• Wednesday, April 17, 2024
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Services sector will create 85m jobs in Nigeria, others by 2030 – McKinsey

Services sector will create 85m jobs in Nigeria, others by 2030 – McKinsey

The services sector is projected to create at least 85 million net new jobs across Africa by 2030, a new report has said.

The report titled ‘Reimagining economic growth in Africa: Turning diversity into opportunity’ by McKinsey & Company, said Africa will be home to the world’s largest working-age population by 2040, and smart deployment of its labor force in highly productive jobs will spur economic growth.

“By 2030, the services sector on its current trajectory will create at least 85 million net new jobs across the continent, enough to absorb half of new labor market entrants in highly productivity work,” it said.

It said the number of new services jobs would almost triple if Africa matched the productivity of Asia’s strongest services hub, which would add $1.4 trillion to the continent’s economy.

Nigeria, Africa’ most populous nation, has an all time high unemployment rate of 33.3 percent as at 2020. And it has been projected to increase further in 2021 and 2022.

The African economy has undergone a profound structural shift to services over the past 20 years, as people left work in the fields to take jobs in trade and other services in cities, authors of the McKinsey report said.

“Reflecting that shift, employment in services increased from 30 percent to 39 percent over that period, although in 2019, half the African workforce remained in agriculture,” they said.

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They highlighted that going forward, the continent has the human capital and resources it needs to to propel growth and increase productivity across all sectors, starting with the services sector.

“Services have secured their place as the major driver of the continent’s economic output, contributing 56 percent in 2019 compared to 50 percent in 2000. The sector presents significant opportunities for African countries to boost economic output and job creation—but only if productivity improves,” it said.

McKinsey revealed that the real productivity of Africa’s services sector, at $7,200 in 2019 compared to $8,900 in India, $17,700 in Latin America, and $20,900 in China, is the lowest of any region in the world.

“It is critical that Africa improve the productivity not only of its services sector but also of its industrial sector. And with half of Africa’s workforce still employed in farming, boosting agricultural productivity and farmer incomes remains critical,” it said.

According to the report, Africa has the potential to unlock more than $3 trillion in consumer spending—but this will take more than a growing population.

“Growth can help move one billion Africans across the empowerment line, defined as the means needed to achieve self-sufficiency in basic needs such as nutrition, energy, housing, healthcare, education, and other essentials.

“This would swell the ranks of the 250 million Africans who are expected to join the consuming class by 2030, unlocking $3 trillion in consumer spending. Such spending creates an opportunity for businesses to offer affordable prices at scale, target expansion in growth hot spots, and innovate in local value chains,” it added.

The report recommends increasing digitisation, developing talent, collaborating more regionally, supporting more business champions, and building green businesses are just some of the ways Africa can increase productivity.

“The world needs a thriving Africa to make the transition to net zero, lessen the emerging impact of demographic decline, and give the continent its rightful place in global commerce and trade,” it said.

It said achieving sustainable growth from a foundation of strong productivity will increase African resilience and spread well-being and prosperity across the continent.