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Africa rising but not nearly fast enough

Jobs aren’t keeping up with population growth.

Africa is frequently heralded as the new frontier, with several of its countries recording the highest economic growth rates in the world. But if you look beyond the hype, life has barely changed for many of the continent’s people.

Jobs are what most people want – and far from enough are being created. During a recent visit to Lusaka, I was surprised to see very few people begging. But I was stopped and asked for a job several times while walking down Independence Avenue in the Zambian capital.

The World Bank’s chief economist Francisco Ferreira – in Lusaka for the Poverty Reduction, Equity and Growth Network (PEGNet) annual conference – said while growth in Africa is extremely welcome, it is not doing enough to reduce poverty.

About 63% of the world’s poor are in Africa.

In theory, the picture looks good. The continent has experienced two decades of sustained economic growth, thanks to better policies in the region and rising commodity prices. The growth has reversed two lost and stagnant decades (mid 70s to the mid 90s).

But the good news has not translated into many more jobs.

Ferreira says while growth hasn’t been jobless, wage employment has lagged economic growth. Jobs have not been able to keep up to speed with population growth. And it’s not going to get easier. A rapidly increasing number of young Africans are coming onto the market looking for work.

According to International Monetary Fund (IMF) research, the median person in Sub Saharan Africa is only 18 years old, seven years younger than the median age in South Asia, which is the next youngest region.

While it could also be seen as an opportunity, the so-called ‘youth bulge’ is also a reason to worry.

Shifts in Africa’s labour force also have impacts. Agriculture and manufacturing as a share of GDP in Africa has dropped.

“Agriculture’s share in GDP has contracted in Africa, but industry has not replaced it, while Africa’s structural transformation is bypassing manufacturing,” says Ferreira.

It’s simply too expensive for many manufacturing companies to do business.

Services, such as power, the management of oil, water, road freight and mobile telephony, are still very expensive in Africa.

“How can you expect manufacturing to take off when it costs so much to get your products to ports?” questioned Ferreira.

There have been some moves to improve this, such as sharing water resources and regional power pools. More of this would make growth far more effective.

The Ebola pandemic has also dealt a blow to several countries in Africa. course. Ferreira has warned of the potentially devastating economic impact of Ebola. He also lists new forms of conflict and terrorism such as Al Shabaab in Kenya and Boko Haram in Nigeria as ‘tragedies with big economic repercussions’.

A more low-profile concern is the fall in jobs in agriculture in Africa, on which so many people depend.

Agriculture’s share of the labour force, which was 65.2% in 2005, slumped to 59.3% in 2010, according to IMF research.

“In Africa most of the growth has not been coming from the places and sectors where the poor are .… Growth that takes place where the poor are, has a dramatic effect,” says Ferreira.

Jobs in agriculture, however small, are a buffer against extreme poverty.

In South Africa, agriculture as a share of the labour force dropped from 4% in 2005 to 3.6% in 2010. South Africa’s neighbours depend on agriculture far more, with 81% of Mozambique’s jobs coming from agriculture; 72% in Zimbabwe, 50% in Lesotho and 53% in Swaziland.

An IMF working paper, ‘Africa’s got work to do – Employment Prospects in the New Century’ – suggests that more time, effort and money should be ploughed into helping people get established in non-wage jobs in agriculture and household (or informal) enterprises.

The gap between rich and poor also needs to be narrowed. South Africa has the dubious reputation of being the most unequal country in the region. Ferreira told Moneyweb a basket of challenges in South Africa such as structural problems, low growth and labour issues contributed to this.

South Africa shares the ‘elite’ badge with the Seychelles, Botswana, Namibia and Zambia. Seven of the ten most unequal countries are in Africa.

Unsurprisingly, most wealth is coming out of the resource-rich countries of Angola, Chad, the Democratic Republic of Congo, Congo Republic, Equatorial Guinea, Nigeria, Sudan and Zambia.

The IMF classifies resource-rich countries as those whose ratio of resource exports as a proportion of total exports was above 80% between 2008 and 2012.

Non-resource countries that have boasted economic growth have drawn much of it from the rising services sector. Ferreira said countries like Ethiopia and Cape Verde have shown encouraging growth.

Fuelled mainly by resources, several African countries have been on the rise. This growth is good and has helped to lift people out of poverty.

While it’s tempting to be swept away with the good news story of the continent. It should not lull people into thinking all is well. Millions of Africans are still on the outskirts – and help with the basics could go a long way.


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