African economies are facing a risk of uprisings due to their failure to stem youth unemployment and poverty, with millions of young people increasingly feeling isolated.
Experts from the World Bank and the International Labour Organisation said there are growing concerns that despite progress on poverty reduction, a majority of the population continue to feel left out.
The exclusion of young people from the labour force is breaking down social cohesion and stoking crime and violence among the youth.
After decades of prescribing austerity measures to lift ailing economies, the World Bank is now advocating social inclusion as a tool for job creation.
Rather than encourage governments to design and implement policies that favour big investors and large scale projects that create job opportunities only in the formal sector, the Bank is now encouraging focus on the informal sector. That is the message in its latest report titled Inclusion Matters: the foundation for shared prosperity.
The report, inspired by the worldwide riots of 2011, seeks policies to reduce the incidence of inequality.
For East Africa, this means that the phenomenon like elite capture, where the minority ruling class hog resources, excluding the majority middle and lower classes have to be addressed.
In Kenya for example, the top 10 per cent of the population owns 40 per cent of the wealth in the country, while the bottom 10 per cent owns less than one per cent. Such inequities have to be addressed through facilitating the growth of the informal sector.
It is stated in the report that newly active citizens include victims of violence who are demanding justice, or members of the growing middle classes demanding a greater voice in their countries’ political processes.
Not only does the exclusion of young people from the labour force perpetuate generational cycles of poverty, it also breaks down social cohesion and is associated with higher levels of crime and violence among the youth.
“A decent and productive job [not only] contributes to attaining fundamental individual and family well-being, but also spills over, contributing to society’s broader objectives, such as poverty reduction, economy-wide productivity growth and social cohesion,” said Diego Rei, the International Labour Organisation senior regional advisor on youth employment in Africa.
“The informal sector is where the majority of jobs are going to be in the next 10 to 15 years. So if you want those jobs where the masses will be employed to be well paying, you have to worry about the informal sector,” said Philippe Dongier, the World Bank country director for Uganda, Burundi and Tanzania.
Invest in formal sector
The experts were speaking during a discussion last week in Uganda that brought together policy makers, activists, academics and World Bank managers for a discourse about what inclusion means in the context of development, why it matters, and what must be done to achieve it.
Mr Dongier said that while East African countries have to invest in the formal sector where the good jobs will be found in the next 20 or 25 years, the continent is in a transition stage and must also emphasise productivity improvements in the informal sector.
In sub-Saharan Africa, the youth unemployment rate hovers around 12 per cent. While this is slightly lower than the global youth unemployment rate of 12.4 per cent, the African region has the world’s highest rate of working poverty — people who are employed but earning less than $2 a day.
The rate of underemployment is difficult to measure, but experts say that it is likely that millions more are either working at jobs for which they are overqualified or else receiving below-average wages.
Despite being Africa’s most educated generation, a youth in Africa is twice as likely as his or her peers in the rest of the world to be unemployed when he or she becomes an adult, according to the ILO.
Not being able to find good, quality work early is stressful and discouraging for youths, say the World Bank and ILO. When youths do not find work, their risk of unemployment as an adult increases, as do their chances of receiving low wages later in life.
There is no specific link between unemployment and violence or crime, said World Bank researchers, but unemployed youth are disproportionately more likely to commit crimes when a number of other factors, such as weak support networks, are also at play.
Young women in sub-Saharan Africa are at a particular disadvantage in the job market as they usually have less access to quality education and healthcare than their male peers.
Millions of productive jobs will need to be created to include the estimated 11 million African youth who are expected to join the labour market each year over the next 10 years, says the World Bank report.
Many African countries have registered high rates of economic growth in recent years, but this has not translated into new jobs.
This is partly because much of the growth in sub-Saharan African countries over the past decade has been driven by the extractive industries — oil, gas and minerals — says Deon Filmer, a lead economist in the Research Group of the World Bank and co-author of the report.
“While these industries generate output and revenues that are reflected in GDP growth, they’re not particularly big job creators.”
The number of jobs created in these sectors, relative to outputs and revenues, is much lower than in export-oriented manufacturing, he added.
Further, the pace of growth for wage-employment cannot keep up with the growing population: Africa has the largest “youth bulge” in the world, and the number of youths is expected to grow by 42.5 million between 2010 and 2020, says the World Bank.
Even in countries such as Ghana and Tanzania, where the number of wage jobs has grown by around 10 per cent, the increase is not enough to absorb all the new entrants to the workforce.
And with nearly half of the current African population under the age of 14, the problem is only expected to get worse.
The director of the Economic Policy Analysis Unit for the Economic Community of West African States (Ecowas) Commission, Felix Fofana N’Zue, told Irin one of the reasons so many young people are being excluded from the labour market is that there is a mismatch between their skills and the market’s demands.
“Africa has failed to train people for its needs,” he said. “Instead, it has been training young Africans to satisfy or meet the needs of other people.”
In Senegal, for example, he explained that the agricultural sector employs nearly 80 per cent of the workforce, but the majority of university graduates study economics, the humanities and international relations.
Mr N’Zue said that, while these fields are important, such degrees leave young people either living in Africa unemployed or underemployed or migrating to places like Europe.
“Once we start training people with the skills they need for jobs we need to create and fill, that’s when young people will become a valuable asset to the workforce,” he said.
Flaubert Mbiekop, the programme officer for social and economic policy at the International Development and Research Centre, agreed.
“One of the issues we have been looking at is the apparent mismatch between the qualifications the youth have and the expectations of employers in the labour market,” he said.
But it will be difficult to persuade the minority of youth who attend university to forgo study in fields thought to lead to more lucrative professions in favour of farming and agriculture.
“So the question is: how can we make the agricultural sector attractive to the youth? How can we get them interested in a sector that is not yet well developed in many African countries, but has so many opportunities?” he asked.
“Youth unemployment isn’t a one-dimensional problem. We have to look at both the human capital dimension — what young people bring to their work, their abilities, and so on, as well the business environment that’s conducive to productive work or not, conducive to competitive firms starting up or not,” said Mr Filmer.
But it is not enough for governments and the private sector to create more jobs geared towards young people — whether in agriculture, manufacturing or the natural resource industries. Access to quality education also needs to improve, alongside a focus on skills-building with apprenticeships and internship opportunities.
The report, however, cautions that these kinds of improvements in productivity require a population that is properly educated.
In East Africa, this is not yet happening. While the region has managed to increase access to education, Mr Dongier says that access has not been backed by quality.
In Uganda, for example, lack of quality education has led low completion rates (at 25 per cent). The problem of poor quality education is wide spread across the continent.
“If we look at the issue of financial inclusion, there are many [young] workers operating their own business, but access to credit is lacking,” Mr Filmer said.
Support could come in many forms, from setting up savings groups at the village level to using new financial technologies, like mobile money. Both approaches have engaged young people, bringing them into financial markets and allowing them to start their own businesses.
Charles Ocici is the executive director of Enterprise Uganda, an organisation that gives advice to informal sector players on how to improve their wellbeing, without ever having to walk the streets in search of suitable job.
Mr Ocici gave examples of poor people growing their small businesses without ever needing loans.
A woman from northern Uganda, a region that recently emerged from war, started with $3.2 selling boiled cow hooves but now has capital of Ush26 million ($10,343).
In order to grow businesses in the informal sector, Mr Dongier advised governments to ensure security of land, development of vocational skills and ensuring financial services so that governments improve the productivity of many small companies and household enterprises.
“Integrate the small farms more integrated into trade and value chains so that dependency on what is available at the very local level is reduced,” he said.
Integration in the value chain would also mean acquiring improved inputs and selling the output on the international market.
Additional reporting by IRIN