Shifting global demographics: An African opportunity? (5)

Africa still has time to benefit from the age of labour (2)

Akileswaran & Hutchinson (2019) suggest African governments face the binary choice of embracing automation or managing automation during the 15- to 30-year time window that probably remains to do so. The choice is probably not mutually exclusive. Instead, Africa must manage and embrace automation in parallel. In doing so, global firms looking to extract more value from their expectedly increasingly redundant equipment stock could do so on the continent. Those looking to invest in the continent’s future by building its digital infrastructure and preparing the population for the high technology era via EdTech, HealthTech, and so on, could also do so in parallel. Chinese firms already do both via the BRI and investments in the building blocks for the realisation of the continent’s consumption potential (Kolodko, 2020).

Africa’s 4IR prospects do not lead to a dead end. Many see advanced technology as the path on which the continent can fully realise its demographic dividend. Ndung’u & Signe (2020) see a transformative potential for 4IR in Africa. Applications of 4IR can generate economic growth while driving structural transformation in African economies. Such restructuring can lead to poverty alleviation via easier access to information for the poor, financial inclusion via digital financial services, modernising agriculture and agro-allied industries, improving healthcare and reinventing labour, skills and production processes. Thus, adoption of 4IR-based solutions in Africa may represent an opportunity and an imperative for global businesses and investors.

Africa’s potentially favourable demographics, combined with the forced global circumstance of increasing automation, may enable it to skip the “shared misery” state of plentiful low-skilled and low-paying jobs (Quadrant B), from which the Asian success stories emerged

An economy fits into one of the four quadrants of the “Labour-technology tradeoff matrix” (graphic in original article). Shared prosperity (Quadrant C) is an ideal outcome. In this state, an economy has about as many jobs in labour-light advanced services sectors as in labour-intensive primary agricultural and secondary industrial sectors. Ideally, an economy should evolve from a highly unequal and poor (Quadrant A) to a “shared prosperity” state (Quadrant C), en route passing through “shared misery” (Quadrant B). However, as is increasingly the case for advanced countries in the West, the journey may end in a highly unequal but nevertheless rich state (Quadrant D), owing to demographic and technological forces in the political economy.

Technological disruption, deindustrialisation, and technological displacement might divert states not already industrialized through labour-intensive manufacturing (Quadrant A) to evolve to a highly unequal but rich society (Quadrant D) instead of one of shared prosperity (Quadrant C). Some advanced economies such as the US, the UK, and others are increasingly unequal and en route to Quadrant D.

Over time, as advanced technologies diffuse, there may not be enough agriculture, mining and manufacturing jobs to go around. Most available jobs would require increasingly higher levels of learning and skillsets. In any case, the working population shortfall in advanced economies would lead to an organic decline of labour-intensive business models in favour of labour-light high-technology models.

Africa’s potentially favourable demographics, combined with the forced global circumstance of increasing automation, may enable it to skip the “shared misery” state of plentiful low-skilled and low-paying jobs (Quadrant B), from which the Asian success stories emerged.

Instead, Africa may be able to leapfrog directly to a shared prosperity (Quadrant C) state. In such a shared prosperity state, currently unequal and poor African countries would have as many low-skilled jobs as needed for their respective populations. Most of these jobs would be in primary sectors such as agriculture and mining. Many would be in medium-paying and medium-skilled secondary industrial sectors, with an increasing number in the rapidly evolving high paying and advanced-skilled high technology sectors.

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