Securing Africa’s Future Workforce through Decent and Wage Paying Jobs
Africa’s working-age population will have surpassed the billion mark within the next decade, according to estimates. The continent is likely to reap big from young people and a declining dependency ratio. However, there have to be appropriate economic, social and political measures put in place to achieve this dividend
According to Mckinsey’s report, economic growth mainly reaches people through employment income; thus, Africa’s key challenge is to ensure that economic growth translates into stable wage-paying jobs that are crucial in sustaining the expansion of the consuming class.
To create scalable wage-paying jobs, 84% of Africa’s workforce currently working in informal occupations characterised by low productivity must move to modern manufacturing and the service industry as it happened in East Asian countries.
Before the global pandemic, it is worth noting that many young Africans struggled to find productive employment. The government and other key stakeholders have previously tackled the youth employment crisis by offering training initiatives, microloans, and grants for youth to start entrepreneurial ventures.
A study by World Bank shows an abysmal performance of these youth-centred initiatives. Employment opportunities will only improve with economic transformation, which entails increased capabilities and productivity of existing firms and farms and the emergence of new entities that leverage new and evolving technology.
Lack of structural change will only result in limited wage-paying job opportunities, impacting people of all ages. Remedying the situation with youth-focused programmes without addressing the structural transformation creates a repetitive cycle that churns resources invested but yields little to no results that could significantly impact millions of households.
There’s an urgent need for all stakeholders to take keen action on fostering structural transformation. A country like Nigeria will be the world’s third most populous country by 2050. As the population increases, there will be an even more significant number of young people entering the workforce.
An unemployment rate that has quadrupled over the past five years spells doom for the future. The case in South Africa doesn’t seem to paint a brighter future either. Still plagued by incessant inequalities, the legacy of apartheid in the country is very much alive. The civil unrest showcased by reported xenophobic attacks across the country indicates an ailing case that would need immediate action for remediation to occur.
The structural transformation across different countries in the continent will heavily depend on each country’s needs and prevailing context, but the overall outcomes will be the same.
As governments, the private sector and non-governmental organisations put heads together to figure out how to secure Africa’s future workforce; there will be a need to pay close attention to the potentially disruptive global trends and their projected impact on the African economy.
The German Development Institute outlines the following areas as a quick way for countries to earn a competitive advantage in creating more wage-paying jobs:
The rise of the global bio-economy and its likely impact on fuel substitutes’ demand creates opportunities for underutilised land resources: Countries like Nigeria that have 90% of their foreign exchange earnings from oil will need to employ agency in diversifying the economy.
Urban centres’ growth and the rise of the middle class diversify demand and create local industries opportunities.
Rise of new technologies and digitisation trends across the continent, i.e. social-commerce enabling producers to tap into previously inaccessible markets.
The rapid increase of wages in China may result in the relocation of labour-intensive industries to African countries with low unit labour costs.
These four potential disruptions create an opportunity for African governments and other key players to set some foundational work and ramp up preparedness. It is neither clear nor confirmed how these trends would play out in individual countries, but some of them stand the chance of being game-changers.
Rapidly moving 84% of the informal sector workforce to highly productive jobs will create a trickle-down effect in the economy. When the informal sector’s oversupply of labour reduces, there is an increase in salaries, a rise in demand for products, and an overall spike in remittances from family members with a wage income.
Manufacturing has historically played a massive role in facilitating this kind of mobility. Due to the declining manufacturing levels as a share of GDP, African countries face the challenge of nurturing and accumulating diversified capabilities in the sector that are huge prerequisites for economic transformation.
The key drivers for a prosperous workforce future in Africa will significantly differ from those that leapfrogged East Asian countries into massive economic growth. While manufacturing still features strongly as a powerful driver of wealth creation, there are new opportunities in non-manufacturing activities that paint a bright future for the continent.
According to Brookings, between 1998 and 2015, services exports grew more than six times faster than merchandise exports. These non-manufacturing activities have the capabilities of absorbing a large workforce in highly productive roles. In some, the services are tradeable, offering economies of scale and opportunities for earning foreign exchange.
The opportunities to be harnessed include high-value agriculture that favours diversification of capabilities. Tourism and creative industries that build on the uniqueness of the African culture and bolster the Made In Africa brand also harbour many opportunities for the creation of sustainable jobs.
Finally, business process outsourcing that allows a skilled workforce to work remotely for worldwide customers will also be a great source of foreign exchange earnings.