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Arab Spring Brings Some Sour Fruits

Simba Shani Kamaria Russeau

CAIRO, Mar 26 2012 (IPS) - Recent shifts in the Middle East and North Africa have presented several economic challenges such as high unemployment, an exodus of migrants from Libya and a reduction of tourism revenues. Given that economic discontent played a vital role in the Arab uprisings, economic growth has become vital to sustain the fruit of revolution.

“In societies characterised by young populations, and by a need to create hundreds of thousands of new jobs every year in order to absorb new workforce entrants, efforts to reshape economic policies and restructure the various economic sectors are of extreme importance,” Ziad Majed, assistant professor of Middle East studies at the American University of Paris tells IPS.

“For this reason, the development of new frameworks for regional and international economic cooperation with public and private sector organisations should be a priority, not only for the direct benefits that such cooperation would provide, but also in the interest of long-run stability and prosperity in the societies concerned.”

According to the Arab Tourism Organisation (ATO), popular uprisings that began a year ago – leading to the toppling of regimes in Tunisia, Egypt and Libya – cost the Arab world nearly 96 billion dollars, with 18 percent of those losses in the tourism sector.

In the Middle East and North Africa (MENA), tourism is considered a major source of foreign exchange after remittances from overseas migrant workers. The travel and tourism industry plays a crucial role in generating employment as well as aiding in reducing reliance on other economic sources.

In Egypt, tourism employs almost two million workers, generates 11 percent of the GDP, and is the principle source of foreign currency – accounting for 20 percent of the total.

In Tunisia, tourism provides employment for approximately 400,000 Tunisians and generates nearly 8 percent of the GDP. It represents the main source of foreign currency in the country.

Last year, Syria generated more than 8 billion dollars due to a 40 percent increase in the number of tourists before the uprisings.

The region has struggled to get back on its feet with ongoing instability in countries like Bahrain where recent statistics indicate that 12 months of political unrest has cost businesses nearly 800 million dollars. Rising unemployment and loss of remittances from overseas migrant workers have also contributed to economic stagnation.

According to the International Labour Organisation (ILO), unemployment in the Arab world was 10.3 percent in 2011 compared to a global rate of 6.2 percent.

Egypt’s population of about 85 million, which constitutes a third of the Arab world, is growing by two percent a year. Two-thirds of the population is under the age of 30, and that age group accounts for 90 percent of the jobless.

Last year, the World Economic Forum’s Global Competitiveness Index revealed that institutions in the MENA region have failed to create supportive economic and social environments that could encourage youth entrepreneurship.

“Reforms like fair wages, and a proper educational and healthcare system is what we need right now,” 25- year-old Egyptian business graduate Hassan Massri tells IPS.

“Investing in young entrepreneurs could offer alternatives for recent graduates who are entering a non- existent job market. Young Egyptians, who were the drivers of political change, have so much potential in terms of contributing to the economic development of this country. Our talents shouldn’t be wasted.”

Remittances have been the most important source of private investment in rural and urban Egypt, from lower as well as from higher skilled occupations, for the past 30 years.

In 2008, the World Bank ranked Egypt as one of the top 10 remittance recipient developing countries.

“The IOM World Migration Report 2011 assumes that the sudden return of large numbers of migrant workers to developing countries in the course of the political transitions that took place in Tunisia, Egypt and Libya’s civil conflict may have a serious impact on the economic stability of these states,” IOM Cairo programme manager Piera Solinas tells IPS.

“Many of them are already struggling with high unemployment, and now they have to absorb large numbers of returnees into their labour market. These countries are also likely to be hit financially, as migrant workers returning home will no longer be able to send remittances.”

This is strongly the case in Egypt, Solinas says. “To date, nearly 200,000 Egyptian migrants have returned back to Egypt. Most are semi-skilled adult males, and were likely to have been single and/or primary breadwinners who were supporting dependents through remittances, which have now been disrupted.”

Prof. Majed says the need for remedial action is urgent. “Incentives, joint projects, vocational training and specialised initiatives could be designed, and investments developing the national economies and enlarging their social bases could be made. This would diminish immigration pressures, social tensions and poverty, and would allow for the emergence of more dynamic economic sectors.”

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