The biggest challenge facing Africa is the rapidly growing population, especially those in working age. If governments do not meet this challenge, it will cause serious problems.
Over the last few years, Africa has undergone many external shocks that have negatively impacted the continent’s economic growth. Oil exporters, such as Nigeria, faced low global commodity prices, and exporters of other raw materials, including South Africa, were hit by a significant slowdown in China. The average economic growth of African economies, which in 2004-2014 exceeded 5% per annum, has now fallen to just 2.2%. Many forecast higher growth after 2018, but this will not solve the continent’s social problems.
It is noteworthy that even in the period of higher economic growth, the income per capita increased only in the period 2004-2007. In the decade 2004-2014 the total number of employees increased by a nominal 1.7%, (ie less than 0.2% annually). This was mainly due to economic monocultures based on resource extraction, agriculture, and low labour productivity. It was not enough for the labour market to absorb an additional 100m people in working age.
In the coming period, the situation may be even worse. Over the last 30 years, the population of Africa has almost doubled, rising to 1.2bn in 2015. Over the next decade, the African population of working age will grow by 3% per annum. In sub-Saharan Africa alone, the number of people aged 19-64 around 2035 may exceed 700m. That is nearly 450m more people than today.
The competitiveness of African economies remains weak. Mauritius, according to Global Competitiveness Report, is only 45th in the world. Next is South Africa at 47th and Rwanda is 52th. Nevertheless, the Mauritian authorities consistently remove barriers to economic development, develop infrastructure, and invest in health care, positively impacting the labour market.
Education level is expected to improve by 2030. By this time, the African labour market will have expanded by as many as 20m well-educated people. The question remains whether they will find suitable jobs. Currently, 16% of highly educated people have graduated from science, technology, engineering and math, while 11% have graduated from information and communication technology (ICT). This will provide impetus to innovation in some African economies.
Unfortunately, the level of basic education remains almost unchanged and this means that at least tens of millions of illiterate people will be permanently excluded from the professional activity.
Some key reforms that African leaders should carry out include:
- strengthening state institutions supporting the implementation of economic policy;
- improvement of infrastructure enabling business and trade development (eg. roads);
- greater use of technology;
- development of relevant labor force competencies.
In the short term, African countries need to support labour-intensive sectors such as agribusiness, construction, and micro-entrepreneurship, open trade policies geared towards regional economic integration, enable the diversification of economies in resource-rich countries and housing – especially in cities that are increasingly absorbing populations – and reduce bureaucracies.
Removing obstacles that hinder the development of competitiveness is a prerequisite for achieving more sustainable economic progress and increasing productivity in trade and investment. Unfortunately, too many African countries do not meet the single most important condition needed for sustainable economic development: political stability.