SEISMIC change is underway in Africa.
The United Nations projects that Sub-Saharan Africa will account for more than half of the growth of the world’s population between 2022 and 2050.
That means that by 2050, one out of every four people on earth, and more than a third of the world’s young people (between the ages of 15 and 24), are expected to be African.
Remarkably, during the same period, Nigeria is expected to surpass the United States as the world’s third most populous country.
To be sure, Africa’s projected shift in population and the potential demographic dividend, in which a higher proportion of the population contributes to domestic production, will both reshape and drive global economic growth.
In the coming era, Sub-Saharan Africa is expected to account for 90 percent of the growth in the world’s working-age population, and the region’s working-age population is projected to be larger than that of both India and China.
This development is in the context of projected population declines in much of the world, including China, Germany and Japan.
As a result, Africa is set to play a bigger role in shaping contemporary geopolitical and economic affairs.
In September 2023, the African Union joined the Group of 20, the premier forum for international economic cooperation.
The move gives the continent the same status as the European Union, which sits alongside 19 countries, including the UK, Russia and the United States.
One of the defining questions of this century is: How will Africa create jobs to meet the population boom?
Growth and jobs for a new era
According to Afrobarometer — a Pan-African, non-partisan survey research network — unemployment is the top policy priority that 18 – to 35-year-olds want their governments to address, followed by economic management.
This finding is unsurprising given that between eight million and 11 million African youth will enter the labour market every year in the coming decades.
Yet, only about three million new formal wage jobs are created yearly.
Notably, South Africa, the most industrialised country in Africa, has one of the highest youth unemployment rates in the world, with 61 percent of people aged 15 to 24 unemployed.
Action from governments and the private sector is required to close the gap between the increase in the working-age population and lagging job growth.
Investment in human capital, including education and skills demanded in growth-enhancing sectors, will be critical to realise this potential.
The good news is that young Africans are increasingly better educated – 44 percent graduated from high school in 2020, up from 27 percent in 2000.
However, a Brookings report found that almost all countries in the region scored poorly in measuring digital skills required to use the recent breakthroughs in artificial intelligence and green technologies.
The World Economic Forum collaborates with governments to help close the skills gap.
The Closing the Skills Gap Accelerators in South Africa and Nigeria aim to create national public-private collaboration platforms to address skills gaps and reshape future education and training.
The Gender Parity Accelerator with the Government of Kenya aims to close gender gaps in labour force participation, wages and leadership.
Security and cooperation in a fractured world
A failure to harness Africa’s demographic dividend could increase social fragility.
According to the Global Terrorism Index, deaths in the Sahel constituted 43 percent of the global total in 2022, compared to just 1 percent in 2007.
Moreover, there have been 11 coups or attempted coups in the region since 2020, resulting in a backslide of democratic governments in the region.
The cause of the coups varies: violence, climate change, poor governance and economic challenges were among the drivers of popular unrest.
On the economic front, almost one in three countries in Sub-Saharan Africa is experiencing double-digit inflation and half of the low-income countries in the region are at high risk for or in debt distress.
Furthermore, exports from the region have been affected by the deceleration in China’s growth, the region’s largest trading partner and a major source of foreign direct investment.
China’s loans to Africa have declined from a peak of US$28 billion in 2016 to US$1 billion last year.
Critically, however, the common element for social fragility across the region is a restless youth population with insufficient economic opportunities.
Africa Continental Free Trade Area
The Africa Continental Free Trade Area (AfCFTA) is the region’s best bet for driving structural transformation and industrialisation, creating opportunities for skilled workers.
The AfCFTA is the world’s largest free trade area by population, covering 1,3 billion people with a combined gross domestic product of US$3 trillion.
The agreement poses significant opportunities for increased competition, foreign direct investment inflows, economies of scale, transfer of knowledge and technology, productivity and economic diversification.
The challenge now is implementation.
To this end, the Forum — under the Forum Friends of the African Continental Free Trade Area — in collaboration with the AfCFTA Secretariat, is mobilising global business to support the implementation of the AfCFTA.
During the 2023 annual meeting, this community of 40 private sector partners launched a report on how global businesses can support the implementation of the trade pact.
At Davos 2024, this year’s annual meeting in Davos, Switzerland, the members will launch the first-ever private sector action plan detailing their investments and commitments under the AfCFTA.
For the global economy to grow faster, African governments, in partnership with the private sector, must act to capitalise on Africa’s youth and dynamism. – weforum.org
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Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.