Why should the Middle East and North Africa care about regulatory reform?

Click to read the report
Click to read the report

Today’s post is by Moritz Ader and Miriam Allam of the MENA-OECD Governance Programme, Public Governance and Territorial Development Directorate

On December 17 2010 in Sidi Bouzid, a Tunisian town of 40,000 inhabitants, twenty-six year old Mohamed Bouazizi decided on a radical protest against the local authorities who were stopping him selling fruits and vegetables in the streets because he didn’t have a trading licence.  With little prospects of getting a good job, and suffering from arbitrary constraints at the hands of officials, Bouazizi set fire to himself. His death due to severe burns has not only become known as a dramatic outcry against Ben Ali’s Tunisia, but also as the trigger of the civil uprisings that have been sweeping across countries in the Middle East and North Africa (MENA) region.

Three years later, no day passes without reminding us of the challenges faced by countries in the region. Reform efforts have proved an unprecedented commitment towards more democratic policies and governance structures in some countries, whereas daily clashes amid rival demonstrations in others reveal the fragility of this process. Why should now be the time to think about such an apparently technical matter as regulatory reform? Would governments be better advised to directly tackle the most pressing challenges, such as fighting youth unemployment and increasing citizen participation? You might even wonder what “hides” behind the somewhat cumbersome term of “regulatory reform” and how it relates to the story of Mohamed Bouazizi.

“Regulation“ is one of these buzzwords you could not escape in debates on CNN, Le Monde or at the OECD about preventing a future global financial and economic crisis of the magnitude that hit countries worldwide in the recent past. The debate about both the desirable amount and design of regulation, however, has never been limited to new laws for Wall Street.

In fact, the call for efficient and effective regulations as part of the overall reform process ultimately relates to the current transition process in MENA as it questions the set of instruments by which the Tunisian government imposed requirements on citizens (and enterprises). From this perspective, regulations include laws, formal and informal orders issued by all levels of government or bodies to which the government has delegated regulatory powers. In turn, regulatory policy defines an explicit policy to ensure high-quality regulations based on a consistent “whole-of-government” approach. Admittedly, this might still appear as being too far away from the daily concerns of the man and woman on the street in the MENA region. It is not.

At this crucial moment in the MENA region, enhancing the regulatory environment should in fact be a top priority. By assessing the current regulatory environment against key principles, such as transparency, accountability and participation, the OECD actively supports MENA countries in their transition process towards more democratic and efficient governance systems. Here is how it works.

The OECD Framework for Regulatory Policy and Governance identifies three elements for regulatory reform that have been used to assess the progress of MENA countries in implementing regulatory policy: i) core policies, ii) systems, processes and tools, and iii) actors, institutions and capacities. One way to understand that this process is at the heart of their transition process is to imagine that reforming regulations is not much different from renovating a flat.

The crumbling plaster and the living room’s fusty furniture create a gloomy atmosphere rather than a cosy haven. Obviously, your flat badly needs refurbishment and a considerable facelift. This is what the OECD framework would call your core policy. In the context of regulatory reform, the call for greater transparency and citizen participation implies that the existing stock of regulation is managed. Of crucial importance for countries in the MENA region, outdated laws need to be consigned to the history books as heavy administrative burdens often serve as entry points for corruption. At the same time, a filter in the form of regulatory impact and risk assessments must ensure that future policies fit well with the stock of existing rules and support a more open and trustful relationship between citizens and the government.

In the flat, creating a more welcoming atmosphere ultimately depends upon your talent for choosing things (new chairs, paint) that complement each other nicely. A shopping list that clearly defines how your new furniture should look would help to make sure that the renovation proceeds in accordance with your ideas. In OECD’s words, effective regulatory reform depends on systems, processes and tools which support the underlying principles of regulating and governing.

Finally, as several entities are usually involved in renovation (you wouldn’t start repainting if you were going to change the electric wiring for instance), success ultimately depends on co-operation, co-ordination, communication and consultation between the individual parties. A clear definition of the functions and roles of actors, institutions and capacities marks the third and final element of OECD’s approach for assessing regulatory reform.

Regulatory Reform in the Middle East and North Africa: Implementing Regulatory Policy Principles to Foster Inclusive Growth is the first progress report that assesses the implementation of OECD regulatory policy principles in the MENA region. Including Bahrain, Egypt, Jordan, Lebanon, Mauritania, Morocco, the Palestinian Authority, and Tunisia, the report provides recommendations based on the 2009 Regional Charter for Regulatory Quality and the 2012 OECD Policy Recommendation of the Council on Regulatory Policy and Governance.

The review reveals that an explicit regulatory policy in the MENA region is still in its infancy. The countries involved do not have an explicit regulatory policy. Systematic regulatory systems, processes and tools, such as Regulatory Impact Assessments, are also new to most governments in the region. The review concludes that further efforts are necessary to institutionalise regulatory policy and governance, for instance by implementing regular performance assessments of regulations.

Improving the clarity and efficiency of regulations will benefit both citizens and enterprises and mark a crucial element in the transition process of MENA countries.

Useful links

MENA-OECD Governance Programme