Forward-looking human development policies, resilient institutions, and financing reforms can prepare countries in the region for challenges of aging, climate stress, and technological change
WASHINGTON, September 15, 2025 - The World Bank today released its new report on human development in the Middle East and North Africa (MENA), outlining a reform agenda to renew human development policies, strengthen institutional resilience, and close financing gaps so countries can safeguard and improve human capital amid three powerful megatrends: demographic change, climate change, and technological transformation. The report stresses that while people's human capital is the region's greatest asset and its primary source of income growth, these transitions will put new strains on people, livelihoods, and public finances unless decisive reforms are pursued.
"Building human capital is the surest path to resilient growth and shared prosperity," said Ousmane Dione, Regional Vice President for the Middle East, North Africa, Afghanistan and Pakistan, World Bank. "This report sets out practical, future‑fit policy choices to protect people and unlock more and better jobs-especially for women and youth-and it underscores that progress hinges on robust institutional reforms and sustainable financing to deliver results at scale."
Across the region, the report entitled Embracing and Shaping Change: Human Development for a Middle East and North Africa in Transition, documents mounting pressures on human development outcomes, which are already lagging. As many as 70 percent of 10‑year‑olds in MENA have not mastered basic literacy or numeracy, and the region's average Human Capital Index score stands at 0.49-below peers at similar income levels. Access to early childhood development for ages 0-5 remains very low; coverage of primary health services is below 70 percent; and social safety nets, though expanding, still reach less than half of the region's poor.
MENA is entering one of the world's fastest demographic transitions. Life expectancy reached 74 in 2023, yet the effective retirement age averages just 54. The ratio of people aged 65+ to the working‑age population will increase 2.5 times over 30 years. Without reform, pensions could cost public finances an average of three percent of GDP by 2050. Moreover, by 2030, 3-10 percent of the population in seven MENA countries will require long‑term care. Investing in the prevention of noncommunicable disease, supporting longer working lives, offering lifelong learning, and establishing long‑term care systems can avert rising costs from ageing, and can also generate employment for youth and women.
There is still uncertainty about how jobs in MENA's low‑ and middle‑income countries may be affected by automation and AI compared to other regions. Given limited digital readiness in several countries, the near‑term risk is missing out on productivity gains. At the same time, several countries have grown sizable workforces on digital platforms. According to the report, countries can strengthen this momentum by promoting digital skills, ensuring quality low‑cost internet access, and introducing suitable labor regulations for platform workers.
Finally, climate change is expected to bring more extreme heat and intensify water scarcity, with knock‑on effects on learning, health, and food security. The report emphasizes making education and health services more flexible and climate-resilient and expanding social protection will help help households manage these risks. At the same time, the region can capitalize on ample solar and wind potential and adopt green technologies to accelerate diversification. This will require targeted investments in green skills across education and training systems.
Delivering on this vision will require closing the institutional quality gaps that many countries display relative to other regions, which lead to fewer results per dollar invested, especially in health and education. The report highlights approaches, from within and outside the region, to strengthen accountability, use data better, leverage digitalization, and pilot AI‑enabled tools to leverage human capacities.
To reverse the current financing slump on HD sectors, and find fiscal space for new investments, the report proposes measures to equitably mobilize domestic resources, better allocate expenditures, and leverage financing from nontraditional sources.
"The report sets out a roadmap to protect people against today's shocks while preparing them for tomorrow's economy," said Fadia Saadah, Regional Practice Director, People, Middle East, North Africa, Afghanistan and Pakistan, World Bank. "Reversing stagnating or falling investments in human development and pairing that with institutional reforms that boost impact and equity is essential. Smarter, more sustainable financing can convert demographic, climate, and technological change into engines of job creation and productivity."
About the report
Embracing and Shaping Change synthesizes the findings of three companion pieces on human development policies, financing, and institutional reforms, and several deep dives, including on green and digital skills. Together, they propose a three‑pronged agenda to mitigate risks and seize opportunities: develop future‑fit policies, strengthen human capital foundations and institutions, and ensure adequate financing.
