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30 Mar 2021

Alia Hindawi, Business & Human Rights Resource Centre,
Dr. Elie Abouaoun, United States Institute of Peace

New social contracts and role of the private sector in the MENA

Solidarity Centre.

Trust between states and citizens of the Middle East and North Africa (MENA) region is at an all-time low. MENA currently hosts some of the world’s bloodiest conflicts, and despite its population amounting to just five percent of the globe, it is estimated that around 37% of displaced persons worldwide originate from the region. Many of the ongoing conflicts across MENA stem from deep seated grievances, and ultimately the deterioration of a functioning social contract – one traditionally imagined between citizens and state – but one that also holds a specific role for the corporate sector in the pursuit of sustainable peace.

For the social contract to establish the legitimacy of authority and state, it should express the general will of a people, their collective interests and provide the basis for ensuring their general welfare.

A social contract enables people to transfer their authority to govern themselves to the sovereign and in turn, authorise the sovereign to represent them while protecting their rights and freedoms. Failure to fulfil this duty in the post-colonial MENA region is not solely attributed to the sovereign or political establishments. Blame extends to the corporate sector too, whose practices often infringe upon the individual rights of workers as well as the collective rights of the communities in which they operate. Authorities in general either turn a blind eye, participate in, or are just unaware of these practices.

Within the context of a thriving social contract, the private sector can provide the prospect of upward social mobility through economic opportunity, particularly among young professionals and through the promotion of entrepreneurship. Upward social mobility is closely associated with economic growth and contributes to closing the gap of inequality in the region that often fuels destabilising sentiments of despair and desperation.

However, not only has the private sector rarely been an essential stakeholder in major political endeavours, peace negotiations or discussions in and about the region, in many cases it actively undermines public trust. The behaviour of the private sector in the region is commonly rooted in corruption, and the abuse of workers and entire communities in their operations. In the MENA region, the supply chain of private corporations generally enriches bad actors in conflicts – with or without knowing. And, when the private sector does not take into consideration community dynamics in unstable contexts, its business activity can actually deepen community divides and exacerbate inequality.

A relevant question today is whether businesses can play a positive role in redeeming or reimagining the social contract of the societies in which they operate. Corporations today are well aware of the “Do No Harm” principle. The principle was adopted by business and humanitarian actors in response to unintended negative consequences to well-intentioned endeavours.

But can and should companies go beyond the mere “do no harm” principle and conduct business in a way that generates tangible, peaceful dividends?

To do so, businesses must first be held to a higher standard when it comes to respecting the rights of their workforce. Efforts to address drivers of tension and reduce inequality in the region will only be meaningful if businesses themselves are operating in accordance with universal rights. Then, they must adopt conflict-sensitive business models that acknowledge real power dynamics, root causes of today’s political decadence, the nature and scope of the tension points and possible beneficiaries.

An abundance of literature on how the corporate sector can contribute to the shaping of social contracts exists, the following ideas are specific to the MENA context.

Closing the gap

By investing in the region’s human capital, the private sector can both contribute to the restoration of a social contract and its own future interests. MENA’s workforce has long suffered from inadequate, poor-quality training. The resulting skills gap, and subsequent wage gap, is one of the most conspicuous reasons for inequality in the region. Additionally, the skills gap incurs a significant cost on businesses looking to recruit and retain capable team members. A three-way partnership between the private, public and education sectors is the most viable vehicle to understand and address the needs of the labour market.

Public good can pay

The private sector can also play a role in supporting social change initiatives which have typically relied on foreign resources rather than local funding. There could be valid reasons for relying on foreign support - including the lack of fiscal incentives or possible political retaliation – but this over-reliance comes with its own price. Foreign funding is sporadic, subject to the whims of international agendas, often short-term in focus and lacking local ownership. In more advanced economies the corporate sector has evolved to understand corporate giving as corporate responsibility or even corporate citizenship, but in MENA the view that this is mere charity prevails. Social contracts should evolve so that a population can expect businesses to contribute to public good, enabling businesses to set themselves apart from competition in the eyes of the population and responsible investors.

The post-COVID era will see serious transformations within a public sector under huge pressure to set up or improve existing stimulus packages and social safety nets. The private sector will have to take a different look at its role in making sure revamped governance structures hold sufficient legitimacy. This begins with ensuring social contracts are inclusive and enshrine the rights of all people living in the region. If businesses make more concerted efforts to close the skills gap, support positive social initiatives and provide the prospect for upward social mobility, they will contribute to addressing inequality in the region, ultimately boosting the legitimacy of the governments in countries where they operate.

Punto de inflexión: Por qué se requieren urgentemente nuevos contratos sociales en el MENA


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