Kristin Azar, Development officer – Groupe SOS International
The Trump administration’s decision to freeze USAID has deprived the aid sector of $60 billion and jeopardized the lives of millions of the most vulnerable people across the MENA region and the rest of the world.[1] But what began as a shock is now an expected trend – and the worst may still lie ahead with other major donors following suit. France and Germany are reducing their development aid by 40% and 50%, respectively, while the UK has reduced its budget from 0.5% to 0.3% of GNI in favor of defense.[2] Security and defense have also stolen the EU’s attention, leaving development and humanitarian aid at the margins.
These punctures to the aid model have threatened a wide range of programs, from basic needs to long-term development efforts. Among the sectors at risk, social protection is not the first that comes to mind. This does not come as a surprise since social protection has historically represented as little as 2% of global aid and is not seen as a priority in comparison with other sectors. While the U.S. and Germany were top donors to global social protection, Germany cut nearly 70% of its support in 2023, and the U.S. cuts have left a major dent in the budget of UN agencies.[3] The UK and EU, already turning toward security, are expected to deepen that shift.
The risk still looms large, with the future of international financial institutions still unknown. The World Bank Group is the largest global donor to social protection, with other institutions supporting the goal of ensuring coverage for all. Should the U.S follow through on threats to withdraw or at least push back on the Group and others, this would have a severe impact on aid-dependent countries, including and especially the MENA region.
Framing Social Protection in the Arab Region: The Influence of Aid and Development
The Arab region is characterized by a high degree of informality – 69% of total employment – and low social protection coverage, ranking second lowest globally after Sub-Saharan Africa.[4] Informal workers are largely excluded from tax-based schemes, leaving them without social insurance or protection against life’s risks. There is a clear divide between the Gulf countries and the rest of the region, where conflict and volatility persist. In many of these countries, social insurance is limited, hard to access, and rigid, while social assistance is often absent, inadequate or discourages formalization. The real gap lies in enabling smooth, sustainable transitions between the two schemes—with the possibility to return to assistance if needed.
International actors of aid and development have promoted formalization in the region by combining push and pull factors. Push factors ease the transition out of social assistance, such as through vocational training or phased benefit reductions. Pull factors increase the appeal of social insurance, for example, by offering contribution subsidies or access to health coverage. This push-pull strategy is coupled with advocating for reforms in favour of formalization and social protection. Jordan, Egypt, and Tunisia illustrate the extent of the influence of these strategies on framing social protection.
Jordan
Jordan has extensively worked on addressing the vulnerabilities of poor and informal workers, including migrants and refugees. Although Jordan has taken national initiatives to promote social protection, including state-sponsored contribution subsidies and the National Aid Fund (NAF), its system has expanded largely through international financial and technical support.[5] The Recurrent Monthly Cash Assistance programme allows low-income households, including refugees and migrants with limited informal income, to remain eligible for support even when earning small amounts. Backed by the World Bank, EU, UNICEF, and others, between 2019 and 2023, the program expanded its coverage from 97,000 households in 2018 to 220,000 in 2023 and is now one of the region’s largest social assistance programs.[6] The Takaful 1 programme, also carried out under the auspices of the World Bank, ILO, UNICEF, and others, supports the workers earning regular or irregular wages by offering income discounts or job disregards, all the while adjusting calculations based on formality, relative poverty, and seasonality to ensure flexibility and inclusion. As USAID’s top recipient, with US$1.2 billion in 2023, Jordan is directly affected by its suspension and indirectly through cuts to the UN and NGOs operating in the country—further straining a system already operating with limited resources.[7]
Egypt
Egypt has also made strides when it comes to social protection. In 2015, a set of cash programs named “Takaful and Karama” were introduced to counter the potential negative impact that new economic reforms could have on the vulnerable, including the removal of energy subsidies, and have now reached 17 million people in Egypt. Takaful is a conditional cash transfer for low-income households with children, providing EGP 325 per month plus supplements for up to three children, based on school attendance, health check-ups, and basic parental training—all aimed at reducing intergenerational poverty. Karama offers unconditional support to low-income orphans, elderly people, and persons with disabilities.[8] UNICEF launched these programmes with seed funding of $20,000, while the World Bank ensured their sustainability through loans totalling $900 million, alongside $3 million from the UK Trust Fund and smaller contributions from other actors. These pull factors toward formal employment were strengthened by the “FORSA” program – also backed by international actors –targeting Takaful and Karama beneficiary households with working-age members. It offers training, capacity-building, and asset transfers to support their transition into formal work, with a focus on rural areas. However, existing issues over transparency regarding the programs could worsen should international actors who typically require specific standards for transparency step back. Egypt is also reinforcing its national model through measures like Law No. 148 (2019), which partially subsidizes social insurance for irregular workers. Yet, the aim of these programs is not merely to counter harmful reforms but to complement reforms that already aim for protection. Such reforms are more urgent than ever, given the recently revealed fickleness of the aid sector.
Tunisia
Tunisia has undergone several reforms in its social protection system. In 2019, the Amen social program was introduced to address the fragmented schemes and extend support to informal workers and other vulnerable individuals. It combines existing social assistance and insurance programs into a unified system. With support from the World Bank and UNDP, it now delivers monthly cash transfers of TND 180 plus a child allowance, along with free or subsidized health coverage, reaching 330,000 households and another 620,000 through healthcare support.[9] The program also underwent a digital transformation through the SPLA and GovTech projects, launching digital health cards and payment tools to ease administrative and geographic barriers, especially for rural areas.[10] Backed by a US$700 million World Bank loan and the TERI Trust Fund, in collaboration with UNDP, these efforts also aim to strengthen legal aid and social services.[11] These actors have pushed Tunisia to reduce universal subsidies in favor of targeted cash transfers. Such overreliance risks a return to more exclusive systems if future support is cut, given national budget limits and technical constraints. This may occur in a context where challenges to inclusive social protection remain rife – coverage is still limited for informal workers, service gaps remain for people in rural areas, and structural discrimination is the norm rather than the exception for women. With the Trump administration, remaining aid and development efforts will deprioritize inclusivity, shaping the Tunisian government’s direction and forcing NGOs to halt or reframe any initiatives that hint at its promotion.
The Opportunities Ahead: From Aid Dependency to a National Model
Social protection is not an aid model but a national one. At least, that is how it was envisioned. Arab countries’ volatility and reliance on foreign support have hindered the development of strong, self-sufficient national systems. Outside of the GCC and some countries like Egypt, Jordan, Tunisia, and Morocco, the region is still largely behind on social protection. Countries like Yemen, Palestine, and Syria are in survival mode and rely on humanitarian assistance to compensate for utterly fractured national models. In their case, the urgent, though temporary, response is to diversify aid sources, turning more toward the GCC, and to reframe social protection around employment and job creation rather than rights. However, such efforts are only patchwork; the only sustainable path is to rethink the aid model itself.
For the countries that have made strides, several recommendations can be used to strengthen the national model to address formalization by ensuring a smooth and sustainable transition from social assistance to social insurance. By building on the technical and financial support provided by international development actors, Arab countries can reinforce the use of the push-pull strategy and continue to address deeper, structural factors affecting formalization. These include working on the fiscal capacity of the country to sustain more shocks, all the while reforming labor laws with more inclusiveness, aligning social protection policies with others like health and education, and enhancing program design with modernized delivery mechanisms.
[1] Robert Beschel et al., “USAID in MENA: A Requiem”, Middle East Council on Global Affairs, February 2025, available at https://mecouncil.org/publication/usaid-in-mena-a-requiem/
[2] Vibhu Mishra, “Humanitarian System at Breaking Point: Funding Cuts Force Life-or-Death Choices”, United Nations News, 12 March 2025, available at https://news.un.org/en/story/2025/03/1161066
[3] Emma Noble, “Social Protection in a Post-USAID World: An Open Discussion on Key Implications,” Development Pathways, 27 February 2025, available at https://www.developmentpathways.co.uk/news/social-protection-in-a-post-usaid-world-an-open-discussion-on-key-implications/
[4] International Labour Organization (ILO), Facilitating Transition Between Social Assistance and Social Insurance, February 2025, available at https://www.ilo.org/publications/facilitating-transition-between-social-assistance-and-social-insurance
[5] Ibid
[6] World Bank, Factsheet: World Bank Support to Jordan’s National Aid Fund (NAF) Cash Transfer Program, 2023, available at https://thedocs.worldbank.org/en/doc/fa60c0d7ec9c896c0f44eb7112b6f005-0280012023/original/Jordan-National-Aid-Fund-NAF-Cash-Transfer-Program-Fact-Sheet.pdf
[7] Laith Alajlouni, “Effects of US Foreign Assistance Reductions in the Middle East”, International Institute for Strategic Studies (IISS), 27 March 2025, available at, https://www.iiss.org/online-analysis/online-analysis/2025/03/effects-of-us-foreign-assistance-reductions-in-the-middle-east/
[8] World Bank, “Promoting Inclusive Human Capital Development and Building Resilience in Egypt through Cash Transfer Programs”, 28 May 2025, available at https://www.worldbank.org/en/results/2024/05/28/promoting-inclusive-human-capital-development-and-building-resilience-in-egypt-through-cash-transfer-programs
[9] World Bank, “Enhancing the Social Protection System to Better Serve Vulnerable Populations”, 26 April 2024, available at https://www.worldbank.org/en/programs/teri/brief/enhancing-the-social-protection-system-to-better-serve-vulnerable-populations
[10] Ibid.
[11] Ibid.
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