Thanks to falling mortality rates and high birth rates, Africa’s population has been growing faster than that of any other continent. By 2050 sub-Saharan Africa is likely to be home to about 2.1 billion people, up from just under 1 billion today. One in five people will live in sub-Saharan Africa, compared with one in eight at present. And the region’s children—now nearly half of sub-Saharan Africa’s population—will have become the region’s workforce. By mid-century Africa’s working-age population may well be larger than its youth and its elderly combined.
This “demographic dividend” offers Africa a huge opportunity, just as it has done for Asia in recent decades. Africa has the chance to achieve the sort of spectacular economic growth that would enable it to catch up with other regions, many of which will be grappling with the consequences of aging populations and shrinking workforces. If it fails to grow fast enough, however, Africa risks the instability that could come from having too few jobs and too little hope to satisfy the aspirations of swelling ranks of youngsters. So what is it to be, boom or gloom?
Or perhaps something in between. On current policies, according to long-term forecasts from The Economist Intelligence Unit (EIU), a sister company of The Economist, Africa will gain only modestly from its favorable demography. The continent’s jobs will mostly be low-productive ones, investors will remain wary of business conditions, infrastructure bottlenecks will hamper development. GDP growth rates of 5% a year in Nigeria and Kenya in 2015-50—the EIU’s central forecast—may seem respectable, yet will do little more than absorb the new entrants into the labor market.
In this scenario, income per head will grow by 127%—not bad, but not enough for the average African to catch up with counterparts in developing Asia and Latin America. By 2050, no African economy will have reached today’s European living standards. And African economies, with narrow export bases, will be no less vulnerable to shocks than today.
A better outcome is possible, however. The chart shows the EIU’s estimates of the difference that smarter policies could make. To make the most of the demographic dividend, policymakers will need to act on labor, capital and productivity.
First, better family planning, girls’ education and investment in health would accelerate declines in fertility rates, and boost the relative size and the quality of the workforce. Second, Africa’s low capital stock and inadequate roads, power supply and other basic facilities need to be enhanced. At present, the region loses 2 percentage points of potential GDP growth every year to its shoddy infrastructure, according to the World Bank. Higher investment in this would make manufacturing more competitive and reduce the time taken to move goods—and workers—around the region. Third, cutting red tape would improve business conditions and make Africa a more attractive destination for foreign investors.
It might be hard to imagine African lions emulating the Asian tigers of the 1960-90s. But even small improvements to productivity and capital would enable Angolans to be as well off as their Vietnamese counterparts by 2050. Overall, based on the EIU’s sample of four biggest economies sub-Saharan Africa (Nigeria, South Africa, Kenya and Angola), such reforms could translate into a 650% boost to Africa’s GDP between now and 2050, or 240% per African: the average African’s income would be some 50% higher than in the baseline scenario. That’s a dividend worth striving for.
[http://worldif.economist.com]