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Ethiopia: model for growth slump defying employment in Africa
Bereket Gebru
The issue of demographic dividend is slowly but surely assuming the central stage in national and international policy dialogues. The labor force that is central to economic development and human advancement then makes a key component of society. That labor force is, in turn, constituted mainly by the youth. Therefore, the issue of ensuring the benefits of the youth has become a significant issue at both national and international stages.
Our continent Africa is one of the continents in the world with an alarming rise in the number of young people. A 2012 report by the Mo Ibrahim Foundation states that 41% of the world youth will be African in less than 3 generations. It also goes on to project that Africa’s labor force will be larger than China’s by 2035. It also goes on to profess that over a quarter of the world’s labor force will be African by 2050.
In line with these projections, however, are uncomfortable realities about social and economic conditions in African countries. The Foundation’s report in 2012 highlighted that young African are more literate than their parents, but more unemployed. Another fact states that almost half of the world’s out-of-school children live in sub-Saharan Africa. Yet another contends that only two-thirds of students progress from primary to secondary education in Africa.
Changing the above stated social and economic realities of the continent in time to better cope with the projected rise of the youth population is vital for the betterment of life in the continent. Putting in place the necessary policy and implementation frameworks that would help the youth of tomorrow achieve remarkable things to the continent is a crucial feat that should be carried out with the highest quality by today’s African states and society. Proactively dealing with the major issues of tomorrow should be one of the priorities of today’s African governments.
Failure to address these potential problems in the making could, however, prove to be a disaster in the near future. The African youth are already daring the deadly Mediterranean and Red seas to find route to a better life in Europe and the Middle East. With their numbers set to surge considerably higher in the face of rising social and economic problems, the African continent should brace itself for more of the turmoil that has defined it for a long time now.
Therefore, the state of life in the African continent, almost certainly, depends on the state of its youth. Educated and employed youth would take the continent to the next step of development. They would also be more in control of their affairs with more assertiveness as Africans because of increased economic standings. Faltering on the social and economic realities of today could, on the other hand, exacerbate the agony and hardship of life in Africa.
The Mo Ibrahim Foundation’s most recent report, titled ‘Africa at a tipping point,’ states: “Africa’s rise has not taken its young people along with it.” The report argues that “the youth bulge that was supposed to energize the continent’s resurgence is increasingly looking like a threat.” For all the positive economic news coming out of Africa over the new millennium, it is a big shame and a scary reality that its youth are not benefitting enough from it.
The report by the Foundation states that the economic growth in the continent over the last decade was mainly export led and that the end of the commodity boom, along with demand from abroad, especially from China have driven down the continent’s GDP (from 6.4% in 2012 to 2.1% in 2016). Over the last ten years, states the report, while Africa’s real GDP has grown at an annual average of 4.5%, youth unemployment levels have remained quite stable.
The export of resources such as oil is cited as one of the main reasons behind Africa’s GDP growth not dragging with it the unemployment figure down. Another could be not enough investment in labor intensive pro-poor projects that help hire a lot of people. Yet another could be the introduction of a large number of teenagers to the labor force and the inability to provide them with jobs. In a case like that, economic growth can only help employ a limited amount of people while the large introduction of youth into the labor market would keep unemployment unchanged or even shoot it higher. Despite the explanations, Africa’s economy has been growing without ensuring the employment of its considerable demographic group – the youth.
The report then shows that there is a bright spot among all the gloomy projections surrounding the continent – Ethiopia. The report explains that while others try to diversify their economies to withstand the effect of the ongoing continental economic slowdown on exacerbating the problems of unemployment, Ethiopia has registered positive results from its prioritization of the agricultural sector. The report states:
From 2000 to 2050 the rural population living in Ethiopia will have doubled (from 56.3 million to 117.1 million). Although its economic growth has reduced in recent years, the country performs better than most African countries in terms of economic growth and job creation. General unemployment and youth unemployment rates have remained relatively stable since 2006.
The reason behind this impressive feat, the report explains, is that the country has accorded the agricultural sector the due attention that it deserves. With policies like Agricultural Development Led Industrialization (ADLI), Ethiopia has adopted the agricultural sector as the major sources of economic growth. The major production leaps that the country has achieved over the past fifteen years have propelled the living standards of 80% of its people who lead agrarian lives.
In such conditions, a slowdown in economic growth would mean less products and income for this large group of the population. It would, however, not mean more unemployment as farmers are not laid off from their small holder farming practices. This structure would enable them cope with the hard times during periods of low economic performance as they would utilize their savings during the good times. As the economy transforms itself from an agrarian to an industrial one, the agricultural sector would be in a good position to consistently provide the industrial sector with the inputs it needs.
The pro-poor nature of Ethiopia’s economic growth also supports employment endeavors as the emphasis is on expanding social services to the population. Such efforts take a really long time before the demand saturates and their pursuit is not significantly reduced even at times of economic slowdown. They are, on the other hand, used as schemes of stimulating economic growth. The report puts this reality as follows: “Ethiopia’s public budget prioritizes the growth-oriented pro-poor sectors of education, agriculture and food security, water and sanitation, health and roads. In 2012/2013, the public sector investment in those areas accounted for over 70% of general government spending.”
