Social policy reforms are due in the Arab world. The main problem of social protection in this world region is not a lack of funding but the inefficient allocation of available resources and their uneven distribution over the population. Large parts of the labour force have no access to adequate risk management instruments. Informal sector employees in particular are vulnerable to manifold risks. A couple of states have made attempts to extend the coverage of social insurance or to widen the out-reach of tax-financed health and social assistance systems. Most governments in the region, however, lack the necessary will to alleviate poverty or to re-distribute income vertically. They are much more concerned about satisfying the needs of the influential urban middle class than to engage in favour of low-income groups. Nevertheless, foreign donors of development co-operation can do something in the field of social protection. They might, for example, support non-governmental social protection arrangements such as micro-insurance systems. These are risk-pooling schemes designed for the benefit of and affordability for low-income persons. At best, they are run by third sector institutions (non-governmental organisations or self-help groups in co-operation with commercial insurance companies. Hardly any arrangements of this kind have yet been set up in the Arab world but some very successful examples were found in other world regions. Likewise, micro-insurance schemes are feasible in at least some Arab countries (Jordan, Morocco) and they should be able to bridge at least part of the current gap in social protection coverage in this part of the world.