Africa’s jobs and growth conundrum

Alexis’s view

The World Bank’s global economic forecast for the year ahead was, on the face of it, full of good news for African countries. Growth in sub-Saharan Africa is expected to accelerate this year and next, fiscal revenues have improved across much of the region, and many countries are set to benefit from high commodity prices.

That’s the good news. But dig a little deeper, and more troubling details emerge: Economic expansion isn’t keeping pace with population growth, and the gap in living standards with the rest of the world looks set to grow. The region is already home to more than 70% of the world’s people living in extreme poverty, and the projected growth of real per capita incomes is lower than in other emerging markets.

This is all very familiar. It reminds me of the optimism around the Africa Rising narrative — a loose theory, coined in the early 2010s, which I, like many others, wrote about at the time. It predicted that the combination of higher government revenues and rapid population growth could translate into a broader distribution of wealth that would expand the middle class in many countries.

Instead, the commodity supercycle ended, the richest people in the continent’s biggest economies became more wealthy, while many young people found themselves struggling to find work. South Africa, one of the world’s most unequal societies, is a classic example of this problem.

This lack of job creation has very real consequences beyond economics. Political unrest in a number of countries last year — including Kenya and Madagascar — was driven by a lack of opportunities for young people. Policymakers across the continent will need to pay attention to the sobering employment picture underlying the growth forecasts, and make sure they don’t repeat previous mistakes.

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