Those of us in Addis are once again in that part of the year when the AU holds its annual summit. The time marks increased business activity for some sectors of the economy as numerous guests and journalists fly in to attend the event. The event is also marked by frequent road blockades as dignitaries go to and away from the meeting hall. Although not the most convenient of options, the proceeding has become part of the life of Addis residents and no one seems to seriously mind the inconvenience anymore.
The 29th AU Summit is being held from June 27 – July 04, 2017 under the theme: “Harnessing the demographic dividend through investments in youth.” Accordingly, this article deals with the concept of demographic dividend and the AU’s roadmap to harness demographic dividend through investments in youth.
A paper by John Ross entitled “Understanding the Demographic Dividend” states that “the demographic dividend occurs when a falling birth rate changes the age distribution, so that few investments are needed to meet the needs of the youngest age groups and resources are released for investment in economic development and family welfare.” This means that the labor force is growing more rapidly than the population that is dependent on it, creating a window for faster economic growth and family welfare. In theory, at the micro level, this transition can result in better living standards for families and higher incomes per person while at the macro level, it can have significant gains in the economic development of a country.
The website populationeducation.org states that there are four areas where benefits or dividends are typically found when a country finds itself with such a shifting age structure. These are:
- Labor Supply:
- The economy is able to take in and productively employ more workers.
- Women are more likely to take jobs outside the home.
- Savings
- Personal savings grow and can serve as a resource for fueling the economy.
3. Human Capital
- Decreases in fertility rates result in healthier women and fewer economic pressures at home.
- Parents are able to invest more resources per child, leading to better health and educational outcomes.
4. Economic Growth
- An increase in GDP per capita due to the decreasing dependency ratio.
The conceptual explanations presented above show the wide ranging benefits associated with responding timely to the window of opportunity opened by the demographic dividend. A book entitled “Africa’s demographic transition: dividend or disaster?” argues that Africa needs to wait up to 2080 for the working age rise that started in 1990 to peak. Even then, the impacts of the demographic transition on growth are expected to be slow and small. The book points out that accelerating the fertility decline is a viable option for speeding up and scaling up the demographic dividend.
The AU Roadmap on “Harnessing the Demographic Dividend through Investments in Youth” denotes that the continent’s population is projected to grow rapidly in the coming years from 1.2 billion in 2015. It is projected to reach 1.7 billion in 2030 and more than double by 2050, to 2.5 billion in 2050 and 3 billion in 2063.
Its share of the global population will increase from 16 percent in 2015 to more than 29 percent in 2063. More remarkable is the fact that about 46 percent of the 1.3 billion increase in Africa’s labor force over the period 2015-2063 will be young people aged 15-34, averaging 12.1 million a year.
The roadmap indicates that there is a potential for economic growth spurred by the increased labor income and increased savings, with a fast transformation in the age structure and a decline in dependency ratios. The document states that this can also correlatively lead to improvements of human capital as: (i) lower fertility is usually associated with delayed age of first birth and longer spaces between births, both of which improve maternal and child health; (ii) a lower youth dependency ratio allows larger investments per child; and (iii) lower fertility increases the potential for female employment and hence empowerment.
Towards harnessing the potential economic benefits of the youth, the roadmap spells out the necessary areas for key investments. These areas are:
- Employment and Entrepreneurship: the roadmap states that African youth (15-
24 years) constitute about 37% of the working age population, but account for more than 60% of all African unemployed people in Africa. Therefore, it sets out to enhance the status of employment in the continent considerably. Considering agriculture employs 60% of the labour force in Africa and accounts for 25% of the continent’s GDP, the roadmap states it is extremely important that this sector is prioritized to help absorb most of the youth in Africa facing unemployment.
- Education and skills development: the roadmap states that improvements in
the outcomes of education in Africa will be critical to the continent’s efforts towards harnessing the demographic dividend and serves as one of the most important areas that require strategic investments. Some of the key challenges facing the educational system are well documented. These include access, quality, relevance, options for technical and vocational education and training, the need for emphasis on science and technology, the mismatch between what students learn and the demands of national development and the labour market, high cost of tuition, inadequacy of learning materials, etc.
- Health and Wellbeing: The roadmap states that the importance of ensuring good health is key to reducing youth vulnerability and to maximizing human capital investment. It is also critical in speeding up the demographic transition and improving the productivity of the workforce. As such, to harness the demographic dividend, it is critical to make strategic investments that would improve health outcomes, especially as relates to access to sexual and reproductive health, including family planning to ensure that women can decide on the number and spacing of their children.
- Rights, Governance and Youth Empowerment: The roadmap states that harnessing the demographic dividend on the continent requires investments in ensuring participatory, representative and inclusive political processes as well as responsive state institutions. This must be premised on the enjoyment, protection and respect for fundamental civil, political and socioeconomic rights of young people, including young women, who experience dire rights-based challenges.