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Shifting global demographics: An African opportunity? (2)

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Africa’s unique demographics — a double-edged sword? (1)

The demographic dividend is “the tendency for economic growth to be spurred by rapid growth of the working-age share of the population.” It emerges as the working-age population (age 15 to 64) begins to outnumber child dependents (age below 15). With fewer dependents, families invest more in their children and build savings that feedback into the economy, creating a virtuous cycle. Reduced fertility and increased productivity and savings are the key drivers for the demographic dividend (Harper, 2016).

SSA’s total fertility rate (TFR) is slowly but surely in decline. However, the levels of African productivity and savings remain far less than ideal. Without improvements in these factors, increases in the working-age population may not become a sustainable engine of economic growth. To improve productivity and savings, African authorities must create and sustain an enabling environment that integrates good health, good education, good governance and good economics.

The emerging global demographic shifts favour Africa. This may attract global firms to focus on the continent either as destination consumers or labour markets. With Africa’s projected progression from its current 10 percent to 20 percent of the global population in only thirty years, many global companies would target Africa for consumption at scale.

If the rich world’s population shrinks, and 4IR evolves too slowly to help their economies avoid labour scarcity and its effects, might potentially more reproductive regions such as Africa and Asia be able to exploit this gap?

And since about 4 of every 10 human beings may be African by 2100, Africans would not only generate consumption but also be a source of skilled labour. It is not farfetched to view the continent’s stomachs, hands and brains as the key driver for global economic growth in the 22nd century, when perhaps one out of every two humans may be African.

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Although Africa currently has the world’s highest birth, mortality and migration rates, it is still in the early stage of its demographic transition, characterised by high fertility but longer (albeit still low) life expectancy (Morland, 2019). In other words, Africa continues to have high birth rates, even as fewer die and more live longer. The outcome is a population boom. Africa’s population growth is likely to account for more than half of global population growth through to 2050, based on the 2015/2016 Global Monitoring Report.

By 2050, about a third of Africa’s population would be children, while about a fifth would live beyond the continent. In fact, sub-Saharan Africa could account for more than half of the world’s working-age population by 2050. Clearly, the implications of these projections, if realised, would be far-reaching, not only for the continent but for the entire world.

Population projections (millions) 2019 2030 2050 2100
World 7,713 8,548 9,735 10,875
Sub-Saharan Africa 1,066 1,400 2,118 3,775
Central & Southern Asia 1,991 2,227 2,496 2,334
Eastern & South-Eastern Asia 2,335 2,427 2,411 1,967
Europe & North America 1,114 1,132 1,136 1,120
Source: United Nations, Department of Economic & Social Affairs, Population Division (2019). World Population Prospects 2019

 

But will more able bodies in Africa be assets if there are fewer entry-level jobs? Automation, artificial intelligence and the other digital technologies that drive the so-called fourth industrial revolution (4IR) will reduce demand for many kinds of labour. It may not be realistic to expect Africa to have its time in the sun through labour-intensive manufacturing work in an era when digital innovations reduce labour requirements while increasing output quality.

Recent reports suggest it may be quite sometime before these new technologies become viable and scalable. Businesses find that adopting artificial intelligence at scale is difficult, data is less readily available than hoped and deploying 4IR tools proves to be relatively expensive. Humans may be a surer bet, especially in less-developed settings.

Thus, Africa may still have time to follow the typical developmental progression from agrarian squalor to industrial wealth and sophisticated services. True, the window is closing. But enough time probably remains in the 21st century for African manufacturing to take off on the back of the labour advantages derived from its youth bulge, to build a substantial middle class, and to transition to the vast consumer market the industrial world needs to consume its excess output.

This raises an interesting question. If the rich world’s population shrinks, and 4IR evolves too slowly to help their economies avoid labour scarcity and its effects, might potentially more reproductive regions such as Africa and Asia be able to exploit this gap?

There is a strong logical basis for this reasoning. Morland (2019) views Britain’s population explosion as crucial to its global exploits. “Britain had a population scale to become the world’s factory and then, based on the wealth it accumulated, to become the world’s financier (Morland, 2019).” Is Africa positioned to evolve similarly?

 

Edited & published by the NTU-SBF Centre for African Studies at Nanyang Business School, Singapore. References, figures, tables, etc. in original article viz. https://nbs.ntu.edu.sg/Research/ResearchCentres/CAS/Publications/Documents/NTU-SBF%20CAS%20ACI%20Vol.%202020-32.pdf