Speaker: Rabah Arezki, Chief Economist, Middle East and North Africa World Bank Algiers, June 2018

1. A New Economy for MNA
Rabah Arezki
Chief Economist, Middle East and North Africa
World Bank

2. a moonshot
for MNA
Photo Credit: NASA

3. context

4. regional context

5. from the old to the new social contract
• Old social contract. Public sector jobs and universal
subsidies amounting to de-risking economic lives of
citizens in exchange for “little voice and accountability”.
Led to weak service delivery and mistrust.
• New social contract. economically empower the fast
growing youth (who currently are on social media voicing
grievances). Promote the emergence of a “new
(service/digital) economy”, autonomous and driven by the
youth.

6. the (promise of a) new economy for MNA
today
new economy traditional economy
future
traditional economy new economy

7. strategic shift: disruptive technologies
“old economy” paradigm “new economy“ paradigm
governance
market structure (entry/exit)
technology
governance
market structure (entry/exit)
technology

8. New
Economy
Old
Economy
Traditional Utilities
Electricity
Gas
Transportation
Digital Utilities
Broadband Digital
Payment
mental shift: from physical to digital infrastructure

9. global context

10. the next global wave of disruption:
from automation to autonomous
Market Size
($ Billions)
Mainframe
Computers
PC
Internet
Mobile
Cloud
Big Data
Analytics
Artificial
Intelligence/
Machine
Learning
Computing Power, Broadband, Data Storage
cost / performance

11. MNA unbalanced nexus between human
capital and technology

12. demographic wave

13. 300 millions entering the labor market
050100150200250300350400
2000 2010 2020 2030 2040 2050
Reference date (as of 1 July)
youth senior
Sources: UN WPP (2017), WB WDI, and World Bank staff calculations.
Youth and Senior in MENA Region Since 2000 in Scenario 1
0
1
2
3
4
5
6
7
80
1
2
3
4
5
6
7
8
9
10
1950195519601965197019751980198519901995200020052010
Male
Female
Fertility (percent, right
scale, reversed order)
Years of Schooling for Youth Entrants vs Fertility in
MENA
Sources:Barro and Lee, WDI, and World Bank staff
calculations.
…with rising aspirations of
increasingly educated and female
labor market entrants (male are
somewhat flanking)

14. Educated but unemployed
unemployment rate by education levels
(% of labor force with indicated education level, WDI)
0
10
20
30
40
50
2001 2003 2005 2007 2009 2011 2013 2015
West Bank and Gaza
0
10
20
30
40
50
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Tunisia
0
10
20
30
40
50
2008 2009 2010 2011 2012 2013 2014 2015 2016
Egypt
0
10
20
30
40
50
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
USA
0
10
20
30
40
50
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Germany
0
10
20
30
40
50
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Sweden

15. brain drain: human capital as an export market
0
5
10
15
20
25
30
35
40
45
50
Australia
China
HongKong,China
Indonesia
Japan
Cambodia
LaoPeople'sDemocraticRepublic
Myanmar
Mongolia
Malaysia
NewZealand
Philippines
PapuaNewGuinea
Singapore
Thailand
Timor-Leste
VietNam
Albania
Austria
Belgium
Bulgaria
Switzerland
Cyprus
Germany
Denmark
Spain
Finland
France
UnitedKingdom
Greece
Hungary
Ireland
Italy
Netherlands
Norway
Poland
Portugal
Romania
Sweden
Turkey
Argentina
Bolivia
Brazil
Chile
Colombia
CostaRica
Cuba
DominicanRepublic
Ecuador
Guatemala
Honduras
Haiti
Jamaica
Mexico
Nicaragua
Panama
Peru
PuertoRico
Paraguay
ElSalvador
TrinidadandTobago
Uruguay
Venezuela(BolivarianRepublicof)
UnitedArabEmirates
Bahrain
Algeria
Egypt
Iran(IslamicRepublicof)
Iraq
Israel
Jordan
Kuwait
Lebanon
LibyanArabJamahiriya
Morocco
Oman
OccupiedPalestinianTerritory
Qatar
SaudiArabia
SyrianArabRepublic
Tunisia
Yemen
Canada
UnitedStatesofAmerica
Afghanistan
Bangladesh
India
SriLanka
Nepal
Pakistan
Angola
Burundi
Benin
BurkinaFaso
Botswana
CentralAfricanRepublic
Côted'Ivoire
Cameroon
DemocraticRepublicoftheCongo
Congo
Eritrea
Ethiopia
Gabon
Ghana
Guinea
Gambia
Guinea-Bissau
EquatorialGuinea
Kenya
Liberia
Lesotho
Madagascar
Mali
Mozambique
Mauritania
Mauritius
Malawi
Namibia
Niger
Nigeria
Rwanda
Sudan
Senegal
SierraLeone
Somalia
Swaziland
Chad
Togo
UnitedRepublicofTanzania
Uganda
SouthAfrica
Zambia
Zimbabwe
East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa North AmericaSouth Asia Sub-Saharan Africa
Share of tertiary-educated of the emigrant population
EAP
ECA
LAC
MNA
NAC
SAS
SSA
Source: Database on Immigrants in OECD Countries, DIOC-E 2000 (RELEASE 3.0), and World Bank staff calculations.

16. technology gap

17. high mobile penetration but limited
broadband
0
5
10
15
20
25
30
35
40
All countries
Middle East & North Africa
Latin America & Caribbean
East Asia & Pacific
Europe & Central Asia
South Asia
Sub-Saharan Africa
North America
Upper middle income
High income
Lower middle income
Low income
World Region Income Group
Fixed-line broadband subscribers
Per 100 inhabitants
Sources: The Economist Intelligence Unit,
Inclusive Internet Index 2018; and World
Bank staff calculations.
0
20
40
60
80
100
120
140
All countries
Middle East & North Africa
Latin America & Caribbean
East Asia & Pacific
Europe & Central Asia
South Asia
Sub-Saharan Africa
North America
Upper middle income
High income
Lower middle income
Low income
World Region Income Group
Mobile subscribers
Per 100 inhabitants
Sources: The Economist Intelligence Unit,
Inclusive Internet Index 2018; and World
Bank staff calculations.

18. poor internet quality and nearly no cashless
payment
0
50000
100000
150000
200000
250000
All countries
Middle East & North Africa
Latin America & Caribbean
East Asia & Pacific
Europe & Central Asia
South Asia
Sub-Saharan Africa
North America
Upper middle income
High income
Lower middle income
Low incomeWorld Region Income Group
Bandwidth capacity in Bits
per internet user
Sources: The Economist Intelligence Unit,
Inclusive Internet Index 2018; and World
Bank staff calculations.
0
20
40
60
80
100
120
140
160
180
Middle East & North Africa
East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
South Asia
Sub-Saharan Africa
Average number of per capita cashless
transactions (2015)
Sources: World Bank, Global Payment Survey
2016; and World Bank staff calculations.

19. market structure and incumbency in wireless
and broadband
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
All countries
Middle East & North Africa
Latin America & Caribbean
East Asia & Pacific
Europe & Central Asia
South Asia
Sub-Saharan Africa
North America
Upper middle income
High income
Lower middle income
Low income
World Region Income Group
Wireless operators' market share
HHI score (0-10,000)
Sources: The Economist Intelligence Unit,
Inclusive Internet Index 2018; and World
Bank staff calculations.
0
1000
2000
3000
4000
5000
6000
7000
8000
All countries
Middle East & North Africa
Latin America & Caribbean
East Asia & Pacific
Europe & Central Asia
South Asia
Sub-Saharan Africa
North America
Upper middle income
High income
Lower middle income
Low income
World Region Income Group
Broadbank operators' market share
HHI score (0-10,000)
Sources: The Economist Intelligence Unit,
Inclusive Internet Index 2018; and World
Bank staff calculations.

20. instagram/facebook but not paypal
Source: internetworldstats
0
20
40
60
80
100
120
USA GBR FRA TUN DZA EGY LBN MAR CHL ZAF
OECD MENA Other
Internet users on Social Media
0
10
20
30
40
50
60
70
FRA GBR USA UAE EGY SAU ZAF MEX KEN
OECD MENA Other
Cashless-payments
Source: Estimates from MasterCard Advisors analysis, 2013

21. some green shoots: the advent of
multisided platforms

22. Careem: Uber of the Middle East
Platforms in MNA 22
Forbes
Entrepreneur
CNBC

23. SOUQ: The Middle East’s Amazon
Platforms in MNA 23
Forbes
Tech Crunch
Inc.

24. JAMALON: Middle East’s books provider
Platforms in MNA 24
Entrepreneur
Forbes
Quartz

25. Thank you