The working-age population in Africa is expected to grow by close to 70 percent, or by approximately 450 million people, between 2015 and 2035.
If current trends continue, only about 100 million of them can expect to find stable employment opportunities. Countries that are able to enact policies conducive to job creation are likely to reap significant benefits from this rapid population growth.
According to the World Economic Forum (WEF) 2017, countries that fail to implement such policies are likely to suffer demographic vulnerabilities resulting from large numbers of unemployed and/or underemployed youth.
New research is providing governments in the Africa with insights into how they can address the coming rise in the working-age populations. African countries will need to find ways to expand aggregate demand for labor and improve supply-side factors at the same time. Beyond the traditional prescriptions such as stable macroeconomic policy, a supportive investment climate, and improving the quality of human and physical capital, countries can facilitate more rapid and better job creation as well as accelerate the development of their manufacturing sector by implementing policies suited to their specific circumstances.
The report further noted that since almost all new jobs in Africa today are in agriculture and microenterprises, improving the business environment in these sectors is a high priority. Fragile countries can create jobs as well as promote growth and stability through targeted support to vulnerable regions and populations.
Open trade policies and developing value chain links were said to be extractive sectors that are crucial in encouraging diversification and job creation in resource-rich countries. Also, policies that foster regional trade and integration are said to be among major sources of new jobs as well as improving firm-level productivity and economic competitiveness.
Rapid population growth and urbanization are putting significant pressure on the urban infrastructure of African cities. The demographic transition, characterized by the youth bulge, requires sharp increases in job creation and infrastructure, including affordable housing in urban centers. For cities to play their role as poles of economic growth and providers of quality jobs, they need to become more competitive.
The report also disclosed that many cities in economies dominated by natural resources experienced very fast growth in per capita GDP, yet they were less successful in improving households’ disposable incomes, adding that high employment growth has not necessarily translated into higher household disposable income, indicating a slow growth in wages and/or a fast increase in the number of households.
A number of cities across the continent witnessed an explosion of slums and large housing backlogs that not only undermines household welfare but also increases matching costs between employers and employees and hinders labor productivity. The negative effects of housing shortages are compounded by shortages of other urban infrastructure such as electricity, transport networks, and water and sewerage systems.
A key factor contributing to those shortages is the outdated and inadequate urban plans that fail to take into account the social, political, economic, and environmental contexts of urban development in Africa.
Beyond the standard recommendations to reduce the infrastructure deficit; improve the business environment though better institutions, governance, and regulatory frameworks; and increase the availability of skills, and creating special economic zones can be effective tools to jump start manufacturing, increase exports, and create jobs. However, strategic planning with special attention to comparative advantage and linkages with the rest of the economy is necessary for achieving the potential benefits of industrial parks.