The Rise of the Young Continent: Why Africa Is Becoming the Epicenter of Demographic Growth

According to report from The Economist magazine, already in the coming years to the forefront of global history will work Africa. As the rest of the world ages, Africa becomes a young continent, a source of labor: over half of youth entering the global labor market by 2030 will be African.

It is predicted that in a decade, every fifth earthling will come from the “cradle of humanity”. For comparison, in 2000, the share of Africans in the global demographics was only 13%, and in 1950 – 9%. The population of 54 African states has doubled in three decades, reaching 1.5 billion. According to UN estimates, this indicator will double again by 2070.

Africa Between Progress and Challenges: Social Achievements and Economic Stagnation

Africa has made significant progress in recent decades social sphere Life expectancy increased from 41 to 64 years, and infant mortality decreased by 3/4. Over the past half century, the level of higher education has increased 9 times. African writers receive recognized international literary prizes, and political dynamics demonstrate a generational shift, with new leaders increasingly displacing the old elite. The G20 will meet for the first time in South Africa, which will be a historic event for the region. This opens new perspectives for the most dynamic and youngest continent of the planet.

However, these achievements contrast with the stagnation of the economy. If in 1960 the GDP per capita in Africa was half of the world average, now it is only a quarter. A continent that once developed on a par with East Asia is now lagging behind: Africans’ incomes are 7 times lower than those of East Asians. By 2030, 4 out of 5 of the world’s poorest people will live in Africa (for comparison: in 1990, this figure was only 14%).

Although individual countries, in particular, Botswana, Mauritius and Rwanda, are showing success, the economies of the largest states – Nigeria, South Africa, Egypt – remain weak. Productivity growth is sluggish and the private sector is constrained by political influence.

Additional challenges are created by climate change. Africa is most vulnerable to global warming: a 2°C increase in temperature could reduce agricultural income by ⅓. The situation is further complicated by the lack of financing, the increase in the debt burden and the decrease in foreign investment.

The continent needs radical reforms, investment in productive industries, the private sector and better governance. Without this, the risk of worsening social problems and a growing economic gap with the rest of the world only increases.

The Low Productivity Trap: Why Africa Risks Missing the Chance for an Economic Breakthrough

Farmers from the south of Zambia were affected by the disaster fall harvest, which forced the government to declare a state of emergency. Even in the best of times, these crops were not enough to survive. President Hakainde Hichilema is sure: climate change is already certain, but technology can change the future.

The president wants to see Zambia – a country with a GDP per capita of just $1,226 – prosperous by 2030. His idea is to make an agrarian revolution similar to the one that changed Asia and Latin America in the last century. Low productivity remains the main obstacle to the development of African countries. Rapid economic growth due to demographic transition, as in Asia, is unlikely. A more reliable way is to increase labor productivity, but over the past 60 years, the region’s economy has grown mainly due to the expansion of resources, not innovation. Leaders like Zambian President Hakainde Hichilema are relying on technology, such as in agriculture, to stimulate the economy. At the same time, the lack of significant revolutions in key sectors is holding back progress and, according to research, the pace of innovation remains low.

Africa is not standing still – social changes are happening, but economic development is not keeping up with them. This is the key reason that maintains the gap between the continent and the rest of the world.

In 1960, only one in seven sub-Saharan Africans lived in a city. Today it is already 43%, and by 2035 more than half of the region’s population will be urban. Urbanization in Africa is faster than anywhere else. By the middle of the century, there will be six megacities with a population of more than 10 million and 17 cities with 5 million inhabitants.

However, this process has its own peculiarities. Unlike other regions, urbanization in Africa is not the result of increased agricultural productivity, with mechanization freeing up workers to work in cities. Here, urbanization serves as a substitute for rural development rather than as its result.

Agriculture remains the backbone of the economy, but it is backward. More than half of the population works on small plots, cultivating the land with primitive methods. The labor productivity of farmers in the region is less than half of the world average, and the grain yield is only a third of the South Asian level.

Although total production increased, this was due to the expansion of cultivated area, not technological innovation. While in South Asia yields have doubled without land expansion, in Africa their growth has been accompanied by a doubling of cultivated area.

Although there are modern commercial farms in Africa, most smallholder farms remain unproductive. Fertilizers are used ten times less than in Asia, and only 3.5% of land is irrigated. Due to the lack of cold storage, a large part of the harvest spoils: yes, in Nigeria, for example, almost half of the harvested products rot.

Despite attempts by politicians and donors to popularize modern technologies among small farmers, this task remains difficult. Many have neither savings nor access to financing. This situation forces farmers, and sometimes their children, to leave the land. The study found that between 2008 and 2018, farm yields in six African countries declined by 4-5% annually. The main reason is the reduction of the workforce. Young people are looking for better opportunities in the urban economy, even if they are casual earnings in markets or construction.

The decrease in the share of workers in the agricultural sector also reflects the growth of employment in the service sector over the past 30 years – from 26% to 37%. However, urban work is often unstable and poorly paid. According to McKinsey estimates, service sector productivity in Africa is half that of Latin America, and behind even India.

Industry in sub-Saharan Africa has not yet become the engine of employment that it has been in other regions of the world. Only 11.5% of the workforce works in the industrial sector, up slightly from 9.9% in 1991. The main reasons for this are historical dependence on resource extraction, low productivity in agriculture, which makes food expensive, and relatively high labor costs. According to a study by the Center for Global Development, labor costs in Africa are double GDP per capita, while in countries like Bangladesh, these figures are comparable.

A 2021 analysis of Africa’s “manufacturing puzzle” found that there are two factory models on the continent: high productivity with a minimum of workers and low productivity that employ many people but hardly use modern technology. Unlike Asia, there is no “flywheel” effect here, when employment at productive factories stimulates economic growth.

The main challenge is the high technology requirements for participating in global supply chains. Factories are forced to choose: either invest in efficiency or create jobs. However, the era when cheap labor was the main advantage is gradually passing.

Industry has played a key role in creating jobs and driving economic growth in many countries around the world. Using the example of Mauritius, which in the 1960s successfully transformed its economy from agrarian to textile, experts emphasize the importance of targeted production strategies for developing countries. However, most African countries are not developing such approaches.

Africa’s future may look more like South Asia than East Asia. As the researchers note, India’s development largely depended on productivity growth in domestic service sectors – trade, hospitality and real estate, rather than on exports. Africa can follow suit, building on its developed services sector. But this development model can lead to increased inequality and unemployment, as happened in India.

The Entrepreneurial Illusion: Why Small Businesses Won’t Save Africa’s Economy

African politicians willingly glorify entrepreneurship, calling it the key to the continent’s economic future. The president of Rwanda sees the basis of the economy in small and medium-sized businesses, and the head of the African Development Bank calls on young people not to look for work, but to create it. Surveys also show that most young Africans dream of owning their own business, and the proportion of women entrepreneurs is the highest in the world.

However, most of this enthusiasm is misconstrued. Many businesses in Africa are not created out of ambition, but out of desperation and lack of other opportunities. The continent doesn’t just need small businesses – it needs big companies that can bring people, ideas and technology together to create massive change.

Large corporations are drivers of productivity and prosperity. However, Africa lags significantly behind in terms of the number of large companies. According to McKinsey, only 345 African firms have annual revenues of more than a billion dollars, compared to more than 1,500 in China. Even these companies are significantly smaller than their counterparts in other regions, and the total revenue of African businesses is only a third of the potential level. Moreover, not a single African company is in the list of the 500 largest in the world, underscoring the scale of the problem.

African companies tend to employ significantly fewer workers than their counterparts in other countries. Economists estimate that African firms employ 20-80% less staff than would be expected given the market. In addition, in many developing countries, firms do not grow over time, remaining small and unproductive.

The majority of employment on the continent is concentrated in the informal sector, which employs more than 80% of the population. Self-employment is the main form of activity in cities, but for many it is a forced struggle for survival rather than a conscious choice. Many young people are engaged in unpaid or low-paid work, and there are not enough opportunities for stable employment. Self-employment rates remain high across all generations, and young people’s chances of finding paid work are no better than their parents’.

One of the main reasons is a weak education system. Although school attendance has increased, about 60% of 15-17-year-olds do not go to school. The literacy rate among young people in the region is only 75%, while in other developing countries it reaches 90%.

The problem is exacerbated by a lack of capital and access to electricity. As economist Paul Collier points out, small businesses in Africa are not the drivers of growth. As a result, the economy falls into a trap where people create businesses just to survive and the lack of growth creates no paying jobs.

…For a more complete understanding of the current situation and development prospects of the continent, it is worth explaining what other critical challenges, according to report The Economist, African countries are facing. These are lack of capital, high cost of credit, energy crises, weak infrastructure and political instability. Economic growth is limited by the lack of investment in key industries, a low level of savings and a high debt burden.

The population boom creates both the potential and the risk of stagnation unless there is strategic investment in education, infrastructure and productivity. Africa has a chance to become a global engine of growth, but this requires decisive reforms, market integration and a change in the approach to international aid. This is exactly what we will be talking about next time.

Tetyana Viktorova