IMF's Christine Lagarde calls for ‘urgent action’ to create jobs in Arab world

Christine Lagarde, Managing Director of International Monetary Fund IMF attends the opening session of the Opportunities For All economic conference in Marrakech, Morocco, Tuesday, Jan. 30, 2018. (AP)
Updated 30 January 2018

IMF's Christine Lagarde calls for ‘urgent action’ to create jobs in Arab world

LONDON: Arab countries need to do more to create private sector jobs and bolster inclusive growth amid growing youth unemployment and regional dissatisfaction, said Christine Lagarde, managing director of the International Monetary Fund (IMF), said on Tuesday.
Speaking at an IMF conference in Marrakesh, Morocco, she said 27 million young people would join the workforce in Arab countries in the next five years in a region that has the highest rate of youth unemployment in the world at 25 percent.
Although Arab states are progressing with reforms, they must move away from being “state employers” and focus on improving social safety nets, Lagarde said.
During the two-day conference on inclusive growth, Lagarde said the public dissatisfaction that is “bubbling up” in several countries is a reminder that even more ‘urgent action’ is needed.
In Tunisia, violent demonstrations broke out again this month as anger mounts over IMF-backed measures that include subsidy cuts and tax increases.
Chris Doyle, director of the Council for Arab-British Understanding (CABU), told Arab News: “Frustrations across the Arab world are growing.”
Doyle said: “The region must urgently deploy more resources to tackle youth unemployment and these resources must be deployed far more effectively.”
The director said Middle Eastern governments must take action to end its “many conflicts and crises” to unlock the region’s potential.
Doyle urged the region to look at redesigning its education system to ensure it provides the right skills for a twenty first century jobs market.
“The region needs to look at skilling up for the digital economy,” he said. “However, be under no illusion, it’s a massive challenge.”
The Cabu expert said that Egypt represents a particularly pressing challenge due to its central location and large and growing population.
“[Joblessness] will have an immediate impact on the country and it’s not rosy,” he warned.
“We may well witness more protests and discontent. Governments really should be really aware that [protests] represent genuine economic weaknesses and reflect the levels of corruption in the region.”
Wes Schwalje, COO of GCC research firm Tahseen Consulting, agreed that regional education systems are struggling to produce national workforces with the skills that meet “the needs of knowledge-based economic development and the Fourth Industrial Revolution.”
Schwalje told Arab News: ” A youthful, growing labor market can be beneficial to economic development if it is accompanied by job creation. Without job creation, the counterfactual is youth becoming unemployed, discouraged, or entering the informal economy.
“Discontent among youth is particularly significant since there is a strong link between youth bulges experiencing economic hardship and political violence. If the public sector is unable to create sufficient jobs for Arab youth, the only other option is private sector job creation.”
High levels of public sector employment in the Arab World have been criticized as “perpetuating low productivity, lack of economic diversification, and high public sector wage bills, Schwalje said.
The COO added: “Market reforms will need to reorient Arab youth toward private sector jobs… A number of Arab countries are piloting ambitious labor market reforms, such as unemployment benefits, minimum wages, fees on foreign workers, and increased mobility of foreign workers, but their success is far from certain.”

Saudi energy giant to invest $3bn in Bangladesh’s power sector

Updated 22 October 2019

Saudi energy giant to invest $3bn in Bangladesh’s power sector

  • Experts say deal will usher in more economic and development opportunities for the country

DHAKA: Saudi Arabia’s energy giant, ACWA power, will set up an LNG-based 3,600 MW plant in Bangladesh after an agreement was signed in Dhaka on Thursday.

The MoU was signed by ACWA Chairman Mohammed Abunayyan and officials from the Bangladesh Power Development Board (BPDB), officials told Arab News on Monday.

According to the agreement, ACWA will invest $3 billion in Bangladesh’s energy development sector, of which $2.5 billion will be used to build the power plant while the rest will be spent on an LNG terminal to facilitate fuel supply to the plant. Under the deal, ACWA will also set up a 2 MW solar power plant.

In recent months, both countries have engaged in a series of discussions for investment opportunities in Bangladesh’s industry and energy sectors. 

During the Saudi-Bangladesh investment cooperation meeting in March this year, Dhaka proposed a $35 billion investment plan to a high-powered Saudi delegation led by Majed bin Abdullah Al-Qasabi, the Saudi commerce and investment minister, and Mohammed bin Mezyed Al-Tuwaijri, the Saudi economy and planning minister.

However, officials in Dhaka said that this was the first investment deal to be signed between the two countries.

“We have just inked the MoU for building the LNG-based power plant. Now, ACWA will conduct a feasibility study regarding the location of the plant, which is expected to be completed in the next six months,” Khaled Mahmood, chairman of BPDB, told Arab News.

He added that there are several locations in Moheshkhali, Chottogram and the Mongla port area for the proposed power plant.

“We need to find a suitable location where the drift of the river will be suitable for establishing the LNG plant and we need to also consider the suitability of establishing the transmission lines,” Mahmood said.

“It will be either a JV (Joint Venture) or an IPP (Independent Power Producer) mode of investment, which is yet to be determined. But, we are expecting that in next year the investment will start coming here,” Mahmood said.

BPDB expects to complete the set-up process of the power plant within 36 to 42 months.

“We are in close contact with ACWA and focusing on the successful completion of the project within the shortest possible time,” he said.

Abunayyan said that he was optimistic about the new investment deal.

“Bangladesh has been a model for the Muslim world in economic progress. This is our beginning, and our journey and our relationship will last for a long time,” Abunayyan told a gathering after the MoU signing ceremony.

Economists and experts in Bangladesh also welcomed the ACWA investment in the energy development sector.

“This sort of huge and long-term capital investment will create a lot of employment opportunities. On the other hand, it will facilitate other trade negotiations with the Middle Eastern countries, too,” Dr. Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), told Arab News.

She added that Bangladesh needs to weigh the pros and cons before finalizing such contracts so that the country can earn the “maximum benefits” from the investment.

“It will also expedite other big investments in Bangladesh from different countries,” she said.

Another energy economist, Dr. Asadujjaman, said that Bangladesh needs to exercise caution while conducting the feasibility study for such a huge investment.

“We need to address the environmental aspects, opportunity costs and other economic perspectives while working with this type of big investment. Considering the present situation, the country also needs to focus on producing more solar energy,” Dr. Asadujjaman told Arab News.