- Evidently, Africa, despite having a smaller GDP growth, has maintained a significant population growth of around 2.5% compared to India, which has a slower population growth.
- Education should be market-relevant, and this can be achieved by designing a curriculum together with employers and preparing students on skills such as good marketing and soft skills to ensure they become effective professionals once they start working.
- According to the panelists, Africa should have a more structured way of introducing young people into starting businesses.
Africa has, for many years, experienced very slow economic growth despite having a large population of young, educated people.
A recent webinar based on a recently released report by McKinsey, hosted by Nexford University, an online university based in Washington, D.C., discussed various opportunities that will encourage economic growth in Africa.
The event provided valuable insights into how the key economies across the African continent will likely develop over the coming decade.
The panel discussion featured Omid Kassiri, Managing Partner for East Africa at McKinsey; Laila Macharia, Director at Aspen Institute’s Africa Initiative; and Dr. Oby Ezekwesili, Founder and President of Human Capital Africa and Fadl Al-Tarzi who is the CEO of Nexford University.
Report overview
The report by McKinsey, titled Reimagining Economic Growth in Africa: Turning Diversity into Opportunity, focuses on productivity as a significant driver of the future economic outlook in Africa.
One of the report’s key findings, as explained by Kassiri, is that between 2000 and 2010, there was a decent GDP growth of over 5%, but the growth shrank significantly from 2010 to 2019.
Evidently, Africa, despite having a smaller GDP growth, has maintained a significant population growth of around 2.5% compared to India, which has a slower population growth.
This contrasts the impact of low productivity as a driver of GDP growth.
He notes that there is a fundamental shift away from agriculture and towards providing services.
Many young people in the continent no longer want to be in agriculture.
The report further adds that, almost across every sector in the continent, productivity is much lower than in any other part of the world.
From a trade perspective, there are few intra-trade activities in Africa, often less than 10%.
The continent is importing very few resources from the rest of the world while the importation of manufactured goods is high.
The report also predicts that by 2040, the continent will have 31 cities with more than five million people, up from 12 cities currently.
Furthermore, compared to most parts of the world, where the population is spread out in many cities, Africa’s population is highly concentrated in the capital cities.
In contrast, the second largest cities come at a distant second.
Africa as a continent
Despite having a huge geographical area, Africa is often grouped when discussing economic challenges and opportunities.
Dr. Ezekwesili said that the key question is why we care about scale in the world of economic policy.
“Too many fragmented countries in our continent means that you have to give triple the effort that you need to put when operating at scale to try and do things across each of the countries,” she said.
She notes that there is a big difference in joining up countries so that economies of scale become possible.
Dr. Ezekwesili adds that to solve productivity problems, there is a need to have a kind of critical joining up of opportunities.
Breaking down barriers
Ms. Macharia acknowledged that despite being large, Africa still has a small proportion of world trade.
She adds that in terms of representation, Africa is behind. Therefore, the idea of looking at productivity is important.
“Barriers between us are largely self-inflicted and if we can start to team up and be very serious about it and put it in our time scale, we can start, as individuals or businesses, to break down these barriers,” Ms. Macharia noted.
She explained that as a businessperson, seeing your market broader than just your country is important.
Start to understand the needs and demands of customers across borders, and then start to break down these barriers.
Education
According to Ms. Macharia, in order to increase access to education across the continent, creating education that individuals would want to invest in is important.
This means that once people see that investing in a degree or training of any kind will lead to a better job or economic outcome, they are more likely to go into it.
She points out that education should be market-relevant, and this can be achieved by designing a curriculum together with employers and preparing students on skills such as good marketing and soft skills to ensure they become effective professionals once they start working.
“I think doing these different things will start to raise not just enrollment but the value of the education they offer,” Ms. Macharia said.
Dr. Ezekwesili added that the continent wants to see that they get value for the years spent schooling.
She notes that graduates return home and depend on the same people who funded their education while looking for jobs.
Despite people still thinking that attending online universities is inferior, she advises many to adopt online schooling, which is outside the traditional education system, because employers are starting to focus on the skills one has to offer.
Job opportunities
According to Dr. Ezekwesili, remote jobs are not necessarily a sufficient solution to the lack of job opportunities in the African continent.
She adds that it is still important for the economy to have a massive manufacturing base through a critical technology transfer.
She notes that technology is a game changer, providing African children with a global opportunity.
Al-Tarzi expressed the presence of thousands of job opportunities online, but most foreign employers find it difficult to access talent from the African continent.
The panelists explained that this is because skills available in the continent are not relevant to the different economies because, in Africa, people are mostly trained more broadly, while most employers are looking for people with specialized skills.
Perception is another challenge faced by individuals who offer their skills to foreign employers because many are used to sourcing talent from a specific country.
Educating the market on what the continent has to offer is necessary.
Bridging productivity gap
To boost productivity in the continent, the panelists pointed out that Africa is afraid of competition, although competition often leads to innovation and efficiency.
The continent needs to be open to new ideas and better ways of doing existing things, as this will boost productivity.
It was also noted that the financial sector needed more deepening by broadening the capital market to increase more access to finance.
Furthermore, more thought should be given to the financial sector and all necessary reforms implemented.
The governments should improve public spending on education in order to improve the quality and learning outcomes of its population.
According to Dr. Ezebwekili, the big economies in the continent need to understand the value of regional integration and how supply chain logistics is helpful for the continent.
They need to understand the power of data that says 1% growth in a country with a big economy could lead to 0.5% growth for the rest of the continent.
She adds that investment in plant and equipment that aids productivity is critical and there is a need to look at the already existing sectors and the level of innovation currently experienced. The continent needs to be deliberate in looking at opportunities available in this sector.
Entrepreneurship
Al-Tarzi explained that having mega businesses in the continent is very important. This can be done by creating a favorable environment that supports young people who want to venture into a business.
According to the panelists, Africa should have a more structured way of introducing young people into starting businesses.
Adopting the same strategy as in Singapore, where children of school-going age are mapped and those who are likely to venture into entrepreneurship are given coaching, unlike in Africa, where the graduates are encouraged to start businesses once they fail to secure job opportunities leading to them not getting enough support from both government and the private stakeholders.
Entrepreneurship is considered one of the untapped areas for growth of the continent because once people start small businesses, there will be a creation of more jobs, particularly in the service sector.
They are considered the largest employers, consequently driving economic growth.
Artificial Intelligence
According to Ms. Macharia, AI has been able to raise productivity in the marketing and finance departments.
This has been possible because it has enabled more production at a lesser cost.
The panelist noted that people need to embrace AI despite fears that it will take a good number of jobs.
They added that it will eventually create new types of jobs.
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They also pointed out that some skills like communication and critical thinking, will not be replaced by AI.
