MENA Needs Digital Transformation to Create More Jobs, Report Says

Lack of digital infrastructure contributes to high rates of youth unemployment in the Middle East and North Africa, a new report says.

The report, “COVID-19 and Internet Accessibility in the MENA Region”, was published in mid-December by the U.S.-based Woodrow Wilson International Center for Scholars. It assesses the readiness of countries in the MENA region to shift employment online, in terms of both Internet availability and digital literacy among the populace.

Its authors, Alexander Farley and Manuel Langendorf, argue that increasing Internet accessibility and investing in digital infrastructure development can help governments’ efforts to form a digitally-enabled economic recovery strategy.

While the MENA region is projected to have 160 million potential digital users by 2025, the paper draws a bleak image of its Internet infrastructure and accessibility.

Last year, 34 percent of the population in Arab states was not using the Internet, according to data from the International Telecommunication Union. In 2019, the GSMA, an organization that represents the interests of mobile network operators worldwide, found that almost half the people in countries such as Egypt and Lebanon, which have a mobile broadband network, are not using the Internet. Around 60 million people in the MENA region were not covered by a mobile network.

Furthermore, with the exception of the United Arab Emirates and Qatar, which cover about 80 percent of households directly with fibre-optic Internet access, only nine out of 100 inhabitants in Arab states used fixed broadband subscriptions, the second-lowest rate of all world regions, after Africa.

The paper says the development of digital infrastructure overall continues to lag behind the rest of the world. This holds back the region’s digital transformation and deprives it of the benefits of investment in improving national core networks.

Digital Infrastructure and Jobs 

Overall, unemployment in the region stood at 11.6 percent in 2020, with the “the low-skilled, the young, women, and migrant workers were affected the most” by the pandemic, the report says, citing International Monetary Fund statistics. Youth unemployment was already over 25 percent in 2019, and employment of young people declined an additional 10 percent in 2020, it adds.

Manuel Langendorf, one of the report’s authors, argued that proper investment in digital infrastructure could help governments confront unemployment.

“Digital transformation is not a silver bullet to solve the MENA region’s protracted unemployment problem, but it can create new job opportunities, especially for the large young and relatively tech-savvy population,” he told Al-Fanar Media.

“Studies have shown that broadband development leads to increased GDP and has a positive impact on employment in the short term. Part of the picture are newly created jobs to build new digital infrastructure,” he added.

While the longer=term effects seem less clear, Langendorf thinks country-wide improvements to digital infrastructure can bring new economic opportunities, including for disadvantaged populations and rural areas.

“These include the expansion of remote working, as an employee or freelance worker, and also allows workers to search for employment opportunities more widely,” he said. “An improved digital infrastructure also opens up new job opportunities in online education.”

Citing the installation of ten undersea Internet cables between Europe and Africa, he said: “We found a significant and large relative increase in the employment rate in connected areas when fast Internet becomes available.”

Do We Need More IT Graduates? 

In the Internet era, when many traditional jobs might disappear, students see information technology courses as a route to secure jobs.

However, the report highlighted that some countries, like Jordan, graduate around 5,000 students in IT-related fields each year, yet less than 2,000 are hired. Still, some see an opportunity for graduates from the region to fill the shortage of skilled IT workers in Western countries.

Farley believes the region needs more people with IT knowledge.

“University curricula in most MENA countries are slow to update, thus creating a situation where many fresh graduates hold a diploma but are not ready to start working in the IT sector, as their knowledge is outdated,” he wrote to Al-Fanar Media.

He called on the education and the private sectors to collaborate to improve the university-to-job pipeline and close the skills gap. “Both sides should make sure that the latest IT knowledge is integrated into curricula and set up internship opportunities for students and graduates,” he said. “Beyond universities, the private sector and educational institutions can hold more workshops to bring people up to speed.”

The report also identified management skills as one of the biggest challenges to expanding potential of IT in the MENA region. “The lack of management skills affects the scalability of projects and businesses that can make use of the surplus of advanced IT skills,” said Farley.

Moreover, the authors said the MENA region lacks truly innovative IT ventures, and is focused instead on adapting ideas created elsewhere.

“In this context, the region is often described as a consumer rather than a creator of technology,” said Farley. “Nevertheless, many MENA startups have had great success in the past years. In 2021, MENA-based startups raised close to $3 billion, a new record for the region.”

Fruitful Digital Transformation Tips

Governments and other stakeholders need to ensure that the expansion of digital infrastructure focuses not just on connectivity (areas covered by Internet), but accessibility, the authors said.

“Is using the Internet affordable? Do people have access to devices to use the Internet?” wondered Langendorf. “GSMA estimated that those living in areas with a mobile broadband network but not using mobile internet increased from 41 percent to 48 percent between 2014 and 2020.”

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To enable investments in digital infrastructure to tackle unemployment, Langendorf calls on governments to support entrepreneurship. “They need to facilitate starting a business and obtaining loans, and decriminalizing bankruptcy,” he said.

“Besides, they should enable cross-border trade and the movement of skilled people between countries.”

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• Inequality in Internet Access Is Greatest in MENA Region, Report Says