Africa’s youth can inoculate it from Dutch disease

Africa has a youthful population, but so far it has been underutilised in the workforce. Charles Okumu

Africa is the last frontier of a plundered planet, as argued by Oxford economist and Africa expert Paul Collier.

When compared with almost all other regions of the world that have already been explored and had much of their resources extracted, Africa is still virgin and so is now receiving greater attention from all regions, especially China.

And yet the emergence of many multinationals from the West and China in Africa has done little to stem Africa’s large youth unemployment problem.

Some 60% of Africa’s population consists of people aged 15 to 25. This bracket accounts for 45% of Africa’s total labour force and unlike other developing regions, Africa, particularly the Sub Saharan region, is growing continuously more youthful. By 2015 this demographic is projected to be at over 75%.

Of critical importance is whether and how this vibrant, energetic and secure source of labour, critical to the strategic economic development of Africa, is currently being tapped. Sadly, the level of economic engagement of African youth is pitiful, leaving many young people dejected and severely underutilised.

Whether the extensive presence of multinationals in Africa generates enough employment for Africans is a debate worth exploring. Youth unemployment in most of African countries, particularly in Sub Saharan Africa stands at around 20%. This percentage grows exponentially when one delves into the nation-to-nation projections of unemployment. Worse still, the situation gets depressing when the poor outlook of rural unemployment is considered.

The multinationals undertaking many major projects in Africa at the moment could do more to absorb local African labour.

Matching skills with work

Various theories have been put forward as to why multinational corporations investing in Africa do very little to employ local Africans. Over 50% of African youth are illiterate and have limited skills required for the emerging business economy. Those with some form of education more often possess irrelevant skills to those demanded in the current labour market.

The young require vocational training to update and acquire new sets of skill to be able to adapt and re-adapt to the ever flexible and constantly changing labour market. Additionally a key focus should target basic knowledge, literacy and lifelong learning skills. Vocational training should be aimed at improving specific skills related to new technologies combined with on-the-job training.

Even when they find employment, young workers are the most vulnerable to layoffs when economic growth falters. This is compounded by the limited attention to job creation by African governments, the youth obsession with unrealistic wage expectations, and negative employer attitudes towards inexperienced young people. Finally there are the pervasive and compounding labour market disadvantages of poverty.

Cracking corruption

The misplaced priorities of the leaderships of many of the governments of Africa, and of the political elites, undermine any sustained effort towards the remedy of youth unemployment. Widespread corruption is concealed by hubris.

For example, in 2009, Transparency International filed a lawsuit accusing Presidents Omar Bongo of Gabon, Denis Sassou Nguesso of the Republic of Congo and Teodoro Obiang Nguema Mbasogo of the Equatorial Guinea of buying luxury homes with state funds. It was alleged that Nguesso owned 24 estates and was running 112 bank accounts in France. Bongo and his relatives allegedly owned over 30 luxurious estates on the French Riviera and in Paris.

This untrammelled level of greed for personal and private wealth accumulation robs African economies of the impetus to germinate and nurture widespread economic activity.

Finally, in relation to African management of Africa resources and the systematic alienation of Africans from it benefits, Kofi Annan in the African Progress Report 2013, on behalf of the executive team, insisted:

Success will require leadership, transparency, and accountability, too. There is no substitute for public scrutiny in developing effective and equitable policies. African governments must rise to the challenges posed by fiscal policy, tax reform and the development of industrial policies. They must manage their countries’ oil, gas and mining resources efficiently and share revenues fairly. We therefore call on African governments to set out a bold national agenda for strengthening transparency and accountability to their citizens. For too long, African governments have been responding to externally driven transparency agendas. They have been following, not leading. And it is time to change this pattern.

In the end, it is Africans’ responsibility to manage and address challenges that come with its increasing youthful population. Educate and equip the young with necessary skills required in the current labour market, but most importantly, government leaders and African elites should strive to not only abandon their corrupt ways but also enforce systems that uphold transparency and accountability across the board.

Avoiding Dutch disease

There is in sight an escape for Africa from the tragedy of mass youth unemployment. With its rich natural resources and promising level of economic growth Africa can engage in structural transformation.

Building a framework of education and infrastructure, optimising the revenues from natural resources, and investing them strategically, enhancing agricultural production and promoting economic linkages between the resources sector and the economy as a whole.

The ideal path from resource discovery to abundance without dependence. African Economic Outlook

As the graph illustrates there need be no inevitability of the Dutch disease as resources wealth wipes out all other forms of economic activity. Used intelligently resources development can encourage other forms of high technology use. Revenues generated from resources can be extensively invested in human capital development, creating further opportunities for business diversification. Over time resources can become less important as a capability economy takes over.

This leap from a resources economy to a capability based economy (which strangely enough Australia is also attempting presently) requires imagination and determination. The tendency to squander the apparently easy profits from resources businesses on consumption must be resisted. These funds need to be invested in the skills and businesses that will provide a future.

African youth, fascinated by the digital world, needs access to it in the form of affordable equipment and broadband access if they are to progress.

There is a future for Africa, and this can be released if the energy, intelligence and idealism of its young people can be given a chance.