By Johann Ivanov *
Africa is facing a serious jobs crisis. But if nothing is done to find a solution, the situation could worsen in the not-so-distant future, as World Bank projections from 2017 show: by 2035, Africa’s working-age population will increase by 450 million. At the same time, however, only 100 million jobs are expected to be created during the same period. And that was before the Covid-19 pandemic hit: Africa was hit hard and its economies shrank by 2% in 2020. The ECA estimates that nearly 30 million Africans have been pushed into below the extreme poverty line.
In the years leading up to the pandemic, particularly between 2016 and 2020, Africa had experienced solid economic growth. However, this growth has been mainly driven by high commodity prices and has not translated into the creation of sustainable jobs. This is of particular concern when looking at the demographics of Africa. By 2050, Africa’s youth (15-35 years old) are expected to double to 830 million people and the continent’s total population will reach around 2.5 billion people. Today, Africa is the youngest continent in the world – in 2020, its median age was 19.7 years. And Africa will remain the youngest continent in the world for decades to come.
In this context, current estimates show that Africa needs to create between 10 and 18 million jobs per year just to absorb young people entering its labor markets. However, only around three million formal jobs are being created at present and the majority of Africa’s youth are destined to remain in the informal economy, which comprises over 80 percent of the continent’s workforce. .
A progressive approach to employment
It is a modern day tragedy that millions of young Africans are unable to find jobs, have enough resources to support their families or reach their full potential. And although there is a very active and informed international debate around job creation, it does not seem to generate viable solutions that would lead to significant changes in the employment situation.
Too often, governments seem to give lip service to democratic processes and institutions.
The jobs crisis in Africa is so complex that it requires fundamental thinking about the direction of structural transformation on the continent. Do the gradual industrialization approaches that have worked for East Asia also work in Africa? To what extent is free trade part of the problem and not part of the solution to the jobs crisis? How can there be real change if governments are undemocratic, corrupt and anticipate reforms?
A gradual approach to tackling the jobs crisis in Africa, which could inspire and inform both African leaders and European policymakers, is long overdue. This progressive approach is based on two sets of interrelated principles, political and economic. Here are some ideas.
The political aspect means above all the establishment of strong democratic institutions to organize and supervise structural transformation and economic reforms. Too often, governments seem to give lip service to democratic processes and institutions. Without accountability, imposed by democratic institutions, the popular will will not be reflected in the development model. Without the corrective function of democracy, development will lead to more inequalities and benefit only a privileged few.
Political reforms must also include a bold stand against corruption. Africans are fed up with governments that are primarily concerned with staying in power to pocket state resources. State capture must be confronted with the transfer of power from the executive to a politically independent and efficient judiciary capable of upholding accountability and democratic principles.
Fundamentally, it is the responsibility of the state, controlled by democratic institutions and an active civil society, to ensure that economic growth effectively translates into job creation.
Broad societal coalitions, including democratic unions, NGOs, activists, environmental groups and progressive political leaders must take the initiative here and voice their demands for a democratic shift towards more accountability. In particular, women must play a key role in this process as they are disproportionately affected by the current employment scenario. Together, these groups must exert more pressure on governments to actively involve civil society, academia, workers’ representatives and the private sector in developing strategies to create jobs and monitor the execution of employment programs. . This is not just an impractical exercise, but a crucial attempt to improve the quality of political decisions and outcomes.
Economic principles must be pursued and claimed with the same energy as political principles. Fundamentally, it is the responsibility of the state, controlled by democratic institutions and an active civil society, to ensure that economic growth effectively translates into job creation.
For this to be successful, revenue mobilization systems must be improved. First, the focus could be on the commodities sector – a major source of income in many African countries. Many export oil, gold, metals and cocoa but find it difficult to negotiate agreements guaranteeing a fair share of these exports. More funds could be extracted from multinationals operating in Africa. In addition, parts of Africa’s large informal economy, remaining in the informal sector for tax evasion reasons – such as some professionals in urban economies – could be another source of income. The loopholes in the tax system must also be closed proactively.
African states must invest heavily in public goods such as education, health, energy and digitization. Basic infrastructure is the key to transforming economies. The construction sector, for example, could be one of the areas where significant jobs can be generated. In public tenders for large infrastructure projects, financed either by African countries or by international financial institutions, African companies should benefit from preferential treatment.
Tackling the jobs crisis in Africa is a process that will take years, if not decades.
Significant state investment is needed in well-designed public works programs across the continent. It is both a strategy for poverty reduction and job creation. Constant evaluation of public works programs and reasonable exit strategies are necessary to contain costs. Additionally, states should roll out programs to provide bank accounts to all citizens – basic income transfer could be an element of direct support.
A project spanning several decades
It is an illusion to believe that all employment challenges can only be solved by States. The main source of employment will remain the private sector and most jobs will be created in urban areas, mainly in the service sector. The so-called “industries without chimneys”, namely tourism, agro-industry, remote office services, creative industries, have some potential for job creation. Generating long-term sustainable jobs and decent jobs, however, will require a significant transfer of knowledge and technology from developed countries to African countries.
Last but not least, trade between African countries – accelerated thanks to the African Continental Free Trade Area (AfCFTA) which began operations on January 1, 2021 – could have effects on economic growth and employment. At the same time, free trade can have negative effects on immature industries in Africa. That is why pockets of industries should rather be nurtured and protected against competition. In addition, areas that will be affected by the potential negative effects of AfCFTA must be compensated for their losses.
Tackling the jobs crisis in Africa is a process that will take years, if not decades. Small steps are more realistic than leapfrog fantasies. Too often, however, the political conversation is preoccupied with a short-sighted emphasis on how favorable economic factors can spur job creation. But it is essential to understand that sound political and economic principles, overseen by those primarily affected by transformation, must go hand in hand – as both determine a
* This article first appeared on IPS-JOURNAL.EU on November 17th. The writer, Johann Ivanov is the resident director of the Friedrich-Ebert-Stiftung office in Ghana and coordinator of the Competence Center in Economic Policy (EPCC) for Sub-Saharan Africa. from Ghana. Previously he worked as Deputy Resident Manager at FES India and Office Manager at FES Headquarters in Berlin. He holds a BA in Political Science from Freie Universität Berlin and an MSc in International Political Theory from the University of Edinburgh.