Impact of Reduced International Aid on Social Protection in the MENA Region

Recent reductions in international development aid, particularly following the Trump administration’s freeze on USAID funding, have significantly impacted social protection systems across the Middle East and North Africa (MENA) region. The suspension of $60 billion in aid has jeopardized the lives of millions of vulnerable populations, undermining progress toward the Sustainable Development Goals (SDGs), especially SDG 1 (No Poverty), SDG 3 (Good Health and Well-being), and SDG 10 (Reduced Inequalities).

Other major donors such as France, Germany, and the UK have also reduced their development aid budgets by 40%, 50%, and from 0.5% to 0.3% of Gross National Income (GNI), respectively, reallocating funds toward defense and security priorities. This shift has marginalized development and humanitarian aid, threatening a broad range of programs from basic needs to long-term social protection initiatives.

Challenges to Social Protection Funding

• Social protection historically receives only about 2% of global aid, making it vulnerable to budget cuts.
• Germany reduced its social protection support by nearly 70% in 2023.
• U.S. funding cuts have severely impacted UN agencies’ budgets.
• The UK and EU’s focus on security further risks deepening reductions in social protection aid.
• Potential U.S. withdrawal or reduced engagement with international financial institutions like the World Bank Group could severely affect aid-dependent countries in the MENA region.

Social Protection in the Arab Region: Current Landscape and Development Aid Influence

The Arab region faces significant challenges in social protection coverage, with 69% of employment being informal and social protection coverage ranking second lowest globally after Sub-Saharan Africa. Informal workers often lack access to tax-based social insurance schemes, increasing vulnerability and inequality, counteracting SDG 8 (Decent Work and Economic Growth) and SDG 10.

A divide exists between Gulf Cooperation Council (GCC) countries and other Arab states affected by conflict and volatility. Social insurance is often limited and inaccessible, while social assistance programs are frequently inadequate or discourage formal employment.

Role of International Aid and Development Actors

International actors have promoted formalization through a “push-pull” strategy:

1. Push factors: Facilitate transition out of social assistance via vocational training and phased benefit reductions.
2. Pull factors: Enhance attractiveness of social insurance by offering contribution subsidies and health coverage access.

This approach supports reforms aimed at formalization and social protection expansion, aligning with SDG 1, SDG 8, and SDG 10.

Country Case Studies

Jordan

• Extensive efforts to support poor, informal workers, migrants, and refugees.
• Programs such as the Recurrent Monthly Cash Assistance and Takaful 1, supported by the World Bank, EU, UNICEF, and others, have expanded coverage significantly.
• Between 2019 and 2023, coverage increased from 97,000 to 220,000 households.
• Jordan is the top USAID recipient in the region, receiving $1.2 billion in 2023; funding suspensions have strained social protection systems.

Egypt

• Introduced “Takaful and Karama” cash transfer programs in 2015 to mitigate economic reform impacts on vulnerable populations.
• Programs now reach 17 million people, providing conditional and unconditional cash support.
• Supported by UNICEF, World Bank loans ($900 million), UK Trust Fund, and others.
• “FORSA” program promotes transition to formal employment through training and asset transfers.
• National legislation (Law No. 148, 2019) subsidizes social insurance for irregular workers.

Tunisia

• Implemented the Amen social program in 2019 to unify fragmented social protection schemes and extend coverage to informal workers.
• Delivers monthly cash transfers and health coverage to over 950,000 households.
• Digital transformation initiatives improve access and administration.
• Supported by a $700 million World Bank loan and UNDP collaboration.
• Challenges remain in coverage, rural service gaps, and gender discrimination.
• Reduced universal subsidies in favor of targeted cash transfers, risking exclusivity if aid diminishes.

Opportunities for Strengthening National Social Protection Models

Social protection systems should transition from aid dependency to sustainable national models, consistent with SDG 17 (Partnerships for the Goals) and SDG 16 (Peace, Justice, and Strong Institutions). The following recommendations aim to enhance social protection and formalization in the Arab region:

1. Leverage international technical and financial support to reinforce push-pull strategies facilitating transitions between social assistance and social insurance.
2. Enhance fiscal capacity to absorb economic shocks and sustain social protection financing.
3. Reform labor laws to increase inclusiveness and formal employment opportunities.
4. Align social protection policies with health, education, and other social sectors to promote integrated development.
5. Modernize program design and delivery mechanisms, including digital tools, to improve accessibility and efficiency.

Countries in fragile contexts such as Yemen, Palestine, and Syria remain reliant on humanitarian aid, emphasizing the need to diversify aid sources and reframe social protection around employment and rights-based approaches to achieve long-term sustainability.

Conclusion

The ongoing reductions in international aid pose significant risks to social protection systems in the MENA region, threatening progress toward multiple SDGs. Strengthening national social protection models through strategic reforms and sustained partnerships is essential to ensure inclusive, resilient, and sustainable development outcomes for vulnerable populations.

1. Sustainable Development Goals (SDGs) Addressed or Connected to the Issues Highlighted in the Article

1. SDG 1: No Poverty
   • The article discusses social protection programs aimed at reducing poverty and supporting vulnerable populations in the Arab region.
2. SDG 3: Good Health and Well-being
   • Health coverage and access to health services are mentioned as part of social protection schemes, such as subsidized health coverage in Tunisia.
3. SDG 8: Decent Work and Economic Growth
   • The article highlights the importance of formalization of employment and social insurance for informal workers.
4. SDG 10: Reduced Inequalities
   • Efforts to include marginalized groups such as informal workers, refugees, migrants, women, and persons with disabilities are emphasized.
5. SDG 17: Partnerships for the Goals
   • The role of international donors, financial institutions, and development actors in supporting social protection systems is discussed.

2. Specific Targets Under Those SDGs Identified Based on the Article’s Content

1. SDG 1 – No Poverty
   • Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and achieve substantial coverage of the poor and vulnerable.
2. SDG 3 – Good Health and Well-being
   • Target 3.8: Achieve universal health coverage, including financial risk protection and access to quality essential health-care services.
3. SDG 8 – Decent Work and Economic Growth
   • Target 8.5: Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
   • Target 8.8: Protect labor rights and promote safe and secure working environments for all workers.
4. SDG 10 – Reduced Inequalities
   • Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.
   • Target 10.7: Facilitate orderly, safe, regular and responsible migration and mobility of people, including through implementation of planned and well-managed migration policies.
5. SDG 17 – Partnerships for the Goals
   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
   • Target 17.9: Enhance international support for implementing effective and targeted capacity-building in developing countries.

3. Indicators Mentioned or Implied in the Article to Measure Progress Towards the Identified Targets

1. Coverage of Social Protection Programs
   • Number of households or individuals covered by social assistance programs (e.g., Jordan’s Recurrent Monthly Cash Assistance program coverage expanding from 97,000 to 220,000 households).
   • Number of informal workers included in social insurance schemes.
2. Access to Health Services
   • Number of beneficiaries receiving free or subsidized health coverage (e.g., Tunisia’s Amen program reaching 620,000 households).
   • Availability of digital health cards and payment tools to reduce barriers.
3. Financial Resources Allocated to Social Protection
   • Amounts of international financial aid and loans dedicated to social protection (e.g., World Bank loans, USAID funding).
   • Percentage of government budget or GNI allocated to social protection and development aid.
4. Formalization of Employment
   • Rates of transition from informal to formal employment supported by push-pull strategies.
   • Participation rates in vocational training and capacity-building programs.
5. Inclusiveness and Equity
   • Coverage of vulnerable groups such as refugees, migrants, women, elderly, and persons with disabilities by social protection programs.
   • Measures of transparency and governance in program implementation.

4. Table of SDGs, Targets, and Indicators Identified in the Article

Source: arab-reform.net