Hope for Africa’s youth

Click to go to the African Economic Outlook site

Today’s post is from Roopa Chauhan, in collaboration with the OECD Development Centre

If Mohammed Bouazizi had lived in Dar es Salam, Tanzania or Durban, South Africa, he might still be alive today. Like millions of young Africans, Bouazizi didn’t have a regular job, but managed to scrape by as an informal market trader, selling vegetables out of a wooden cart. Being fined repeatedly and having his stock confiscated proved too much to bear and Bouazizi committed suicide by setting himself on fire. He would have remained just as anonymous as countless other victims of injustice had news of his death not provoked the protests in Tunisia that led to the Arab Spring.

Youth employment is the special theme for this year’s African Economic Outlook. It analyses the economic factors that indirectly contributed to Bouazizi’s demise, namely a rigid formal sector unable to provide sufficient employment opportunities for Africa’s youth. Yet, the AEO remains positive in its overall assessment of Africa’s prospects, which are generally good even though the Arab Spring set growth back from 5% in 2010 to 3.4% in 2011. Commodity prices, key to many African economies, have also dropped recently and may continue to fall, but their levels are still relatively high and have so far supported growth in exporting countries.. Despite this and other issues related to the global recession (inflation, the rise in food and fuel prices, etc.), Africa’s economy continues to expand, creating favorable conditions for governments to tackle unemployment, a serious problem in most African countries, especially for youth.

A discouraged youth population is the risk governments face if their policies don’t become more inclusive and fail to stimulate employment creation. So, how can African countries unlock the potential of their youth and offer them a hopeful future? The solutions and problems differ depending on the level of development. The rate, quantity and quality of employment differ depending on a given country’s income level, and the policy challenges are therefore also different. In middle-income countries, the quantity of employment is more of an issue than in lower-income countries, where the quality of employment is a problem for first-time job seekers. Formal employment is higher in middle than in low-income countries, but overall employment is lower because middle-income countries do not provide as many informal employment opportunities as LICs, which creates an “employment bottleneck” to accessing the formal sector.

Generally, all African countries, need to recognise the economic benefits of the informal sector where millions of Africans find their first jobs and where those with the talent build successful businesses. The formal sector needs to be flexible enough to absorb the informal sector. One way of accomplishing this is to encourage private sector growth, which is “the most important vehicle for creating jobs for young people in Africa”. However, until the private sector can do this, those employed in the informal sector need adequate government support. For example, in Dar es Salaam, Tanzania and Durban, South Africa local governments provide licenses to street traders. This practice legitimises their status, strengthens their ties to local authorities and renders them less vulnerable to harassment. Bouazizi would have certainly benefitted from such a license.

Education should also be high on African policymakers’ agenda. African youth need skills that match employers’ expectations. For many African countries, graduates with degrees in engineering and information technology are more likely to find jobs than those who have degrees in the social sciences or humanities. In order to encourage students to obtain degrees in science and technology and produce employable graduates, the Ethiopian government introduced a policy designed to shift the balance of subjects in all public universities away from the humanities’ on a 70:30 basis.

Finally, the dynamism of the rural sector needs to be exploited. It provides employment not only in agriculture, but in small-scale, non-farm related activities (mechanical repair shops, hair dressing, handicrafts, textiles, etc.). It has “potential as an engine of inclusive growth and youth employment”. Youth in rural Africa are endowed with the entrepreneurial spirit, more so than their urban counterparts: 23% of youth in rural areas have plans to start their own businesses; in urban areas only 19% have similar ambitions. Their creativity can benefit the African economy as a whole, so it needs to be channeled in the right direction.

The bottom line is that African economies are expanding. They have weathered the global economic crisis rather well with a projected growth rate of 4.5% in 2012 and 4.8% in 2013.  This growth needs to be accompanied by job creation so that all Africans can reap the benefits, not just the elite.

Today, Africa has 200 million young people, which makes it the youngest population in the world. By 2045, this number will double. African youth are also becoming more educated: 42% of 20-24 year olds have a secondary education. In 2030, it will be 59%. Who would like to see a vibrant, capable generation of workers sacrificed because of inadequate policy choices? Hopefully, not African politicians. The stakes are too high and economic outlook is too positive for those in power not to take advantage of their best resource: Africa’s youth.

Useful links

The 2012 International Economic Forum on Africa: Promoting Youth Employment

Development Centre Director Mario Pezzini talks about youth employment