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Monday, August 3, 2015

Africa’s economic growth must translate into employment for youth

That  Africa is on the rise, as measured by GDP, is irrefutable. However, despited nearly two decades of solid GDP growth, Africa’s economoies are creating too few jobs.

Ethiopia, Kenya and Tanzania are among Africa’s fastest growing economies, which have been least successful in converting impressive GDP growth into employment. A recent survey shows that unemployment among young people aged between 18-35 is over 50 percent.

The International Labor Organization’s (ILO) Global Employment Trends ,which was published in 2014 provides a basis for re-examining the Africa rising narrative. The ILO report shows that at 77.4 percent, Africa has the highest rate of vulnerable employment. Typically these include unpaid family workers; farmers and petty traders.

The kind of growth that has been witnessed in Africa in the past two decades is often associated with fundamental structural transformation. This typically includes rising productivity per capita, attributed to a transition from agriculture to manufacturing.  Africa’s growth story and structural transformation has defied this classical path.

Manufacturing as a share of GDP has declined in Africa’s fastest growing economies and the proportion of workers in manufacturing is woefully low. The fact is that Africa has de-industrialized. This is dramitacially different from the Asia growth story where millions of workers have moved from agricultre owing to rapid the expansion of the manufactureing sector.

What is happening here in Kenya? A large number of Kenyans are either moving out of rural areas or depend on off-farm work for their livelihoods. The rate of urbanization is unprecedented. Cities, medium and small towns and market centres are bursting at the seams. This trend is unstoppable.

Kenya’s productivity transformation is characterized by low skilled workers migrating to urban spaces and getting trapped in low-productivity jobs. Millions of Kenyans, especially youth, are moving into low productivity and low paying jobs in the service sector as motorbike taxi riders, petty traders, security guards, unskilled construction workers, touts, food vendors, domestic servants (e.g., maids, cooks, drivers), hawkers etc.

The situation is not any different in Burundi or Rwanda or Uganda or Tanzania. These new urban workers are often just marginally more productive than smallholder subsistence farmers.  What we see is a vicious low productivity, low wage-employment trap.

Morever, the average share of manufacturing as in GDP in most African countries is about 10 percent, unchanged from the 1970s. The out put per worker in the manufacturing sector in more countries with more sophisticated manufacturing sector such as South Africa and Egypt is estimated to be six times larger than for an agricultural worker.

The median age in the East African Community is estimated as 19 years. About 65 oercent of the population is below the age of 25. This is especially worrying given that the population of Burundi, Uganda and Tanzainia will more than double by 2100. Impressive GDP growth without well-paying jobs for a majority of Africa’s youthful population must worry politicians and policymakers to death. Kenya and the  rest of Africa needs economic transformation, and it is needed urgently.

The solutions that will be needed are both long-term and complex in nature. We must begin to undermine the factors that pre-ordain African children to fail. A majority of African children fail before they are born because their mothers lack nutritious diets during pregnancy. African children fail because  they are chronically malnourished in the first 1000 days of their lives. This leads invariably to staunting.

A majority of African children fail because when they show up in school they are both too hungry and cognitively impaired to learn. Even when they are ready to learn public schools are under-resourced. Moreover, African children fail because the school has been turned into a grade factory and fails to enagage their eager and creative minds.

A majority of African children fail because we have not invested in skill building, preparing school leavers at all levels for the world of work. We have failed to invest in vocational education. Moreover, employers think more than 50 percent of graduates from our universities are not employable.  

A majority of African youth are trapped in low productivity and low paying jobs because policy makers lack the imagination to stimulate the manufacturing sector through innovative policy and financial incentives that integrate infrastructure, agriculture and services.

Unattended, unemployment and low productivity could torpedo the Africa rising story. Time is not on our side.

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