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27 May, 2021updated 01 Nov 2021 10:20

Jason Mitchell

Opinion: Africa’s demographic dividend may start to pay off soon

Sub-Saharan Africa took a powerful hit from the Covid-19 pandemic, but enormous opportunities are now there to be taken through its youthful population and the AfCFTA.

africa-youth-opportunity

Sub-Saharan Africa’s youthful population offers the region hope of a brighter economic future. (Photo by Gulshan Khan/AFP via Getty Images)

Sub-Saharan Africa is at a crossroads. During the past year, the region did not suffer as badly as other parts of the world in terms of Covid deaths but the lockdowns and containment measures certainly took their toll economically.

Years of poverty reduction have been undone in this time. Unemployment has ballooned. Children did not go to school and were unable to learn at home because they did not have laptops or sufficient connectivity. The vaccination roll-out in sub-Saharan Africa is taking place at a snail’s pace and this is expected to hamper this year’s economic recovery. It could be next year – or the one after that – before many parts of the region have herd immunity. Economists predict that it will have the slowest-growing economy on the planet this year.

Moreover, it is all too easy to be pessimistic about sub-Saharan Africa. It is hard to generalise about a region so big and diverse but certain aspects stand out. Corruption and nepotism are rife. Most countries are badly governed. State education is expanding but often is of a poor quality. Many countries are becoming highly indebted again. Gender inequality is rampant. These massive problems existed before the pandemic and lockdowns came along but the past year has undoubtedly made matters a lot worse.

How the odds are stacked up against Africa

Of the world’s 28 poorest countries, 27 are in sub-Saharan Africa, according to the World Bank. Most economies are heavily dependent on agriculture and vulnerable to external shocks, particularly climatic ones. The majority of young Africans do not have stable economic opportunities. Of the region’s almost 420 million young people aged 15–35, one-third are unemployed, another third are vulnerably employed, and only one in six is in salaried employment, according to the African Development Bank.

Furthermore, Africa is seeing massive destruction of its natural habitat. Deforestation rates in Africa leapt to more than four million hectares a year between 2014 and 2018, from less than two million hectares a year between 2001 and 2013, according to Climate Focus. An area the size of the Netherlands is now being lost every year. By 2050, Africa is predicted to lose 50% of its birds and mammals. Among the seven primate species on the verge of extinction on the planet, six are in west Africa where deforestation and bushmeat hunting is rife.

However, crises present opportunities and this pandemic is no different. This period could be a turning point for the region. Africans have the chance to take stock and decide what kind of continent they want to live in in ten or 20 years’ time.

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Could Africa’s youth give the continent an advantage?

The median age in the whole of Africa is 18 years, compared with 31 in Asia, 35 in North America, and 42 in Europe, according to the Bill & Melinda Gates Foundation. Some 628 million Africans are aged under 24 and, by the year 2050, that figure is expected to jump by half to 945 million. It will make up almost twice the young population of south Asia and South East Asia, east Asia, and Oceania combined. By 2050, south Asia’s young population will have plummeted by 41% to 475 million; South East Asia, east Asia and Oceania’s by 32% to 471 million; and western Europe and North America’s by 6% to 215 million.

Africa is the only continent whose pool of youth is expanding, and that has huge implications for the planet. By 2050, its population is expected to double to 2.6 billion people, accounting for one-quarter of the world’s inhabitants (up from 17% today).

The question is whether this vast pool of youth represents a demographic ticking time bomb or a demographic dividend. Can the energy of Africa’s young be harnessed to drive economic growth and lift the region out of poverty? Or will massive numbers of young people only generate even higher unemployment and become a greater burden on the region’s social and natural resources?

The pandemic has created immediate problems for the region, but the key questions that will determine what Africa will be like in ten or 20 years’ time relate to demographics. The World Bank estimates the total fertility rate of sub-Saharan Africa at 4.6 births per woman in 2019, more than twice the level of any other region in the world.

The AfCFTA could be a game changer for Africa

Sub-Saharan Africa requires economic growth of above 6% annually, just so that it can feed those extra mouths and to start to drag people out of extreme poverty. This year, the International Monetary Fund (IMF) is forecasting a paltry 3.4% growth. However, there are grounds to think that the African economy will take off during the next few years.

Before the pandemic struck in 2019, the region had some of the world’s fastest-growing economies: Rwanda at 9.4%, Ethiopia at 9%, Côte d’Ivoire at 6.9% and Ghana at 6.5%, according to the IMF. There is no reason why sub-Saharan Africa’s major economies cannot return to those growth rates in the near-term and attract greater investment inflows.

The African Continental Free Trade Area (AfCFTA) – the world’s biggest free trade area that encompasses 54 of Africa’s 55 countries – went live on 1 January 2021, and could be a game changer that takes the whole region into a new growth league. A lamentable 18% of all Africa’s commerce is intra-African trade, while the equivalent figure in east Asia is between 35% and 40%. Africans trade more with the rest of the world than they do among themselves.

The new trade pact has the potential to more than double intra-African commerce by 2035. By mid-March, 36 African countries had ratified it and undertaken the legal obligations for market opening and reducing barriers to trade. It now falls on governments in the region to seize the opportunity, to put adequate customs infrastructure in place, to remove non-tariff barriers and to construct trans-regional infrastructure.

Major global economies are also assigning a higher value to ties to the continent, promoting investment in infrastructure and resources but also industrial development. Multinational companies are also starting to turn their gaze towards the region. Not only is it the only part of the world with an expanding pool of youth, but it has a middle class now numbering 350 million people, a market that will only grow in time.

Many sub-Saharan African countries have seized the opportunity within the crisis to move faster on necessary structural reforms and investments that will be crucial for long-term economic development. The pandemic is also accelerating the region’s Fourth Industrial Revolution. Many young Africans are incredibly tech-savvy and the continent has a vast pool of entrepreneurial talent.

Investment is booming in the healthcare sector and technology has started to play a much bigger role in rural communities, partly to help remote working opportunities but also to make agriculture more productive. A great deal more investment is taking place in digital currencies, virtual education platforms, and online shopping malls and e-commerce.

The recent sharp rise in commodity prices will help – if it is sustained – as well. Nigeria and Angola are major global oil producers while the Democratic Republic of the Congo and Zambia are significant copper-producing countries.

Africans are a highly resilient and resourceful people. The region now stands at a crossroads. If its governments are able to improve governance, clamp down on corruption, build better infrastructure, embrace technology, integrate their economies and, most importantly, harness that vast pool of youthful energy, sub-Saharan Africa could start to fulfil its economic potential.

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