The Possible Economic, Demographic, and Geopolitical Outcomes
Background
For better or worse, population growth in Africa over the next three decades will change the course of human history. The continent is currently home to 1.3 billion people, equal to roughly 17 percent of the world’s total population.[1] By 2050, Africa’s population will increase to an unprecedented 2.4 billion and eventually to a staggering 4.2 billion by 2100.[2] The continent will nearly become the most populated on earth—trailing only Asia’s 4.8 billion.
Many Sub-Saharan African countries will thus figure amongst the most highly populated in the world. Africa’s most populous country, Nigeria, whose population of 190 million people is currently growing at 3 percent annually, will have more than 400 million people by 2050.[3] The Democratic Republic of Congo—currently 81 million—will have 195 million. Ethiopia, which currently sits at 105 million, will reach 188 million. Tanzania, currently at 57 million, and Uganda, currently at 42 million, will also experience remarkable surges—similar to Nigeria’s—with 129 million and 101 million people respectively by 2050. These are all enormous numbers that portend massive challenges for a continent that is already struggling to provide for its current population of 1.3 billion. As African countries face down this looming demographic explosion, there are several critical questions economists are attempting to answer.
The Pressing Questions
Economists are divided on whether Africa’s population growth will indeed reach the UN’s predicted 2.4 billion and 4.2 billion population levels by 2050 and 2100, respectively. Those who subscribe to the UN’s prediction often reference the persistent upward growth of the continent’s population since the mid 20thcentury. Since 1982 Africa’s population has more than doubled with the continent passing the 1 billion mark in 2009. Meanwhile, between 2011 and 2015, Africa’s population growth rate averaged 2.55 percent annually—the highest in the world.Economists believe the decrease in infant mortality rate coupled with the reduction in deaths from diseases like malaria, cholera, and hopefully soon, AIDS, points to the plausibility of the UN’s predictions.
Skeptics, while recognizing past growth trends, do not believe the trends will peak as high as the UN projects, particularly in light of possible future political, health, and climatic changes that they argue are not comprehensively accounted for in UN calculations. Although there is a strong possibility of unforeseen factors slowing down the population growth rate, the UN’s population predictions still appear highly realistic.[4] A closer look at Africa’s demography further validates the UN’s projections.
Nearly all of the countries in Africa have a sex ratio skewed in favor of females. More significantly, though, they all have an overwhelmingly youthful population, specifically below age 15.[5] In conventional demography, a predominantly youthful and female-dominated population often portends an increasing birth rate. In Africa, this general pattern may even be exacerbated as use of contraceptives and access to family planning services are severely limited.Anincreasing birth rate will also produce a larger youth population in successive decades. This again points to the possibility of a sustained, high future growth rate, as John Wilmoth, Director of the Population Division at the United Nations corroborates, stating: “41 percent of the [continent’s] population is under the age [of] 15. This is a very high fraction. Another 19 percent are between ages 15 and 24. So if you add those two together you’ve got three-fifths of the population that is under the age of 25.”[6]
Some economists have argued that this radical increase in population will plunge the continent into further economic misery. They believe that much of the new population will fall into the extreme poverty bracket, especially if critical infrastructure related to things like health, security, and education remain poor over the coming decades. On the other hand, optimists believe this demographic explosion could, in fact, be propitious for Africa’s economic growth prospects. Such a population increase could enable Africa to undergo an industrial revolution, if the continent can adapt and implement proper economic policies, learning from the examples of China and India.[7]
The total fertility rate by world region including the UN projections through 2100. Source: OurWorldInData.org/future-population-growth/
But Africa’s roadmap to 2050 and 2100 is far from clear. As such, a comprehensive evaluation of plausible outcomes and opportunities is necessary for African leaders to make informed judgments on what policies to pursue. Thus, the key question here is not if the continent is ready for the ensuing demographic change, but how it will manage the change.
Significant Changes to Anticipate in the Coming Decades
Unprecedented Pressure on Infrastructure
Africa’s infrastructure gap will take around $170 billion annually to fill.[8] This is perhaps the most frequently cited statistic about Africa among development economists after the UN’s “2.4 billion population increase by 2050” prediction, and rightly so. It is a troubling reality if put in the context of how difficult it will be for the continent to finance. It is, though, a reality that some African leaders are attempting to come to terms with.
In the immediate years following their independence, many African governments made strenuous efforts to invest in critical infrastructure, often using proceeds generated from nationalized assets inherited from the colonial period and, in some cases, bolstered by foreign aid and loans. Although this building spree created some of the most enduring infrastructure across the continent, it fell well short of meeting the demands of the fast-growing continent. Indeed, the infrastructure gap the UN and others are deeply concerned over actually began to worsen in the 1980s and 1990s when civil wars and coups destabilized many countries. This underinvestment in infrastructure has, at the same time, been exacerbated by the concomitant rise in systemic corruption. During these two decades, many countries that were not economically destabilized also watched as their infrastructure gaps widened in the hands of corrupt governments. The gap grew even larger in the 1990s and throughout the first decade of the millenniumdespite the fact that Africa had more loans and foreign aid to help address the problem than in any period prior.
A 2013 joint report by the AfDB and Global Financial Integrity claimed that about$1.3 trillion was taken from Africa in illicit financial flows between 1980 and 2009, which is roughly equivalent to Africa’s GDP for 2014.[9] Back in 2002, the African Union revealed that the continent loses about $150 billion annually to corruption. More recently, in 2018, the United Nations Economic Commission for Africa estimated the annual losses to corruption through fraudulent activities to be around $148 billion—about 5 percent of the continent’s average GDP. This means if the continent can fix the loopholes through which state funds are corruptly mismanaged, Africa would have almost the equivalent of its annual infrastructure expenses. Meanwhile, African leaders have turned to international creditors like the AfDB, the World Bank, the International Monetary Fund, the European Union, and lately, China to finance these expenses. But the expedient route of relying on loans while continuing to forego the lost revenue from corruption is not sustainable over the long-term. Fixing the corruption problem is a sustainable, internal alternative to generate the revenue necessary for infrastructure development.
The challenge of accommodating an additional 2.4 billion people, let alone 4.2 billion, will be nearly insurmountable if the ratio of basic infrastructure to individual does not radically improve over the next few decades. As Africa as a whole struggles with this, urban centers like Nairobi, Kampala, Lagos, Kinshasa, and others—most of which are already poorly built—will become the center of infrastructure pressure as Africa increasingly urbanizes. Hospitals will grow increasingly overcrowded whilemillions of new commuters will pack major roads that are hardly robust enough to accommodate their current user base. Other critical infrastructure, in particular security and energy, remains inadequate in these cities, and will, if unaddressed, contribute to dysfunction. In order for Africa to avert this looming problem, there must be sufficient investment in infrastructure. But meeting the $170 billion annual threshold set by the African Development Bank Group (AfDB) will be extremely difficult, especially as the continent continues to lose potential resources to corruption.
Expanding Labor Force
Africa’s labor force is currently among the largest in the world and it will soon be the largest. Africa couldbenefit from this unprecedented increase in its labor force. Indeed, this would ordinarily strengthen economies and governments by increasing both labor supply and taxable income. In Africa, though, there will be a tremendous amount of pressure on governments to design policies that will allow the economy to produce new jobs and meet the needs of a growing labor force. Unfortunately, African leaders are currently failing in this regard. They should prioritize the creation of an environment that will attract foreign direct investment, including a reduction in corporate tax and minimal regulations on businesses, especially for small and medium-sized enterprises. Thebenefits of creating a stable, effective, and non-cumbersome business environment are likely to be substantial. It could make Africa the next bastion of cheap and abundant labor for multinational corporations, in direct competition with China and India.
The best way for African leaders to initiate this opportunity is by helping to make the incoming labor force skilled and educated enough to compete with those of both China and India, or to at least match their level of competitiveness. A strong initial step could be a massive investment in technical education over the next few decades.
A New African Middle Class
The population of Africa’smiddle class has significantly increased over the last five decades and will likely continue to do so. The AfDB estimated in 2011 that Africa’s middle-class population had risen from 126 million(27 percent of the continent’s population) in 1980 to about 350 million in 2010(roughly 34 percent of that year’s 1 billion population). A Brookings Institution study found that “582 million Africans will have estimated revenues of $2 to $20 a day [by 2030], classing them in the middle class. An additional 116 million people will have revenues higher than $20 a day, for a total of 698 million people from the middle and upper classes.” The study further found that while in 2013 the middle and upper classes represented only 33.90 percent of the population, “in 2030, [they are] estimated to represent about 42.69 percent of the population.”[10]
This is a promising prediction for Africa. Middle class growth of roughly 9 percent within seventeen years (2013 to 2030 as calculated by the Brookings Institution) would be a positive change for any serious economy. Meanwhile, disposable income will similarly improve. There will be 56 million middle-class households with disposable incomes of nearly $680 billion by 2030 in Africa. A growing population with increasing incomes means there will be more money for Africans to spend, save, and invest. Indeed, the same Brookings report claimed that consumerexpenditure on the continent had grown from “a compound annual rate of 3.9 percent since 2010 and reached $1.4 trillion in 2015,” and that the “figure is expected to reach $2.1 trillion by 2025, and $2.5 trillion by 2030.” African countries can use this consumption-based economic growth, fueled by the middle class, to their advantage.[11]
A Larger Consumer Market
China’s status as the second-largest consumer market in the world has much to do with the substantial personal income of its 788 million labor force. Africa too, over the coming decades, could develop as a major consumer market powered by its labor force. Population growth in Africa—as indicated earlier—will measure at rates of 25 percent in 2050 and 39 percent by 2100. Whereas in Asia, the rate will fall from 54 percent in 2050 to 44 percent by 2100. At the same time, the fertility rates in Africa and Asia respectively are 4.5 and 2.1 children on average, and these rates will likely remain relatively unchanged for both continents for at least the next two decades.[12] Macroeconomic thought holds that market opportunities in highly-populated economies are usually greater than those in lowly populated economies. This is based upon the notion that the more potential consumers within an economy, the more demand there is for goods and services. If the personal income rate in an economy grows as quickly as the population, then this will create an even larger consumer market.
As we have seen historically, corporations will go to great lengths to expand and tap into highly populated consumer markets like those of China, India, the United States, and Brazil. Yet, while corporations certainly profit, there is perhaps an even bigger benefit for the host countries. When a company plans to introduce its product into a new market, there are taxes, import duties, and other forms of royalties that governments usually impose as means of generating revenue. The larger the demand and purchasing power of a given population, the more investment interest there is, and hence the larger the size of possible revenue from state royalties. A related outcome will be an increase in job opportunities, as the increase in investments leads to greater demand for labor. As corporations enter into new markets, they invariably require local labor, which provides openings to the middle class and increases the tax base.
Possible Geopolitical Outcomes
A Possible Shift in Economic Power
Global GDP currently stands at a staggering $80 trillion in nominal terms with almost 40 percent of it attributable to the United States and China. The largest African countries, Nigeria and South Africa, account for just 0.47 percent and 0.44 percent of global GDP respectively. If the three changes identified above (the growth of the middle class, fostering a competitive labor force, and developing a large consumer market) were to yield the predicted results, there is a good chance that the GDP of a few major African economies could jump into the top 10 by 2050.
An Increase in Global Poverty Rate and Migration
Many governments experiencing a high population growth rate face the often concomitant problem of reducing poverty. For African countries especially, this task will be daunting. The global poverty rate has dropped in recent years, especially with the rise of China and India. Sub-Saharan Africa, on the other hand, is now home to more than half of the world’s extreme poor. Over 413 million people in the region live in extreme poverty—mostly in countries like Nigeria, the Democratic Republic of Congo and Uganda, which will all experience the largest increase in population. At the same time, most of the countries with the highest unemployment rates in the world are in Africa.[13] Senegal (48 percent) and Djibouti (40 percent) are among the worst in the world,[14] while stronger economies like South Africa (27 percent)[15] and Nigeria (23 percent)[16] are still struggling mightily with unemployment as well. As a result, out of the 420 million young Africans aged 15 to 35, one-third are unemployed and another third are vulnerably employed with only one out of every six of Africa’s youth in wage employment.[17] The World Bank predicts that if African governments do not quickly and sufficiently build out infrastructure to both stimulate and accommodate job creation, 9 out of 10 of the world’s extreme poor will be in Sub-Saharan Africa by 2030.
If the economic situation of these African countries does not improve as we approach 2050, the rate of emigration from Africa will likely skyrocket well beyond current figures. Africa’s outlook over the next two decades is already fraught. Finding jobs for the rapidly expanding younger demographic—which is the core of the labor force distribution—will be a huge task. Indeed, many have shown the link between factors like financial insecurity and unemployment to the mass exodus of Africans across the Mediterranean Sea to the coasts of Europe. If there are more people without jobs living in weak economies in Sub-Saharan Africa in the coming decades, greater numbers of people will attempt to leave.
Conclusion
As 2050 draws near, African leaders must quickly acknowledge the scope of the demographic challenge and begin implementing the right policies to buttress their countries against it. Should African leaders fail to properly prepare, Africa is at risk of descending into a full-blown humanitarian crisis. Fortunately for African leaders, there are precedents to learn from, namely China and India.
Indeed, it is important that low-income countries not copy the development model of higher-income countries outright. For Africa, then, similar policies that helped both China and India in managing their population surges are replicable. These include such things as mitigating corruption, liberalization of economies, investing in labor force competitiveness (especially in the field of information technology) and creating an attractive business environment.
In the interim, every African country must initiate sustainable frameworks to fix its infrastructure gaps. This will likely not be achieved through heavy state borrowing; Africa does not have a good history of loan servicing or debt management. Instead, African leaders should consider how state revenue from trade and other means can be judiciously used to raise the necessary funds for infrastructure development to accommodate the imminent population growth. The looming change in the continent’s demography requires careful evaluation and the policies must be well informed. For Africa, the risk in doing nothing could yield consequences almost as great as doing the wrong thing.
References
[1]“World Population Prospects: United Nations’ 2017 edition of World Population Prospects.” United Nations.
