Africa to add more to workforce in 2035 than world combined

Growth in SSA should remain robust but decelerate in the wake of the decline in oil and commodity prices. This is according to the IMF’s latest Regional Economic Outlook for sub-Saharan Africa which projects that the region’s economy is set to register another year of solid performance, by expanding at 4.5% in 2015. While this rate will be at the lower end of the range experienced over the last few years, SSA will remain among the fastest growing regions of the world.

Despite the near term challenges of falling commodity prices SSA will have more people joining the labour force in 20 years’ time than the rest of the world combined, according to the International Monetary Fund. An additional 100m people in the region will reach the working age of 15 to 64 years in 2035, almost double the number added by the rest of the world.

The IMF estimates the working-age population in SSA will reach 1.25 billion by 2050. “The rising share of SSA’s working-age population is increasing the continent’s productive potential at a time when most advanced economies face aging populations and a declining share of their working-age populations,” the IMF said.

The rapid growth in the region’s potential labour force means it needs to create jobs for 450m workers projected to join the workforce between 2010 and 2035, according to the report. Supportive policies, such as investment in education, wage flexibility and increased saving, are needed to take advantage of this “demographic dividend.”

“Failure to create sufficient jobs could result in severe economic and social problems,” the IMF added. The fund estimates that the region will have to create an average of about 18m jobs a year until 2035.

SSA’s total population of about 800m will probably rise to 2bn by 2050 and 3.7bn by 2100, the IMF said. This will strain public resources and the ability of governments to implement programs.

The continent’s growing urban population, increasing access to education, political stability and good governance are all contributing to a robust investment drive. We have highlighted that consumer sector and infrastructure will thus be at the forefront of investor attention across SSA. Governments continue to spend significant money in health, education, and infrastructure to cater for a more conscientious population a trend we expect to continue.

Like the IMF, we do acknowledge that there is a caveat to this demographic dividend discourse, as if the appropriate policies are not actively pursued, this demographic evolution could in fact turn out to have grave negative consequences.