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Africa’s Youth Goldmine: AfDB’s Response to Youth Employment Crisis in Africa

20-02-2014

Soucat, A., Offei-Awuku, R. 2014. Africa's youth goldmine: AfDB's response to youth employment crisis in Africa. GREAT Insights, Volume 3, Issue 2. February 2014.

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Africa’s continued growth in youth employment is creating concern over the continent’s ability to use its young people’s potential for its economic transformation. The AfDB is proposing practical solutions for countries to curb the prevailing risk.

Goldmine of a youthful workforce

Africa, the world’s youngest continent, is experiencing an unprecedented youth bulge. Underpinned by high fertility rates, about 62% of Africans today are less than 35 years old. Over 25% are aged between 15 and 24 and by 2020, three of every four Africans will be less than 20 years. The working age population escalated from 92 million in 1970 to almost 575 million in 2010. This population explosion- marked by youthful workforce turbulence- will continue for 40 more years between now and 2050, surpassing that of China and India by 2035 (Figure 1). The continent’s 200 million youths, constituting 20.4% of its population and 37% of total workforce is set to reach more than one billion by 2050.This will represent more than 50% of the world’s youth population. Expected decline in fertility and mortality rates offers an enormous opportunity for Africa to capture the demographic dividend and foster economic competitiveness and social development.

 

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Yet, the gains of a youth bulge are neither automatic nor guaranteed. Already middle-income countries, including Mauritius, Tunisia, Morocco, Algeria, Egypt, and South Africa, are experiencing the greatest increase in population aging (65 years and older) and other countries, such as Libya, Botswana, Zimbabwe, and Djibouti, have also witnessed a significant increase in their elderly population. There are concerns over losing out owing to the youth employment crisis, as their youth cohort is expected to wane in coming years. 

Youth wealth repressed

Daunting challenges faced by today’s youth may mean a bleak future. Africa is hailed as the second fastest growing continent, with GDP growth rate averaging 5% per year and a marked increase of its middle class. On the flip-side, the paradox of rapid economic growth lingers with poverty and inequalities devouring Africa’s youth and women especially. The economic sectors contributing significantly to GDP such as mining, oil, and gas rely less on labour, as these are more capital intensive. Further, the labour market disarray marked by rising skills mismatch founded in limited relevance of education and training, low productivity in the informal sector, unemployment and underemployment against a mounting youth population reflects a generation at risk. Although Africa is witnessing a growing share of its youth being educated, it records the world’s lowest school enrollment and quality, leaving over 90 million teenagers with little or no skills struggling for employment in low-paid, informal sector jobs. Many young people are leaving the education system without basic literacy and numeracy skills, under-qualified or with qualifications that do not match the needs of the labour market (Figure 2; 3).

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Today, an overwhelming 72% of Africa’s youth population lives on less than US$2 a day. This largely reflects the marked effects of the youth employment crisis; 60% of the continent’s unemployed are aged 15 to 24. Notable effects are in North Africa (Figure 4) where the unemployment rate is among the highest in the world. Youth unemployment rate for Sub-Saharan Africa hides significant disparities among countries. In South Africa, for example, 50% of youth are unemployed compared to 25% in Ethiopia. In Mali, Liberia and Malawi more than two thirds of young people cannot find a stable job. Vulnerable employment in sub-Saharan Africa, most of who are the youth, still remains extremely high – 77% of total employment in 2012. Half of the unemployed youth in Africa are women and gender gaps in employment opportunities remain exceptionally high (1). For instance in South Africa, by the first quarter of 2013, youth neither in employment or education (NEET) was 33.5%.

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The pace of job creation must accelerate to keep pace with the 10-12 million young entrants to the labour force each year; over the past decade, Africa has created over 37 million wage-paying jobs. There are pressures for quality education that creates productive and competitive skills, workforce skill upgrade and employment to large cohorts of youth. The good news is that policymakers across the continent and development partners are devising solutions to curb the youth employment crisis. Success or failure will be determined by how effectively young people are able to develop and make use of their talents and to fulfill their ambitions. The underpinnings and aftermath of the North Africa political crisis and the global increase in protests provides lessons to the continent on youth frustration and unemployment.

What is AfDB doing to tackle Africa’s Youth at Risk?

Strategic choices and key objectives. AfDB’s Board of Governors meeting in 2010 renewed a pathway to determinedly tackle the growing youth employment crisis on the continent. The Bank’s strategy 2013-2022, “At the center of Africa’s transformation” (2) stipulates inter alia, youth development through five core operational priorities – 1. skills and technology; 2. private sector development; 3. infrastructure; 4. regional integration; 5. governance and accountability guided by the twin objectives of (i) inclusive growth and (ii) transition to green growth and underpinned by special emphasis on gender, fragile states and agriculture and food security. The strategy provides the framework for spurring job creation by addressing labour market supply and demand side constraints largely through skills and technologies development; entrepreneurship and innovation, enabling legal and regulatory frameworks and social protection. The Bank seeks to engage more purposely with policymakers, with young people themselves, and with the private sector, to develop solutions and facilitate the entry of young people into a happy and productive adulthood.

Consolidating and reorienting operations. The strategy aims to scale up linkages between youth and economic development in programs and projects and ensuring that vulnerable groups including youth and women are mainstreamed in the development process. Internal synergies have been strengthened cross-sectorally by expanding the focus of youth employment in its social sector arm towards the mainstreaming in other sectors such as infrastructure, private sector and agriculture operations.

In the last two years, the Bank has increased cross-sectorial operations that address policy issues of skills mismatch, education sector and labour market reforms in various countries, e.g. Côte d’Ivoire, Morocco, Mozambique, Rwanda, Senegal, Tunisia, Zambia and Zimbabwe. The Bank’s operational strategies such as for private sector development, gender and human capital (3– are targeted at strengthening education and training systems to adequately respond to industry needs; including technical and vocational training linked to specific needs in the labour market and upscaling of science technology, engineering and mathematics. Through targeted operations for innovation and catalytic effects, the Bank is supporting the strengthening of safety net programmes in countries, particularly by linking safety nets with jobs and entrepreneurship. Diagnostics on employment issues and education are addressing knowledge gaps to inform operations as well as to foster public debate and workable actions. The private sector development is crucial on the Bank’s agenda by promoting an enabling environment for employment creation and lending to micro, small and medium-size enterprises.

Innovative rapid-responses for sustainable jobs. The Bank is promoting community-rooted innovators and has been contributing to Social Funds for Development in several countries such as Egypt, Djibouti, Guinea, Gambia and Mali, with the specific objectives of supporting community development and promoting employment through capacity building at local levels, support to income generating activities and basic social services. The Souk At Tanmia (Market for Development), piloted in Tunisia and increasingly in demand by other countries, echoes the dynamics of engaging the private sector and the inclusion of unemployed youth through training and micro enterprises. Social business is also being pioneered as an enormous potential to tackle youth unemployment in a financially sustainable way in Tunisia, Togo and across Africa. The Bank is strengthening private sector initiatives to develop value chains and promote labour-intensive manufacturing, especially in areas such as agri-business and agro-processing.

Engaging productive partnerships. AfDB cannot do it alone. The Bank is working closely with key institutions in Africa towards ensuring policy coherence, and building concerted efforts to increase coordination and the impact of various youth employment activities in the continent. The Bank is a key partner to the Joint Youth Employment Initiative for Africa (JYEIA) (4), aimed at ensuring policy coherence and synergies towards addressing labour market issues in Africa. The Bank also hosts the Global Facility for Employment Creation (5in Fragile Situations. AfDB remains committed to partnerships that foster practical responsiveness to the youth employment crisis in Africa.

Key Milestones are Ahead. Will Countries be Successful?

Every country has its particular priorities in response to the youth employment crisis yet some dimensions of the youth employment challenge are universal. Targeted efforts are therefore required in developing youth employment opportunities in Africa.

Productively integrating the current youth into the economy. Economic growth policies should promote a pro-youth focus. Substantial investments in labour intensive economic sectors – such as in agriculture and manufacturing given Africa’s enormous natural resource endowment – are important to absorb the already adult and not yet skilled cohort of youths. Over the past two decades, agriculture’s share in GDP has contracted in Africa, but it still employs the majority of the labour force. Thus, improving agriculture through value chains development remains crucial. Policies should also address competitiveness and create an environment that promotes entrepreneurs. The informal sector, making up more than 80% of total employment in sub-Saharan Africa holds a lot of promise for harnessing entrepreneurial talent that can foster job creation if adequately enabled by government policies. Small and medium size enterprises (SMEs), which make up the main part of the informal sector, have to be stimulated through entrepreneurship and innovation, particularly along lines of value chain development in productive sectors and access to finance.

Schooling is not enough; Education and training needs to be transformed. Investments in education must increase educational opportunities available and quality at all levels among all ages and sexes. Africa’s education system should encourage greater involvement of economic and social stakeholders in the content and quality of education. Education must promote innovative entrepreneurship and relevant skills acquisition. Emphasis on science, technology, engineering and mathematics is necessary to foster skills appropriate for transformative and knowledge-intensive economic sectors. Expanding access and improving the quality of technical and vocational training will facilitate greater transition between schooling and employment. African countries’ education systems must be rethought taking into account the new opportunities arising with technology and such challenges as rapid urbanization. The youth need to be prepared based on these shifting opportunities to bridge evolving skills gap. Most of Africa’s youth are aiming for wage employment in the formal sector, but most will end up in the informal sector. Governments and educators must therefore make active efforts to guide young people with information on labour markets at all stages of the education system.

Strengthening and scaling-up youth employment programs. Problems facing the youth are multifaceted. This means youth interventions will be more effective if mainstreamed. In recent years, African governments are increasingly implementing youth employment initiatives; providing training and promoting entrepreneurship are the most frequent interventions. Yet, many programs are unlikely to have significant impact because they are poorly governed and remain ad-hoc and dysfunctional in many countries. In 2012, 21 countries had dysfunctional youth unemployment programs in Africa. Inadequate coordination between government agencies and related Overseas Development Assistance often leads to scattered and sometimes competing efforts that are not integrated into an effective strategy. While employment and growth are generated in the private sector, employment programs are often managed by public institutions with weak linkages to the private sector. There should also be increased opportunities for the private sector and the youth to engage in effective decision and consultative processes and to implement action plans.

Addressing knowledge gaps in labour market issues and youth. A major setback to youth development in Africa is the lack of data. Available global data on (in)activity of young people is clearly inadequate, which makes it difficult to design evidence-based policies aimed at reducing youth inactivity. Another sad reality is that employment interventions and programs that are generally applicable and that can be scaled up sustainably and reliably are yet to be discovered. Youth employment interventions in Africa generally lack knowledge on what works well and what does not, which is closely linked to the extreme paucity of employment data availability. High quality data is therefore crucial to guide effective youth policies, strategies and programs.

Dr. Agnes Soucat is Director for Human Development and Rosemond Offei-Awuku is a Senior Poverty Economist at the African Development Bank (AfDB).

Image: photos.com

Footnotes

1. Male youth unemployment rate in North Africa is more than three times that for male adults and the female youth rate more than six times that for adult men. Nonwage work represents more than 80% of women’s employment in Sub-Saharan Africa, but less than 20% in countries of Eastern Europe and Central Asia. Generally, there is huge scope to utilise the youth, as labour force participation rates remain low (Figure 5). 
2. http://www.afdb.org/fileadmin/uploads/afdb/Documents/Policy-Documents/AfDB%20Strategy%20for%202013%E2%80%932022%20-%20At%20the%20Center%20of%20Africa%E2%80%99s%20Transformation.pdf
3. The Bank Group Gender Strategy 2014-2018 and the forthcoming AfB Human Capital Strategy for Africa 2014-2018.
4. In collaboration with African Union Commission (AUC), Economic Cooperation for Africa (ECA) and International Labour Organization (ILO). Read more at http://www.ilo.org/wcmsp5/groups/public/—africa/—ro-addis_ababa/documents/newsitem/wcms_210399.pdf
5. In collaboration with the World Bank, the International Labor Office (ILO/CRISIS), the United Nations Economic Commission for Africa (UNECA), the United Nations Development Program (UNDP/BCPR) and the United Nations Peace-Building Support Office (PBSO)

References

1. Africa Economic Outlook. 2012.
2. AfDB. 2012. Africa’s Demographic Trends; a Briefing Notes for AfDB’s Long-Term Strategy.
3. Asford L.S. 2007. Africa’s Youthful Population: Risk or Opportunity? Population Reference Bureau: Washington, DC. 
4. ECA;AfDB. AUC. 2013. Creating and Capitalizing on the Demographic Dividend for Africa.
5. Clifton D.. Hervish A. 2013. Reducing Youth Unemployment in Sub-Saharan Africa. PRB: Washington, DC.
6. Fleet J. W. Watkins K. Greubel L. 2012. Africa Learning Barometer. Brookings.
7. ILO. 2013. Global Employment Trends for the Youth. ILO Publications: Geneva.
8. IMF. 2012. Youth Demanding Change. IMF Publication Services: Washington DC.
9. IMF. 2013. Regional Economic Outlook: Sub-Saharan Africa Building Momentum in a Multi-Speed World. IMF Publication Services: Washington DC.
10. OECD. 2012. Education at a Glance 2012: Highlights. OECD Publishing.
11. OECD. 2012. The challenge of promoting youth employment in the G20 countries. OECD Publishing.
12. The World Bank Group. 2011. Africa Development Indicators 2011.
13. The World Bank Group. 2013. Africa’s Pulse: Volume 7.
14. The World Bank. 2013. World Development Report. Washington DC.
15. United Nations. 2013. World Population Prospects: the 2012 Revision. New York.
16. Brookings-Africa Growth Initiative. 2013. Youth Policy and the Future of African Development; working paper 9.

This article was published in GREAT Insights Volume 3, Issue 2 (February 2014).

Economic Transformation and TradeBusiness and DevelopmentEmploymentAfrica

External authors

Agnes Soucat

Rosemond Offei-Awuku