BizNis Africa
Latest News
Bridge City public-private partnership leads to economic transformation
In his Budget Speech 2018, South African Finance Minister...
PwC comments on proposed 1% VAT rate increase
The Minister of Finance announced in his Budget speech...
National Treasury to assist state-owned companies
South African National Treasury will assist state-owned companies (SOCs)...
SA government to spend ZAR57 billion on free higher education
Government will spend ZAR57 billion on free higher education...
South African budget deficit to narrow by 3.5%
South African Finance Minister Malusi Gigaba says government expects...
GDP growth expected to be 1.5% in 2018
South Africa’s Gross Domestic Product (GDP) is projected to...
Illovo Sugar Africa positive economic impact estimated at ZAR23.8 billion
Illovo Sugar Africa today, 21 February 2018, announced that...
Glencore funds from operations up 49%
Our performance in 2017 was our strongest on record,...
Kwesé and iflix seal deal in sub-Saharan Africa
iflix and Kwesé, have announced an expansion of their...
South Africa gears-up for 2018 Budget Speech
Malusi Gigaba, South African Finance Minister will, today, 21...

Kathy Davey, Ashburton Investments Fund Manager

World Economic Forum (WEF) Davos which starts tomorrow, is a meeting of international businesses and global political leaders to discuss politics, economics and social factors and strategise on how to better shape the world’s future. Many of these global leaders will be over 50 years old, however, those who are most affected by the decisions made today are the youth and so it’s important for the youth to also play an active role in the sessions of this global event.

The same applies in an African context. The continent has the largest youth population in the world, with 60% of people under the age of 25. African leaders must be cognisant of this burgeoning youthful population when planning and investing in the future. While a high youth population is generally seen as an advantage for a country, it can also be detrimental if the voices of the youth are not heard.

If a country has more people of working age than non-working age and these people are employed, the advantages are enormous. These include, higher tax generation to spend on social services and development, a bigger consumer base for the manufacturing/consumer industry, more people to look after the elderly and so less of a burden on the state and in general a large active workforce contributing to the growth and prosperity of the country.

However, if a country has not made adequate effort to ensure its youthful population can find work, this youth dividend becomes a ticking time bomb. One of the best examples of this is the Arab Spring, which spread across Libya, Egypt and Tunisia in the form of mass protests. Large population growth and poor planning led to large youthful populations in these Arab countries who were unable to find work and were experiencing poor living standards. Even though these countries were largely dictatorships, the youth could mobilise around authorities by using social media – the first mass protest in Egypt was announced on Facebook and drew crowds of tens of thousands of people. The eventual outcome of the protests was the ultimate demise of the leaders of these countries.

Extremist terrorism is also an effect of not providing adequate employment opportunities for the youth. Unemployment provides a ripe environment for extremists to attract young, disillusioned citizens. Terrorism is a serious problem across Africa which not only takes innocent human lives, but also negatively affects a country’s tourism sector as we have seen in Egypt, Tunisia, Cote d’Ivoire and Kenya after serious terrorist attacks were orchestrated in these regions. Tourism for these countries is an important revenue generator and source of foreign exchange and therefore can damage the economy of an entire county.

So, what can Africa leaders do to avoid the youth dividend turning into a serious problem? Investing in education is a good starting point although not a panacea if not enough jobs are created for the educated youth. African leaders and businesses can work together in creating jobs. Government can allocate (and they do currently in many African countries) a portion of public procurement to young entrepreneurs who ordinarily wouldn’t be able to compete with bigger, more established players. Banks could redefine how they grant credit to make it easier for young entrepreneurs to acquire funding to grow their businesses by starting to look at non-traditional methods of determining credit worthiness such as mobile money accounts. Many countries in Africa also have inadequate systems to prepare the youth for the workforce. Governments could develop programmes whereby graduates gain work experience through public institutions to make them more attractive to potential employers.

Most importantly though, today’s African leaders (irrespective of their age) need to be aware of the challenges faced by the youth so that they can plan for a better future. Decisions that seek to accommodate the youth and harness the continent’s enormous potential demographic dividend will ensure that their countries can grow and prosper compared to developed countries that have ageing populations.

Kathy Davey, Ashburton Investments Fund Manager

Leave a Reply

%d bloggers like this: