1. Energy sector diversification: Meeting demographic challenges in the MENA region
- Author:
- Bina Hussein
- Publication Date:
- 01-2020
- Content Type:
- Special Report
- Institution:
- Atlantic Council
- Abstract:
- Countries in the Middle East and North Africa (MENA) region are expected to witness a substantial growth in population over the next three decades. Many of the hydrocarbon-rich nations in this region will need to meet a commensurate increase in job demand. This report focuses on four nations that are predominantly reliant on the oil and gas sector: Saudi Arabia, the United Arab Emirates (UAE), Kuwait, and Algeria. In all four nations, the majority of the local population is employed in the public sector, which, in the long term, will become economically unsustainable. In order to meet the growing job demand, these nations must both diversify their economies beyond the energy sector and expand their energy sectors beyond hydrocarbons. Doing so will create important employment opportunities in new industries. Saudi Arabia, the UAE, and Kuwait all have strategies in place that, if followed, could pave the way towards a diversified knowledge-based economy. Algeria, on the other hand, is at a crossroads. Even as it is undergoing a political transition, the transition can create opportunities for the new government to change the country’s course and push economic reforms that are not only aimed at lowering the current unemployment rate but also at making the private sector more enticing. Additionally, all four nations will need to take steps to increase female participation in the workforce by easing current restrictions and making labor laws more favorable towards women. The energy sector plays a large role in the economies of all four nations. This sector has a critical role to play in efforts to diversify the economy and teach skills that will be beneficial in the future or can be applied in other sectors as well. Moreover, all four nations also have sovereign wealth funds that either play, or can play, a key role in diversifying the economy, strengthening existing industries, and helping to create new industries altogether. This report offers the following recommendations on how these four nations can work towards meeting demographic challenges in relation to the economy, specifically the role of the energy sector: Governments can strengthen the private sector through increased foreign investment and by incentivizing entrepreneurship through reforms that open up the economy and make it more lucrative for investors. Governments can create laws and support structures that encourage women to work and increase female participation in the workforce. Opportunities should be provided to teach skills and impart knowledge relevant to the job market that will also be relevant in the future. Lessons should be learned from the experience of the energy sector and leveraged to achieve successes in other areas. For example, the state-owned oil and gas companies have successfully set up a structure that allows them to not only invest in their employees but also take care of the community by offering health care services, education, and more.
- Topic:
- Demographics, Energy Policy, Markets, Oil, Governance, Geopolitics, Gas, Renewable Energy, Fossil Fuels, and Transition
- Political Geography:
- Middle East, North Africa, and Gulf Nations