Africa’s Jobless Growth?

As China’s economy slows and the major advanced economies struggle to record solid growth, African countries are dominating the list of the world’s fastest growing economies of 2012: Zambia, growing at a rate 7.38% is the twelfth fastest, Mozambique tenth, Ethiopia eighth, Liberia fourth, Angola at 10.5% is the third, and Niger at a rate of 15.4% is the fastest growing economy in the world.
Exaggerated optimism?

While growth in African countries is certainly cause for hope, in many it may not be enough to significantly reduce poverty. Growth does not necessarily mean greater distribution of wealth and inclusivity remains a big challenge. At the recent African Development Forum held at the School of Oriental and African Studies (SOAS), Univeresity of London, Dr Patricia Daley, lecturer in human geography at the University of Oxford, asked whom Africa’s growth is really benefitting. Although Africa’s growth pattern shows signs of broadening, in general the sectors driving growth are more capital-intensive than labour-intensive, propelling foreign direct investment into highly corporatised areas. This does little to help those underemployed and surviving on precarious, informal work without social protection.

“Despite growth, it is not trickling down" said Daley. "It is concentrated in the narrow economic bases of primary commodity production and extractive industries which does not create large employment."
Jobless growth

Amid claims of jobless growth, the African Economic Outlook report warned that with the youngest population in the world, which is set to double by 2045, Africa’s social and political stability will be determined by its ability to engage its youth, its most precious resource. Currently, 60% of Africa’s unemployed are aged between 15 and 24. With Africa’s labour market on track to surpass both China's and India's by 2040, it is crucial that policies are developed to help teach youth the necessary skills to compete in the job market.

Government policy needs to make education more relevant to labour market demands. While many firms are looking for technical skills, Africa has the highest share of students studying social sciences, many of whom go unemployed. Traditionally, education systems have been tailored towards the needs of the civil service, but universities must educate with an eye to African markets, improving education in technical fields and agriculture. According to an African Economic Outlook survey, matching education to labour market requirements will be crucial as 54% of job seekers have advanced qualifications but not in the skill sets required by many employers.

Addressing the straightforward availability of jobs, however, will of course also be crucial for transforming growth into development. Owing to a development policy emphasis on education, Africa’s youth may be better educated than ever but a lack of employment opportunities nevertheless means around 72% of the youth population live on less than $2 a day. Out of 200 million people aged between 15 and 24, only 21 million are estimated to be in waged employment, a proxy for ‘good’ employment, while 53 million are in vulnerable employment which is linked to working poverty.

“The ILO (International Labour Organisation) estimates that between 2000 and 2007, the working age population grew by 96 million but the number of jobs created was only 63 million", explained Jan Rielaender, an economist at the OECD Development Centre, at the UK launch of the African Economic Outlook (AEO) report. He continued "with 10-12 million young people entering Africa’s labour market every year, youth that are not working or studying are a waste of a country’s resources".

It is also crucial to point out that that economic growth is not, as might be assumed, gender-neutral. Women are typically disproportionately disadvantaged in securing good quality employment due to things such as more limited access to education. This forces many into the informal and low-value-added industries where they are subject to low income, lack of job security and vulnerable to exploitation. Increasing access to decent employment may therefore be particularly important for improving women's livelihoods and well-being.
Inclusive growth

With small public sectors in many countries – a legacy of the World Bank’s structural adjustment programmes – government hiring is simply unable to create enough jobs per year to reduce unemployment significantly. The private sector is often called upon therefore to make up the shortfall but it too tends to be small so expectations it can absorb a huge labour force, let alone create the growth of jobs needed to keep up with population growth, are often overly optimistic.

For example, each year, 100,000 university graduates enter Senegal’s labour market alone, competing for less than 30,000 formally registered vacancies.

A more viable option may be increasing the productivity and incomes in more labour-intensive industries among small and medium enterprises in the informal and rural economy. “Given the sheer size of the informal sector in most African countries, and the fact that it is born out of the absence of other opportunities, it has to be seen as part of the solution, not the problem,” argues the AEO report.

For this to happen, the attitude of African governments about the informal economy will have to change. The story of Mohamed Bouazizi, the unlicensed vegetable seller who set himself on fire in the streets of Tunisia in protest against the continuous repression he faced by the Tunisian local authorities, effectively triggering a chain events that led to the revolution, spells out the dangers for governments clearly enough.
Organised optimism

While a more optimistic opinion of Africa is a welcome counterpart to traditional perceptions of poverty, disease and failed leadership, equating economic growth to development will only lead to further disappointment. When growth is not harnessed for long-term investments in infrastructure and education, growth will not result in the structural transformation necessary for development. For the inflows of foreign investment into African countries to serve as effective instruments for development and poverty reduction, there will need to be a balance between the incentives for foreign investors and the rights of its citizens to support those engaged in labour markets.

“The Africa Youth Charter and Africa Women’s Protocol should be taken into consideration in development programming for women and youth to benefit from economic growth,” argued Dr Daley. Ultimately, targeting policy to the challenges that women and youth face in the labour market is the only way that Africa’s growth will ever become more inclusive. Doing so would provide a real basis for “Afro-optimism”.


Kiran Madzimbamuto-Ray was born and grew up in Zimbabwe. She is currently studying for an MSc in Development Studies at the School of Oriental and African Studies, London.  Follow her on twitter .

Focus on Africa, growth and job creation.

Africa's economies are amongst the fastest growing in the world, but growth does not necessary lead to development.