Africa at Work: Employment Establishment and Inclusive Growth

Africa is currently the world’s 2nd fastest growing region, as statistics have shown that the region’s poverty rate is falling while over 90 million of its households have already joined the world’s consumer class, which marks a 31 million increase in less than a decade.

However, according to McKinsey Global Institute, the continent must accelerate the creation of wage-paying jobs in order to sustain their success as well as ensure that any growth they show can be experienced by the majority of Africans.

According to the McKinsey Global Institute’s report, only 28 percent of Africa’s labor force benefits from the 37 million stable wage-paying jobs that were created in the last several decades. Sixty three percent of the region’s total labor force instead engages in some form of self-employment that is highly vulnerable.

If this trend continues, Africa may be able to create 54 million new stable wage paying jobs but it will not be enough for the 122 million new entrants into the labor force. In order to accelerate job creation, Africa needs to employ five key actions designed to help them create as many as 72 million wage-paying jobs within a decade:

Address Macroeconomic and Political Stability: One of the key barriers that prevent African businesses from growing and hiring is the fact that confidence over the region’s macroeconomic and political stability is low and continues to dwindle. Fortunately, nations in Africa already went through an economic overhaul that included setting up metrics to measure their growth or loss. However, the system is still far from perfect.

Improve Access to Finance in Target Sectors: This will encourage foreign direct investments, which in turn will ease financial constraints on their tourism sector. For example, Cape Verde’s beautiful beaches were leveraged by providing a 5 year tax holiday for investors along with import duty exemptions and unrestricted expatriation of profits.

Address Infrastructure Shortcomings: There are a lot of perfectly valid concerns over the region’s infrastructure which includes unstable sources of power, unplanned lane improvements and the unavailability of resources that will allow them to create farm to market roads. These things hinder development.

Addressing these shortcomings will have a direct impact on investor confidence, as well as positively encourage business growth both local and foreign owned. The region is already making headway, such as the concerted public-private program that built several roads and rails that cut the transit time for goods and cargo shipment in half, but there’s still room for much-needed improvements.

Remove Unnecessary Regulations and Reduce Red Tape in Certain Sectors: This will help streamline the procedures required to open the business, which will dramatically increase the number of new companies in the region, and therefore increase improves the availability of regular jobs with regular pay.

Encourage the Development of Skills in Target Sectors: Africa’s educational attainment is behind that of other neighboring regions. While many employers in neighboring regions consider lack of skilled workers as a barrier to growth, Africa could still benefit from continued improvement. The areas that require more improvement include the improvement of the quality of graduates to make them prepared for both white collar and blue collar work.

Source: McKinsey Global Institute

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