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
Arab Human Development Report 2022: Expanding Opportunities for an Inclusive and Resilient Recovery in the Post-Covid Era
June 29, 2022
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.
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.
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