Africas Dire Demographics: A population boom unlocking $3 trillion in consumer spending? - Or $50 a week, a motorbike and a Kalashnikov...?| World Economics

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Africa's Dire Demographics

A population boom unlocking $3 trillion in consumer spending?
Or $50 a week, a motorbike and a Kalashnikov...?

Last updated: 10 July 2024

There are great differences between views on the outlook for Africa. On the one hand, recent papers from McKinsey bubble with excitement over the potential demographic bonanza: "Africa has the world's youngest and fastest growing population, burgeoning cities, and bold innovations...with its population expected to nearly double to $2.5bn people by 2050...the continent presents myriad opportunities for robust, inclusive growth¹. That population boom has the potential to unlock more than $3 trillion in consumer spending..."². This follows many papers from supposedly authoritative sources earlier this century, seemingly predicated on the "demographic dividend" theory, essentially suggesting that "more people = more jobs = more economic growth".

Others are not so sanguine. Whilst there is little doubt that the average age of the African population is the world's youngest, or that it is growing rapidly (see Table 1 below), it is also certain that the demand for jobs already far outstrips supply, particularly in Sub-Saharan Africa.

Table 1: Fertility, Median Age & Dependency Ratings

Edward Paice, the Director of the Africa Research Institute, in a recent book "Youthquake" reviews the problem in great depth. Paice notes that the number of jobs available to employ the millions already born lags far behind the need, and that by 2050 one third of the worlds working age population will be African. He quotes IMF estimates that Africa needs an additional 180 million high productivity jobs in the current decade, equivalent to 80% of the current size of Europe's entire labour force. To generate 360 million decent jobs in the two decades between 2015 and 2035 would be equivalent to 80% of all manufacturing jobs, formal and informal in the world at present. This seems an impossible task, particularly given the very poor Governance ratings so common in Africa (see Table 2 below).

Table 2: Governance Ratings

The growing chasm between the need for, and the growth of jobs in Africa, is likely to be at least partly responsible for the recent political unrest. A French security official who has worked extensively in Africa summed up the situation with the stark conclusion: "If you give someone (with no prospects of a job) $50 a week, a motorcycle and a Kalashnikov, that's a pretty good deal" . The unspoken addendum is of course to get the $50 you have to join some kind of army. Add in the new scramble for African raw materials with heavy Chinese and Russian involvement; widespread poor governance; a fertility rate still at 4%; and a high dependency ratio (see Table 2 above) of young and old to the (theoretically) working population, troubling scenarios are easy to imagine. McKinsey's optimism may be justified... but probably best not to bet on it too heavily.

McKinsey; Reimagining economic growth in Africa; June 5th 2023
McKinsey; Aiming for growth in Africa ; July 7th 2023
Financial Times; " The Islamic insurgents threatening west Africa"; 21st January 2024

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