Making Africa Work. Greg Mills

      Figure 3: Projected median age of total population in 2050

      Source: UN Department of Economic and Social Affairs, Population Division. World Urbanisation Prospects: The 2014 Revision, https://esa.un.org/unpd/wpp/DataQuery/

      By contrast, much of the rest of the world is ageing. In 2015 the segment of the population over 60 was equivalent to 12 per cent of the global population. At the current growth rates of over 3.2 per cent per annum, by 2050 all major continents of the world except Africa will have nearly a quarter or more of their populations aged 60 or over.

      If properly harnessed, and properly planned for, Africa’s population increase and the resultant proportion of so many young people present a tremendous force for change, providing opportunities to fill the resulting labour-force gap. (A similar situation is seen in other parts of the world where ageing populations create an opportunity to provide services for that age group.) Sixty per cent of Africa’s population and 45 per cent of the labour force are under 25, with some 10 to 12 million youths entering the labour market every year. Youth as a proportion of the total population is projected at over 75 per cent by 2015, and is not expected to decline before another generation or more. The World Bank, for example, has estimated that the demographic dividend could generate 11 to 15 per cent GDP growth between 2011 and 2030. But such growth depends on providing improved education and skills, suitable infrastructure and the systems to employ young people, as well as efficient government to make it all happen.

      Without such planning and a conducive set of policies for development, there could ensue a demographic disaster and a spur for social unrest and increased migration both within Africa, and to Europe and elsewhere. The choice is in the hands of Africa’s policymakers.

      Critically, the large number of young people who will come of age in the next few years will need jobs.

      The International Monetary Fund (IMF) has estimated that, in order to maximise its booming population dividend, the continent will need to produce an average of 18 million high-productivity jobs per year until 2035. The surge in young people will necessitate an extremely rapid, possibly unprecedented, rate of job creation. The IMF also notes that over this period policies are required to gradually transition jobs from the informal sector, which accounts for about 90 per cent of the 400 million jobs in low-income sub-Saharan African countries, to the formal sector.24

      To date, Africa’s job creation has not kept up with existing birth rates. The African Economic Outlook 2015, for example, reports that only 7 per cent of the continental population aged 15 to 24 in low-income countries had a ‘decent’ job. In African middle-income countries, this figure increased marginally, to 10 per cent.25 Underlining the challenge, the World Bank has forecast that, by 2030, despite major efforts, some 19 per cent of Africa’s population will still live in poverty. Those 300 million people will then represent 80 per cent of the global population living on less than the (2005 equivalent of) $1.25 a day.26

      The risks stemming from large numbers of digitally connected youths without jobs are high.27 They are unlikely to sit idly by waiting for change: they will demand it. In the future, increasingly, the political focus will shift to the cities, the youth and to the technologies that they employ.

      At the same time, where people live and work in Africa is changing. The countries south of the Sahara, are projected to constitute the most rapidly urbanising region on the planet. The percentage of people living in this region’s cities will rise by 16 per cent to reach a level of 56 per cent by 2050.28 Over this period, some 2.5 billion people will be added to the urban population worldwide, with almost 90 per cent of the increase occurring in Asia and Africa.29 For example, Lagos – which had a population of 1.4 million in 1970, and 5 million in 1991 – will increase to 25 million by 2020, rivalling Cairo as the continent’s most populous city. Africa’s urban growth will far outpace the historical rate of developed and developing regions. While the population of London grew at 2 per cent annually from 1800 to 1910, doubling every 35 years, some African cities’ populations are doubling every 10 years, with growth rates at over 7 per cent annually.30

      So far, as will be seen, African urbanisation has not correlated with economic growth on a similar scale to that experienced elsewhere. As the World Bank has put it, African cities ‘cannot be characterised as economically dense, connected, and liveable. Instead, they are crowded, disconnected, and costly.’31 Urban migrants have largely moved from low-productivity jobs in rural communities to equally inefficient jobs in lower-income urban areas. Neither the migrants nor African economies have enjoyed the economic benefits of urban agglomerations, concentrations of labour, or economies of scale.

      The inevitability of a fast-growing population increasingly concentrated in the cities is a game changer for Africa one way or the other.

      The old policies that featured to varying degrees across the continent – state interference in the economy, corruption and a failure to concentrate on growth – will not only fail to serve the population but, worse still, if these policies remain unchanged, will condemn leaders to an increasingly restive citizenry. These conditions have the potential to destabilise governments and end the tenure of low-performing rulers. In a more crowded and urbanised Africa, the fate of leaders will, in the future, be much more directly tied to economic performance.

      Commodities: Dealing with the bust

      During the commodity boom there was considerable optimism that African economies were changing and that they were no longer dependent on exports of raw materials. In 2010, the McKinsey Global Institute claimed that the ‘commodity boom explains only part of Africa’s growth story. Natural resources directly accounted for just 24 per cent of Africa’s GDP growth from 2000 to 2008.’ McKinsey argued that ‘the key reasons behind Africa’s growth surge were improved political and macroeconomic stability and microeconomic reforms.’ However, hedging its bets, McKinsey believed that the continent would continue to benefit from ‘rising global demand for oil, natural gas, minerals, food, arable land, and other natural resources’.32

      This analysis informed McKinsey’s upbeat 2010 Lions on the Move report about Africa.33 This report states: ‘We find that Africa’s economic growth surge was widespread across countries and sectors and that its roots extend far beyond the global commodity boom’, noting ‘Africa’s business opportunities are potentially very large, particularly for companies in consumer-facing industries (such as retail, telecommunications and banking); infrastructure-related industries; across the agriculture-related value chain; and in resource-related industries’. The report declares: ‘Global executives and investors cannot afford to ignore the continent’s immense potential.’

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