THE creation of jobs remains a major challenge for Africa in the coming years and needs to be given priority by governments, Dr. Ngozi Okonjo-Iweala, Nigeria’s Minister of Finance has said.
She said the unemployment rates today were over 20 per cent in several countries citing the example of Nigeria which has 23.9 per cent unemployment rate and South Africa 24.5 per cent.
Speaking at the second John A. Kufuor Foundation lecture in Accra, she said the numbers were even larger at the youth level.
She said: “Youth unemployment is over 40 per cent in these countries. And for the future, can you imagine that by 2035, the size of Africa’s labour force would be greater than that of any nation. Yes, even larger than that of China! This is a challenge for this generation.”
“Where would the jobs come from? They will come from the private sector. And how can we support the private sector? Well, the key binding constraint which you hear from the private sector across the continent is the lack of infrastructure,” she said.
Dr. Okonjo-Iweala said: “For infrastructure, the numbers are well-known to all of us. Take the example of power. The entire sub-Saharan Africa region, with a total population of nearly 800 million, generates only about two per cent of the world’s electricity output, and this is equal to the total power output of Spain.”
This poor infrastructure, she said, reduces the productivity of Africa firms by about 40 per cent, especially for small businesses.
She said overall, Africa’s infrastructure deficit reduces the region’s economic growth by about two percentage points each year.
“So we need to target a lot of investments into this critical sector,” she said.
For Africa, she said an estimated $120 billion per annum was needed in infrastructure investments.
“Even after accounting for available resources, a funding gap of $50 billion still remains with the largest gap being in the power sector,” she said.
The World Bank, she said, estimates that about two-thirds of the expenditure would be for new infrastructure assets and a third of the funding needed to maintain existing and new infrastructure.
“The numbers are sizeable, and represent about 10-12 per cent of Gross Domestic Product (GDP) for some African countries. But let us not forget that for most of the past decade, China invested nearly 14 per cent of its GDP consistently in infrastructure,” she said.
To address the jobs problem, she recommended African policy-makers to invest more in developing skills of their citizens, particularly for the youth.
“Africa has a pending demographic bulge — the median age in the region is about 20 years, compared with 29 years in Asia and 40 years in Europe. But we can only realise the demographic dividend, if we invest in the training of our labour force — in practical, technical and vocational skills,” she said.