An IMF report released last month shows Sub-Saharan Africa’s economic growth will fall for the second consecutive year to 3.6% in 2023 — due to factors such as financing obstacles, public debt, inflation, exchange rate challenges and a decline in foreign aid. Though it is hoped that growth will rebound slightly in 2024, the people of Africa will naturally be wondering what is in store as they look towards an uncertain future.
While challenges exist, Africans have good reason to be confident in the long term. With 70% of the continent’s population under the age of 30, Africa has a young, energetic and future-orientated workforce that could drive a wave of prosperity in emerging industries such as renewable energy, the online economy, media, fintech, and circular food systems.
Before this can happen though, Africa should tackle its youth unemployment. According to the African Development Bank, 10-million to 12-million young people enter the African labour market every year, but they are chasing only 3-million formal jobs. It is not a new problem, but a long-standing pattern. Between 2000 and 2014 Africa’s labour force grew 3% a year, but employment expanded only 1.8% a year. The result was that by 2020 more than 20% of young people in Africa were not in employment, education or training. It is estimated that by 2032 the number of Sub-Saharan Africans alone entering the workforce will be more than the rest of the world combined.
Where will the jobs come from for these young people? With investment flows into Africa reaching a record $83bn in 2021 after bouncing back from Covid-19, foreign investment remains significant. But it is not making a big enough impact on unemployment — particularly in Northern Africa, where youth unemployment stands at 30%, and 40% of women are not in employment, education or training.
Tertiary education
Instead of just relying on foreign investment to solve Africa’s problems we need to find new ways to create growth from within. But that means prioritising young people and their education in a way that helps them create new opportunities. According to a 2022 study, 52% of young Africans are likely to consider emigrating in the next few years, mainly due to economic hardship and educational opportunities. To ensure a healthy future for Africa we need to convince young people to stay — which means investing not only in education but also in the kind of education that will create social goods, technological innovation and economic growth.
Though the UN Sustainable Development Goal of 12 years of quality universal education is vital, we also need more than school-level education to build the skills that will lift African economies. To create a new generation of entrepreneurs that will lead the industries and social movements of the future, we need investment in tertiary education with a focus on leadership, innovation, and digital skills. However, creating such leaders requires more than just classroom learning and private study: not only do students need to acquire hands-on experience by contributing to real-life projects, but they also need to participate in networks via conferences, internships, peer-to-peer forums and mentoring. Partnerships between universities and business can help facilitate these formative professional experiences. We must also encourage students to articulate and pursue their own personal mission: without this, it is hard to overcome significant obstacles and create lasting change.
The effectiveness of this approach in creating entrepreneurs for economic, social and environmental good has already been demonstrated in a number of countries. In the US, Babson College has been employing a similar entrepreneurial focus across all its programmes since the late 1970s, emphasising leadership, real-world exposure, personal mission and partnerships with industry.
The college hosts an annual entrepreneurship competition for students and alumni, with this year’s competitors including Amelia Thomas, who created a process that turns nearly any waste (plastic, plant, or sewage) into usable biocrude oil. Similarly, in the UK, Imperial College London’s WE Innovate incubator and Enterprise Lab have helped many students bring their start-up ideas to fruition, including Changavy Kajamuhan’s and Shad Asinger’s Tommy device — a wearable product that applies machine learning to help manage diabetes by monitoring and predicting glucose levels continuously and non-invasively.
Recognised shift
If Africa can create an entrepreneurial focus to match these, there is no limit to what it can achieve. Across our great continent, there is tremendous potential for entrepreneurial growth in new industries that are a far cry from sectors such as resource extraction, which has historically provided significant export earnings and made up a substantial portion of GDP for many African economies.
Foreign investment has recognised this shift to new industries too: according to a 2020 EY report, the service sector’s share of FDI projects (including business services, telecom, media and technology, financial services, and consumer) has increased to 72%, while the extractives share has fallen to 3.5%. In particular, the internet economy has the potential to contribute $180bn to Africa’s economy by 2025, with mobile and internet penetration likely to reach 50% by then; renewable energy capacity in Africa could reach 310GW by 2030, putting it at the forefront of renewable generation globally; consumer spending is anticipated to reach $2.1-trillion by 2025; and circular food systems could help create a trillion-dollar industry by 2030.
Now is the right time to ensure that Africa’s young people are in the driving seat. With the right leadership initiatives, they will be helped to fulfil their full potential and avoid being left behind like previous generations. In the next few years however, we need more support for institutions and programmes that promote home-grown entrepreneurship — if Africa is going to have the bright future that it so richly deserves.
Sunassee is CEO of the African Leadership University.
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