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Posted on Tuesday, 29 September 2015 11:19

Growth: Jobs, jobs and more jobs

Photos© Gwenn Dubourthoumieu for JAWithin 35 years Africa will have the world's biggest workforce – finding jobs for them is the top priority for governments throughout the continent as economic conditions get tougher

 

When the presidents of Ghana, South Africa and the United States (US) ring alarm bells on the pressing need for more jobs in Africa, it should be a jolt to the system.

With more than 350 million young Africans due to join the labour market in the next three decades, almost everyone admits the urgency but there is a startling lack of consensus about what policies create jobs and how to finance them.

Although Africa has seen strong and sustained growth during the past decade, this has neither generated the required tens of millions of jobs nor changed the continent's dependence on the production of primary commodities.

As commodity prices sink due to oversupply and China's slowdown, the big resource companies are cutting jobs and government revenue is falling, raising new questions about what policies can produce growth and jobs.

And the importance of jobs in Africa goes beyond the continent's borders.

A recent World Bank report on youth employment explains: "Africa's rapidly growing population will constitute the world's largest reservoir of working-age individuals for generations to come, and the majority of this population will be young."

As millions of Africans leave the countryside and head for cities, both output and employment are shifting from agriculture to services but with little growth in industry and manufacturing.

US President Barack Obama told a special session of the African Union on 27 July: "The most urgent task facing Africa today and for decades ahead is to create opportunity for this next generation. And this will be an enormous undertaking. Africa will need to generate millions more jobs than it's doing right now. And time is of the essence. The choices made today will shape the trajectory of Africa, and therefore, the world."

And to spell out the stakes with Africa's population due to rise to two billion by 2050, Obama added: "This could bring tremendous opportunities as these young Africans harness new technologies and ignite new growth and reforms [...] It's a demographic edge and advantage – but only if these young people are being trained. We need only to look to the Middle East and North Africa to see that large numbers of young people with no jobs and stifled voices can fuel instability and disorder."

Mining stand-off

As Obama was speaking, yet another job crisis was brewing in South Africa.

With an official unemployment rate of 25% and an unofficial rate almost double that, jobs have become the priority of priorities for the governing African National Congress (ANC) party.

What started as a spat between mines minister Ngoako Ramatlhodi and London-listed miner Glencore, which wanted to cut 380 jobs in response to lower coal prices, quickly grew into a wider confrontation.

Ramatlhodi ordered Glencore to shut its coal mine because its cuts broke employment law before he reversed his decision in August.

Other companies such as Anglo American and Lonmin have made common cause with Glencore but trade unionists warn that there are plans to fire as many as 10,000 of the 440,000 workers in the mining industry.

On 9 August, President Jacob Zuma said that mining companies should avoid retrenching "at the first possible opportunity".

Before last year's elections, Zuma had promised to create 6 million jobs in his second term.

Academics Alan Hirsch, Brian Levy and Ingrid Woolard recently compared South Africa's performance to that of its emerging-market peers.

They found that South Africa compared well in terms of most measures except for inequality.

Explaining their findings, Hirsch and Levy argued: "The sustainability of the democratic miracle of 1994 becomes worryingly uncertain if South Africa does not rectify this unbalanced combination of high earnings for highly skilled workers and owners of wealth, and high unemployment plus the very poor quality of jobs in the middle range of incomes."

They say that the way to address that would be through a social compact to build a more inclusive economy, but they lament that the political will is lacking.

Ghana is also haunted by rising joblessness. In mid-August, President John Dramani Mahama told the local radio station Joy FM that the country has to double its economic growth rate: "We want to accelerate the economy so that more people can find jobs in the formal and informal sectors. The private sector has to begin to grow to be able to take up the extra jobs that are needed."

With a nod to the country's frustrated youth, Mahama said a mismatch between the skills that companies require and the qualifications of those emerging from the country's schools has worsened unemployment trends.

The education ministry is still reeling from the findings of a survey by the Organisation of Economic Cooperation and Development that ranked Ghana's schools at the bottom of a league table–just behind South Africa and Morocco – of 76 countries.

For finance minister Seth Terkper, the main question is structural. "If you don't add value, you don't create jobs," he told The Africa Report in London during a trip to raise funds for a $7bn gas production project that received a $700m guarantee from the World Bank in July.

Most of the gas, Terkper explains, will be used to generate power for processing and manufacturing operations: "There are petrochemical plants planned using by-products from the process and also fertiliser plants [...] These will create jobs directly and [also] in the companies using their products."

Beyond adopting new technologies, countries have to make strategic changes to tackle jobs, according to Makhtar Diop, vice-president for the Africa region at the World Bank.

"There is kind of an aversion to investing in something that gives you a longer-term rate of return," he says. But to raise the finance for long-term job-creating projects – such as agro-processing and light manufacturing – there has to be more effort to mitigate risk and guarantee investments, says Diop.

Uncertainty needs to be reduced in sectors that create jobs. In agriculture, this could mean promoting a move to irrigation away from a reliance on rainfall, through private-public partnerships where the state provides the land and the private sector provides the necessary investment.

Farming first

Those sorts of partnerships, pioneered in Ethiopia and Nigeria, are commercialising farming across the board, not just for the production of export crops.

"The vegetable market in Lagos State alone is worth $20m a day," agriculture minister in Nigeria and now president of the African Development Bank, explains: "We are moving agriculture from a development project to a profitable business."

Ethiopia has its new model army of farm extension workers, and Rwanda is increasing its agricultural budget by 10% each year.

Rwanda tripled its yields of maize, wheat and cassava between 2007 and 2011, according to professor Graham Harrison of the University of Sheffield.

The latest data from the United Nations International Labour Organisation and the World Bank estimate that just 16% adds Kayode Fayemi, head of policy for Nigeria's governing All Progressives Congress party.

Farming will be the main source of jobs in Africa for decades to come. Currently 70% of jobs in the poorest African countries and just more than half in middle-income states are in farming.

However, agricultural productivity is lower in Africa than in any other region of the world, according to the World Bank. This translates into high local food prices, which make cheap imports, such as rice from Thailand and palm oil from Malaysia, attractive.

Some countries are making substantial progress. Akinwumi Adesina, a former agriculture minister in Nigeria and now president of the African Development Bank, explains: "We are moving agriculture from a development project to a profitable business."

Ethiopia has its new model army of farm extension workers, and Rwanda is increasing its agricultural budget by 10% each year.

Rwanda tripled its yields of maize, wheat and cassava between 2007 and 2011, according to professor Graham Harrison of the University of Sheffield.

The latest data from the United Nations International Labour Organisation and the World Bank estimate that just 16% of African workers are in wage labour.

Their forecast is that the share of people in wage labour could increase to 25% over the next 10 years but with a minority working for big companies.

After years of chasing away street traders and hostility to most other informal businesses, governments now see these sectors as a source of tax revenue and employment.

In some cases, the jobs crisis has sparked an entrepreneurial response from local businesspeople.

In Nigeria, Odunayo Eweniyi co-founded PushCV to help young people find work. "Employers didn't trust fresh graduates [...] so we started our own thing where we helped youth build employability," she says.

Eweniyi specialises in building information technology skills: "Employers need students with at least intermediate professional skills. The educational system is not giving them that. We have a divide that many companies are trying to fix with little support, and unemployment is rising."

Manufacturing Myth

Making those links between the skills that companies are demanding and schools are providing is also critical to the prospects for manufacturing jobs in Africa.

Currently, the average share of manufacturing in Africa's economies, at around 12% according to the World Bank, is less than it was in 1980. Experts differ sharply on how quickly that could be changed.

Some development economists such as Dani Rodrik of Harvard University, an early advocate of African governments adopting industrial policies, are raising doubts about the ease with which African countries can move into light manufacturing as a first stage to industrialisation as wage costs rise in China and India.

Most of the new jobs will come from modernising the service sector, argues Rodrik, in one form or another.

He warns that "premature deindustrialisation" is already happening in Latin America and parts of Asia as part of structural changes in the international division of labour.

Even hardened sceptics about Africa's capacity to create big industries and the jobs to go with them concede that there is a blurring of the edges between manufacturing and services.

More nationalistic proponents of African industries have a far more upbeat assessment of developments in the short term, citing a new generation of projects in at least a dozen countries to use the continent's massive gas resources for electric power and other industries.

Those vast new power projects will shape the range and number of jobs in Africa, along with the massive investments that governments have to make in education and training programmes to capitalise on new economic opportunities.

How far and fast these initiatives go will depend critically on the determination of African governments to meet the jobs challenge. They cannot say they have not been warned.



Nicholas Norbrook

Nicholas Norbrook

Nicholas Norbrook is Managing Editor of The Africa Report, helping to set up the magazine in 2005. He has been a producer for Radio France International, and has lived and worked in West Africa. In 2011 he won the Diageo Business Reporting award for Journalist of the Year.

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