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Marco Annunziata: How to Capture the Benefits of Africa’s Youth Dividend

With a new industrial revolution underway, African policymakers must start building a pipeline of the right skills for the Future of Work.

 

Sub-Saharan Africa has been the second-fastest growing region in the world for the last decade and a half. A long commodity boom has helped, but African countries have also started to improve business conditions and strengthen institutions.

Africa now has a great opportunity to maintain this strong growth momentum: the region is poised to enjoy a huge demographic dividend, as its young population continues to expand at a fast pace. Sub-Saharan Africa is projected to increase its labor force by more than the rest of the world put together through 2030; the region is already the youngest in the world, and by 2025 it will be home to a quarter of the under-25 global population. At a time when other parts of the world face aging populations and a shrinking workforce, Africa will have a large young workforce with relatively few retirees to support.

To turn this demographic dividend into a powerful engine of growth and prosperity, Africa needs to build a broader and competitive manufacturing industry, able to create large numbers of high-quality jobs. This requires substantial investment in infrastructure: power generation and distribution, logistics (rail and road transportation, ports infrastructure and management), and urban healthcare. Additional effort is also needed in improving the business environment: cutting red tape, streamlining administrative procedures and regulations, and boosting transparency.

The region also needs to equip its young population with the right skills — both for today and for tomorrow. The world of industry is being transformed by the Future of Work, an accelerating wave of innovation driven by the marriage of digital and physical technologies: It comprises (1) advanced manufacturing — new processes and materials and a digital thread connecting all components of a factory; (2) the Global Brain — the digitally interconnected intelligence of people around the globe; and (3) the Industrial Internet — sensors-enabled industrial machines made more efficient through the insights of data analytics.

With the world of industry changing fast, African policymakers need to start building a pipeline of the right skills for the industry of tomorrow — not just that of today. To lay the basis for faster and sustainable job creation within this context, Africa needs a three-pronged strategy based on:

  1. a stronger education system with closer links to industry;
  2. more open and flexible labor markets and a broader talent localization strategy pursued in partnership with global companies; and
  3. an effort to build the pipeline of skills needed to successfully leverage the technological advances of tomorrow, enabling the Future of Work in Africa.

Advanced manufacturing can help Africa identify new models for growth. It redefines economies of scale, enabling microfactories and distributed production — the “democratization of manufacturing.” This could help the region develop a more modern, diversified and nimble manufacturing sector at the same time as it seeks to build more traditional, large-scale industrial activities.

Governments should encourage and leverage Africa’s entrepreneurial and innovative spirit. In Kenya, the mobile payments system M-Pesa has bypassed the banking system, transforming financial transactions and boosting economic activity. Similar leap-frogging of technology could be brought to bear in other areas where the lack of infrastructure is an especially acute problem, notably power generation and distribution and healthcare. The key to unlocking this potential will be investing in infrastructure and investing in skills.

The joint efforts of government and private companies, including multinational companies like GE, are beginning to bear fruit: training and technological transfer in areas such as transportation and healthcare have begun to accelerate the creation of the necessary skills. Yet policymakers and private-sector companies have a lot more work to do to ensure young Africans have the right skills and the right job opportunities. We need to strengthen the education infrastructure, create more technical and vocational schools, set up more job training and skills transfer initiatives, and make greater use of digital innovations that are already helping to improve the quality and reach of education in some African countries.

The combination of Africa’s demographic dividend and the new industrial revolution around the Future of Work provides a unique opportunity to accelerate the region’s economic development. We have a joint responsibility to take full advantage of it.

(Top image: Courtesy of Arne Hoel).

Click here to download the Future of Work in Africa white paper.

 

 

Marco Annunziata is the Chief Economist and Executive Director of Global Market Insight at GE.

 

 

 

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