the World Bank for the Middle East and North Africa. “A digital transformation would create jobs in a region where the unemployment rate is at an unacceptable level, especially among young people and women. With a concerted effort, it is possible to change the situation,” he continued.
Doubling of the female activity rate
According to the report, the universal adoption of digital technologies would double the female labor force participation rate, with an increase of regarding 20 percentage points over a 30-year period (i.e. an increase in the number of working women from 40 to 80 million). Employment in the manufacturing sector would increase by at least 5% over 30 years, with 1.5 million additional jobs over this period, or an average of 50,000 new jobs each year.
Frictional unemployment might go from 10 to 7% over a period of six years (which corresponds to a reduction in the number of unemployed from 12 to 8 million), and disappear in 16 years. Note that frictional unemployment, or “natural” unemployment, refers to the period of temporary inactivity necessary to find or change jobs. The time required to match job offers and applications is considerably reduced by the use of technologies such as e-mail, job search platforms or professional networks, which facilitate the prospecting and the application process.
The use of the internet and digital tools, not up to expectations
The report highlights a paradox specific to the MENA region: while the level of adoption of social networks by the population is high compared to levels of GDP per capita, the use of the Internet and digital tools, such as payments by mobile phone, is not living up to expectations. About 66% of people in the MENA region use the Internet, compared to only 61% in Latin America and the Caribbean and 54% in East Asia and the Pacific.
In contrast, the usage rate of digital payments in developing countries in the MENA region (i.e. excluding Gulf Cooperation Council member states) stands at 32%, while it reaches 43% in Latin America and the Caribbean. In addition, in most countries in the region (with the exception of Iran and the United Arab Emirates), mobile money penetration is lower than it might be, given their levels of mobile money. income. For example, the share of the population with a mobile money account in the Gulf countries (21%) is lower than that of sub-Saharan Africa (24%).
You have to lift the brakes
This reluctance to use digital technologies for financial transactions is probably due to society’s lack of trust in public administration and commercial companies. It is also explained by regulations that complicate digital transformation.
In this regard, the report recommends, in particular, to further open the telecommunications market to competition, which might help to increase the supply and use of mobile money and digital payments and, moreover, to improving financial inclusion by expanding access to current accounts. Measures are also needed to put in place a stronger regulatory framework conducive to the development of e-commerce, mainly with regard to electronic signature systems, data privacy protection and cybersecurity. More generally, it is essential to prioritize the reforms essential to the generalization of dematerialized payments in order to resolve the “digital paradox” and accelerate the digital transformation of the economy in the MENA region.
Aziz Diouf / ECO Inspirations
