November 22, 2018 (MLN): With millions of young people entering the workforce each year, countries like North Africa, Afghanistan and Pakistan (MENAP) need urgent action as their fiscal resources have been severely constrained and economic risks are on the rise, says the International Monetary Fund (IMF), in its recently published report.
According to the narrative, bolstering the private sector is critical to meeting this challenge, but the key to doing so—increasing private investment in the region—has long been elusive.
MENAP countries can increase private investment through improvements in the areas that have meaningful impact on private investment which include education, infrastructure, governance, and access to finance and all areas where MENAP countries could improve.
The report further adds that the school enrollment rate for oil-importing countries in the region stands at just above 50 percent for secondary schools, well below the emerging markets and developing economies average of over 75 percent.
However, if school enrollment reaches to emerging market level it could boost private investment by over 1% point of GDP, says the report.
Moreover, the report highlights that, improvements in infrastructure like ensuring access to electricity has the potential to raise investment by another 3/4 of a percentage point.
Apart from this, improving the rule of law to the emerging markets and developing economies average could raise private investment by 2/3 of a percentage point of GDP.
In parallel, bringing financial development to the level of the average advanced economy could boost private investment by 1/2 of a percentage point of GPD.
