Ferid Belhaj, Vice-President for Middle East and North Africa, World Bank: Interview

Interview: Ferid Belhaj

How can digitalisation help economies in North Africa address the constraints of informality?

FERID BELHAJ: Digitalisation offers a critical opportunity for North Africa to address the accessibility and affordability barriers that keep many firms and individuals in the informal sector by reducing regulatory compliance costs, while also enhancing service delivery quality. It can also provide transformational solutions to address financial exclusion for households and enterprises.

Facing the informality challenge in Tunisia requires multiple targeted public policies, and digitalisation can help. For example, technology is enabling reform in the new investment climate programmes. Digital payments are also a key priority and efforts are being made to upgrade payment infrastructure and open the market to digital financial service providers and financial technology. Ongoing research suggests that increasing the incidence of digital payments by 1% of the adult population may result in a 0.4% decline in the national unemployment rate in developing countries.

To address the issue of informal employment, the government recently decided to scale up the use of Ahmini (“Protect Me”), a digital platform initially piloted in rural areas to expand social security coverage – particularly to women working in agriculture – by reducing administrative barriers and compliance costs, including the payment of social security contributions. This tool can be implemented in other areas such as firm registration, tax payments or public procurement, and can be transformational in reducing informality.

In which ways can coordination among Maghreb countries improve efficiency across the region?

BELHAJ: The first of two areas to focus on is trade of goods and services, where there is a lot to be done in terms of intra-regional trade. There are still significant “behind-the-border” barriers to trade including differences in product standards and poor logistics. The latter results in unnecessary costs, including higher prices that are ultimately paid by consumers. In addition, trade in services between Maghreb countries is subject to a range of restrictions, as services are not covered – or are covered in a very shallow way – by preferential trade agreements.

The second area is the differing subsidy systems in place in the Maghreb countries, which give rise to big price differentials for key commodities, particularly petroleum products and food. We see substantial distortions arising from this, especially in border regions. In the case of Libya, the distortion caused by fuel subsidies is so large that it has major impacts on smuggling, informality and tax collection in Tunisia.

In what ways can bolstering entrepreneurship effectively contribute to reducing unemployment?

BELHAJ: As background, Tunisia, like many countries in the region, faces a daunting unemployment challenge. Official statistics suggest that about 15% of the active population is unemployed, but many more are out of the active labour force. Most of the unemployed and discouraged workers are low-skilled, and the unemployment rate is higher among youth and women, and in lagging regions. Moreover, the public sector job market is saturated. As such, we are increasingly convinced that digitalisation, coupled with complementary reforms that enhance transparency and reduce entry barriers for new entrepreneurs, can help lessen unemployment in Tunisia. Thus, it has the potential to grow economically, create jobs and support new ventures by continuing to advance in the digital technological revolution.

To create jobs for its unemployed youth, Tunisia is currently developing the Digital Economy Programme, which takes advantage of its young, tech-savvy and educated workforce. This programme aims to build a new economy that encourages entrepreneurship, generates more opportunities and strengthens the public sector’s ability to address the needs of citizens through the digital transformation of key public services.