Policy Briefs
What Should Be Done to Quicken the Pace of Digital Transformation among Business Firms in the MENA Region?
No.
PB 80
Publisher
ERF
Date
June, 2022
Topic
I. Health
J1. Demographic Economics
In a nutshell
- The worldwide precautionary measures adopted by governments to control the spread of the COVID-19 pandemic, such as closing businesses, social distancing, and restricting mobility, led to adverse consequences on the business sector in all economies.
- The MENA region was not an exception, as the business sector in the region has been hit hard by the catastrophic consequences of these measures. This is the case because the region's economy is dominated by activities that directly or indirectly require extensive human interactions, including oil exports, tourism, and foreign remittances.
- The existing evidence indicates that adopting digital technologies appeared as one of the most effective strategies to absorb the shock induced by the pandemic containment measures (Seetharaman, 2020; Dwivedi et al., 2020).
- The analysis based on microdata collected from 5,480 firms surveyed in four countries of the MENA region, namely Egypt, Jordan, Morocco, and Tunisia. The results show that firms of larger size, owned by foreigners, encountering business challenges due to the pandemic, complying with pandemic containment measures, receiving support from the government, as well as firms operating in the service sector are more likely to adopt digital solutions in response to COVID-19 pandemic.
- To accelerate digital transformation among businesses in MENA region, policy makers can apply several measures. These actions may include intensifying internet accessibility to all businesses; granting firms’ subsidies; a preferential tax cut; and tax breaks based on their achievement on digitization fronts; establishing a conducive business environment to attract foreign investments; and reforming educational curriculum to bridge the digital divide among population and businesses.
Authors
Mohammed Elhaj Mustafa Ali
Assistant Professor, University of Kassala
Research Fellows
Ebaidalla Mahjoub Ebaidalla
Assistant Research Professor, Ibn Khaldon Center for...