5 Key Takeaways for African Growth
The World Economic Forum’s Regional Meeting in Cape Town, South Africa brought together more than 1,200 participants from 75 countries to look ahead to the African continent’s future. It’s a future that looks brighter than at any time in recent memory—but it requires a clear outlook on both the promises and perils the continent faces.
1) The greatest opportunity for African growth is youth
“Within five years, half the working population on the African continent will be under 25,” said David Meads, president of Cisco Africa. Africa’s working-age population is estimated to double to 1 billion in the next 25 years, exceeding that of both China and India.
But if this demographic dividend is to be prevented from becoming a demographic time bomb, more must be done to improve job creation for youth. Between 2000 and 2008, only about a third of the 74 million jobs created in Africa were for people ages 15 to 24.
2) Want to boost intra-African trade? Think infrastructure
Jean-Louis Ekra, of the African Export-Import Bank, indicated that in 1993, trade in Africa was worth about $256 billion, it’s now estimated at $1.4 trillion. Nonetheless, intra-African trade remains woefully low in comparison with other regions, and recent research by the African Development Bank suggests that increasing it would be an important tool to combating youth unemployment.
Streamlining the many barriers to trade posed by the region’s numerous trade agreements is just a first step to boosting intra-African trade. Investments in infrastructure are critical: “A truck journey that takes one day in Europe would take eight to nine days in Africa,” Sir Michael Rake, chairman of BT Group Plc, observed.
3) Improving food security & job security go hand in hand
Agriculture in Africa is the source of at least two seeming paradoxes: first, that while Africa possesses 60% of the world’s arable land, the continent still imports more food than it exports. And, second, that although agriculture already employs 60% of the continent’s labor force, some see agricultural transformation as a growth area that can drive youth employment. The connection? The need to modernize agriculture via improved technical and business infrastructure to raise productivity and bring more producers into the formal economy.
“We need to provide financing to agricultural producers, because agriculture is a business,” said Kanayo F. Nwanze, president of the International Fund for Agricultural Development in Rome.
African women’s economic-activity rate ranks highest compared with the rest of the world, with a value of 61.9. Yet, women remain primarily employed in the informal sector, ranging from 36.1% in Lesotho to as high as 89.2% in Mali.
While announcing the launch of the “PovertyisSexist” campaign, the latest initiative of the ONE Campaign, Dr. Sipho Moyo, Africa executive director at ONE, stressed the need to refocus the world’s attention on the challenges of women and girls in education and health to bring more women into the formal sector.
5) The greatest risk to African growth is…
Climate change, according to Paul Polman, chief executive officer of Unilever.
Some key sectors of the economy remain most vulnerable to climate change, including agriculture, tourism, forestry and water resources, and could drive down economic performance. For every 1°C increase in temperature, GDP growth goes down by 0.67 percentage point.