African Continental Free Trade Area (AfCFTA ) could be a way out for Africa’s unemployed and leeway for people seeking to invest in Africa as well as transform jobs in Africa.
Africa is home to the youngest population in the world. The United Nations points out that sub-Saharan Africa has 70 per cent of its population under 30. Numbers are excellent tools when it comes to analysing scenarios. Hence Africa has enough human capital to propel its growth.
Africa’s growth can only be realised if young minds across the region are fully empowered and utilised effectively for the betterment of the continent. The UN finds young people essential in building better economic systems and fuel sustainability.
Sadly, the youth are facing a much grimmer reality—unemployment. Nearly 60 per cent of the youth population in Africa are unemployed.
However, the state of young people is dire when that segment of the population decides to work within the realms of the informal sector—which is highly unregulated, unprotected and overly populated.
By 2020, the sector will account for 80.8 per cent of jobs, the primary source of employment and the backbone of economic activity in urban Africa (World Bank).
Further, the numbers show how many job creation scenarios are tricky yet doable. The urban informal economy is widespread among youth (95.8 per cent ages 15 to 24) and women (92.1 per cent) and is an essential contributor to poverty reduction (World Bank).
Most young people are now migrating towards urban areas and opting for street vending, which caters for their daily bread and secures their future. Africa has the potential to maximise available tools and resources, mainly through the AfCFTA.
Job creation in Africa
Africa is expanding fast—its population is growing more quickly than available resources to cater to their working aspirations.
The Foreign Policy – a global magazine of news and ideas in its October 2021 publication – warned Africa’s unemployment is becoming a big concern. Africa has six nations with the highest unemployment rates: South Africa (35.30 per cent), Nigeria (33 per cent), Lesotho (24.60 per cent), Gabon (22.30 per cent), Somalia (19.8 per cent) and Tunisia (16.10 per cent).
According to the World Bank, Africa’s working-age population is expected to grow by 450 million by 2035. Still, new analysis shows that without effective policy change, there will be only about 100 million new jobs for this growing cadre of working people.
“With the right combination of policies implemented speedily and effectively, Africa can turn its growing working-age population into a “demographic dividend” in which incomes rise, families can save and invest, cities offer affordable housing, productivity rises, and more investments can take place,” according to World Bank.
Most nations with the highest unemployment rates have high levels of impoverishment, inequality (South Africa, for instance) and some institutional setbacks that limit the effective execution of social protection and services projects.
The World Bank argues that failure to strengthen government institutions, improve infrastructure, and promote near- and long-term job creation will lead to a widening gap between the rising population and available employment.
The African Development Bank (AfDB) finds the present situation to be a breeding ground for success, as it could spur rapid development. Hence, policy reforms are essential in improving the quality of institutions, infrastructure, skills and adoption of new technology.
In that context, available tools before Africa, such as AfCFTA, give the continent ample room to stretch its abilities to maximise wealth creation across the young population from both ends—informal and formal sectors.
The AfCFTA presents a significant opportunity for African countries to bring 30 million people out of extreme poverty and to raise the incomes of 68 million others who live on less than $5.50 per day. The AfCFTA is the new anchor to pull multinationals to invest in Africa.
This agreement not only brings hope to African governments but also encourages current efforts on the ground, which improve jobs in Africa.
The World Bank points out that the AfCFTA will create the largest free trade area in the world, measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion.
It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.
The single continent-wide market is essential for vast products and services produced by the informal sector and the innovation developed within the formal sector by highly knowledgeable young African minds.
The numbers speak for themselves and affirm the potential that AfCFTA leverages to improve people’s lives across the region.
Further, the agreement will spur more significant wage gains for women (10.5 per cent) than men (9.9 per cent). Additionally, it is argued that the agreement will boost wages for both skilled and unskilled workers—10.3 per cent for unskilled workers and 9.8 per cent for skilled workers.
For instance, in Tanzania, farming as an informal activity is the largest employer, contributing at least 27 per cent of GDP. This sector stands to create decent jobs across the value chain, particularly in distribution and supply, storage and marketing as Tanzania expands its food production muscles across East African markets. Farming is one of the contributors towards jobs in Africa.
The advent of modern technology has spurred the uprise of digital solutions that address farmers’ market access cries. With the presence of AfCFTA, mobility restrictions are no longer obstacles; thus, Africans can express their ingenuity freely across various market points.
Companies such as Agritech and Sustainable Agriculture Tanzania are at the forefront of transforming farming practices to small-scale and medium-scale commercial farmers, who stand to reap billions as Tanzania’s grains begin to dominate other regional markets such as Juba, DRC and South Sudan. Hence, Tanzania is one of the African nations streamlining good reasons why companies ought to invest in Africa.
Mobile money services are another new normal in Africa. Needless to say, the sub-sector has transformed jobs in Africa. Transformational and cross-boundary fintech services from Tanzania’s Nala and PesaKit in Kenya are now bridging the gap between the unbanked population and conventional, decent financial services.
AfCFTA kick-starts the efforts towards poverty alleviation by providing available business solutions and innovations for growth across other regional emerging markets.
Agri-startups such as Kilimo Fresh from Tanzania uplift farmers’ efforts by connecting smallholder farmers and produce buyers to reliable markets in the region (particularly Rwanda), enabling buyers to access better-quality and fresh produce directly from farms at affordable prices, and have it delivered directly to their locations (Disrupt Africa).
The agreement comes to the table to inspire mushrooming industries in developing economies, such as the creative industry, which is currently the new money to expand and grow. Now more than ever, entertainment is topping the export list as consumers of arts keep growing and demand content that crosses borders. This is the right time to invest in Africa and amp up job creation.