In Nairobi, there are some sections of the central business district colloquially referred to as “jobless corner”.
You’ll find groups of young men and women whiling their days here, looking for an opportunity to make some money for the day, for example, by offering to act as a messenger or delivery person for a busy, suit-wearing person.
You’ll also find students taking a breather between classes, sweaty preachers with voices so loud that it’s almost unbelievable they are not using a microphone, and people anxiously glancing at the time, waiting for a date to arrive.
Such sections of the city are often held up as evidence of Nairobi’s youth unemployment problem. But they also offer a hint as to how the continent’s young people could be its saving grace.
Africa is the world’s youngest continent; today, half of the continent’s population is under 25 years of age. Each year between 2015 and 2035, there will be half a million more 15-year-olds than the year before. Meanwhile, the population in the rest of the world is, or will soon be, aging.
Although the current generation of Africans entering the labour force is the most educated ever, many are finding that their prospects for employment and earnings differ very little from those of their parents. In a few countries, they are worse.
But Africa today faces an unprecedented opportunity. Young people not only need jobs, but also create them. Africa’s growing labour force can be an asset in the global marketplace. Realising this brighter vision for Africa’s future, however, will require a clearer understanding of how to benefit from this asset.
A recent study by the World Bank showed that sub-Saharan Africa can be the main supplier of the world’s workforce, either by producing goods and services in the region, or by sending workers to regions with a shortage of workers.
In addition, manufacturing wages in leading industry hubs such as China are rising, and companies are increasingly having to relocate their businesses to cheaper locations. Africa’s labour force should be able to compete for these jobs. Increasing concentrations of workers in urban areas can be a source of innovation and rapid economic growth.
If fertility rates in Africa continue to decline, projections from the UN show that rapid growth in Africa’s workforce will mean that the number of working- age adults relative to dependents will rise from just around 1 in 1985 to close to 1.7 in 2050, providing the space for savings, investment, and sustained economic growth, known as the “demographic dividend”.
Yet the demographic transition is not automatic. A critical concern is that the decline in fertility rates has stalled—or not even started—in many African countries.
But another big concern is that African governments have not put in place the structural changes to make the most of the boom in working-age population.
In recent years, despite high economic growth, Africa’s poverty reduction has been less marked because in many countries the source of growth is primarily oil, gas, and mineral extraction, not labor-intensive sectors such as agriculture or manufacturing.
Still, there is time to put into place policies that will make the most of the country’s youthful strength. Each country will probably have to figure out it’s own way, but there are a few broad paths.
Manufacturing is one clear winner, and countries like Ethiopia, Cote d’Ivoire, Ghana, Nigeria and Kenya already have something of an industrial base, which can be boosted for greater productivity.
The other is agriculture, Africa’s largest economic sector, representing more than $100 billion annually. Countries such as Nigeria, South Sudan, Zimbabwe, Zambia and Tanzania have large tracts of arable, uncultivated land, with large rivers like the Nile and Zambezi that can be tapped for irrigation.
The third is oil, gas and mining, if revenues are reinvested wisely. African oil and gas have become important components of the world’s hydrocarbon supply–demand balance.
This year, 13% of global oil production is projected to take place in Africa, compared with 9% in 1998. Tanzania, Mozambique and Uganda are poised to be the next hydrocarbon powerhouses in Africa, and can use oil and gas revenues to uplift their economies from a low base.
There is still time for Angola, too, to develop a more inclusive model, as well as South Sudan and Democratic Republic of Congo – if they could get their houses in order.
Finally, there is services. The service sector has been the fastest growing in many African economies, typically accounting for 40-50% of GDP as other traditional heavyweight sectors, such as agriculture and manufacturing, languish from low investment and dismal productivity.
Kenya, Zimbabwe, Nigeria, Ghana already have a well-educated populations and relatively sophisticated service sectors; they are well positioned to capitalise on their human capital for transformation.