For the past several years, real GDP growth rates have been strong across Africa, but jobs have suffered, with the poverty rate high, at an average of near 50 percent. With this Africa has been experiencing what is called immesirizing growth, typically meaning economic growth that does not eliminate misery. So, why are jobs not been rapidly created? The reason to me is simple. The 5 percent average real GDP growth rate across Sub-Saharan Africa is simply not strong enough. It is creating jobs alright, but it is not creating jobs fast enough to strongly outpace the growth in population, which is at about 2.5 percent. This means that real GDP growth rate in Africa is only about 2.5 percent. That's just not good enough to create jobs and raise the level of living. The potential for strong economic growth exists in Africa because a demographic dividend exists since about 70 percent of Africans are under 35 years of age. However, this could also portend a demographic disaster, if this population is not appropriately engaged and they become free radicals. Now, back to the seemingly impressive economic growth rate of 5 percent. Well over 30 percent of the growth has been driven by increases in resource and commodity prices. For example, oil prices rose from less than $20 a barrel in 1999 to more than $145 a barrel in 2008. Prices for minerals, grains, and other raw materials have also soared during this period, due to rising global demand. Unfortunately, benefits from commodity and natural resource revenues don't transmit quickly to average citizens and have not helped much in creating jobs because policy across Africa has failed to force foreign buyers of African raw materials to invest and refine the raw materials in Africa. And in addition, poor governance often undermines the strength of the benefits. Manufacturing in Africa is being decimated by cheap imports from China and other Asian countries. What Africa must note is this. Our jobs are being shipped out every time we export unprocessed goods. If African policy makers want to see a robust labor market, then at least 50 percent of the natural resources and commodities being shipped out would have to be processed in Africa. The processing activity with its strong and positive spillover results is the engine we need for driving Africa into a great era of promise, job growth and prosperity. I am Magnus Kpakol, and that's my view. I am Magnus Kpakol and that's my view.
Posted: Aug 4th, 2015 @ 03:47:24 AM