How Africa Can Reap its
Demographic Dividend

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If current trends continue, in the year 2100 nearly half of the global youth population aged 18 will be in Africa.¹ This unparalleled opportunity in terms of demographic capital and dividends also poses a significant threat to the regions’ stability. The continent’s culture, education and skilling architects have an onerous responsibility to nurture the youthful population on strategic and mental models to facilitate economic growth, wellbeing, and to navigate the geopolitical environment.

The population of the continent’s 54 nation-states and over 1,000 ethnic nations will double by 2100, eventually climbing to over 4 billion by the end of the century. At 1.4 billion, Africa’s population is already double that of Europe (743 million) and galloping to catch up with that of Asia (4.7 billion). According to the Mo Ibrahim Foundation, by 2100, populations will decline in Asia by 285 million, in Europe by 150 million, and in Latin America and the Caribbean by 50 million. Meanwhile, Africa will record an increase of 2.2 billion.

Africa has the youngest population in the world, with 70 percent of the Sub-Saharan Africa under the age of 30. With a median age of 18.8 by 2100, Africa is set to remain the youngest region in the world. Young, energetic populations can drive productivity, innovation and consumption. Youth are characterized by the eagerness to learn new things, enthusiasm, vigor, resilience, open mindedness, creativity and optimism. However, if not well channeled, youthful energy has the potential to ignite social upheaval and create unprecedented challenges such as unemployment and migration pressures.

«If not well channeled, youthful energy has the potential to ignite social upheaval and create unprecedented challenges such as unemployment and migration pressures.»

The Megatrends and Africa’s Demographic Trends

Continental and global megatrends such as free trade areas, technological advancements, climate change, urbanization and geopolitical competition will shape how Africa taps into its demographic capital and dividends.

• The establishment of Regional Economic Blocs such as the Common Market of Eastern and Southern Africa (COMESA) or the Economic Community of West African States (ECOWAS) has already created a momentum for free movement and opportunities for Africans within Africa.
• The Africa Continental Free Trade Area (AfCFTA) is expected to boost intra-African trade by 52.3 percent. The AfCFTA has made currency convertibility across Africa easier through the Pan-African Payments and Settlements System (PAPSS) to overcome currency convertibility constraints. PAPSS bypasses the need for a third currency, such as the US Dollar or the Euro, to catalyze the much-needed intra-Africa investments to cater for growing population needs.
• Technological advancements, especially the digital revolution, are rapidly expanding in Africa. They offer potential to boost access to education, healthcare and economic opportunities. According to the World Bank, the digital revolution has already created around 21.7 million digital gig workers in Sub Saharan Africa alone. The digital gig economy continues to create avenues for the growth and development of entrepreneurship, as well as employment opportunities for millions of people in Africa.
• Climate Change, characterized by rising temperatures and changing rainfall patterns, is likely to negatively impact Africa’s capacity to manage and sustain its population. The surging effects of climate-induced food shortages resound throughout most of Africa’s economies triggering inflation, conflict, and migration.
• Rapid urbanization is transforming African cities into megacities with the potential to provide hubs for the much-needed economic growth and opportunities for growing youthful population. Africa’s urban population is estimated to grow at 3.5 percent per year, a faster rate than on any other continent. Six out of the 20 fastest growing cities between 2000 and 2020 were in Africa.
• Geopolitical competitions are likely to shape the political and economic landscape in Africa. Geopolitical competition may trigger positive investments leading to the celebration of populations as ultimate capital and dividends. Alternately, big power competitions can create dependencies and tensions that lead to instability in Africa. Competition to influence Africa is illustrated by two major competing investment projects namely, the Belt and Road initiative by China and the Global Gateway led by the United States and the European Union.

Historically, conquering powers have had significant influence on a peoples’ mental models. A mental model is like an invisible hand that guides and determines a community’s direction to success and happiness. Mental models have guided systems of economic coercion such as slavery, colonization, racism, and tribalism. Africa’s demographic surge calls for a situation-aware, strategic and deliberate, mental model to enable harnessing of creative forces within its population.

Harnessing Demographic Capital and Dividends

Optimistically, a youthful population is Africa’s greatest asset. It provides a formidable workforce and increases economic outputs that can be tapped both within the continent and outside Africa. Increased population provide market opportunities for goods and services that attract foreign investment elevating the continents influence globally. Young people are open to new ideas and are likely to drive social reforms, innovations and cultural shifts.

Harnessing Africa’s demographic capital and dividends will require investment in education and skills development; job creation and entrepreneurship; healthcare and social services; political stability, good governance and infrastructure development. Investing in quality education and vocational training is needed and must critically align to modern economies within and outside Africa. Africans with high proficiency in European languages have a headstart in Western labor markets. The creation of an enabling environment for business to thrive while supporting start-ups and Small and Medium Sized Enterprises to offer jobs and absorb creative capacities is a big gain for the youth.

«Investing in quality education and vocational training is needed and must critically align to modern economies within and outside Africa.»

The Geopolitical Implications

The rise of emerging market formations such as BRICS that challenge the West’s liberal democracy as the only pathway towards economic development and wellbeing will impact choices made by Africa. Africa under the new formations is gaining a voice and has demanded a new evaluation culture to reassess its gross domestic product, economy and green wealth. The outcome might change the African population’s mental model away from the traditional doctrine of a continent that perpetually requires salvaging to one that has opportunities and a vibrant market.

Discussions are ongoing on the role that Africa will play to assist Europe which is facing an estimated 95 million fewer working age people by 2050. Automation and digital jobs will not be sufficient to cater for labor scarcity in the Global North. The demographic dynamic puts Africa at a labor comparative advantage over the ageing Global North. Labor transfers currently dominated by the United States of America on the demand side and Asia on the supply side is likely to shift towards Africa as a main supplier.

Africa can take advantage of its demographics by domesticating lessons from Asia that put in place deliberate policies on labor migration and aligned skilling initiatives to meet developed market demands. In practical terms, each African country ought to establish accelerator skilling hubs to complement education systems to serve as a rapid response to global skills demand. The continent should ride on the existing regional economic bloc formations to designate technology hub cities. These can help to attract actors from developed markets, to establish innovation centers and to tap into youthful start-ups creativity. Heavy investments in digital and energy grids will provide opportunities for African populations to participate in the digital gig economy. Governments must be proactive in reviewing policies detrimental to productivity. Meanwhile, the African Union must drive continental policies that ensure standardized labor and social protection laws.

Africa’s youthful demographic profile offers growth opportunities in all spheres including emerging technologies such as artificial intelligence, urbanization, climate sensitive industrialization, and the requisite innovations to tap into the continent’s dormant capital. The emergence of new power centers in what is referred to as a ‹multipolar world› is likely to reshape global governance systems leading to scaling down of possibilities of a volatile future for Africa. The onus is on ensuring that relevant policies and frameworks are in place to prioritize investment in strategic infrastructure that will convert the continent’s demographic capital into much-needed dividends.