According to the United Nations, three-quarters of Africa’s population is under the age of 35.
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According to S&P Global rankings, the working-age population in sub-Saharan Africa will double by 2050 to become the largest in the world, providing an unprecedented opportunity for economic growth.
In a report released on Wednesday, the rating agency estimates that the increase in the working-age population will increase the average annual GDP growth rate of major economies in the Indian subcontinent by 3% over the next 10 years.
Satyam Pandey, chief economist at S&P Global Ratings, said sub-Saharan Africa is now facing “the most significant demographic change in its history”.
“Significant declines in fertility rates, reduced infant mortality, and increased life expectancy will be critical factors in the region’s economic prospects for decades to come,” Pandey said.
“The age composition of a country’s population is important to economic growth. For a region that has experienced weak economic growth over the past decade, there may be an opportunity to reverse population migration, but this instability can be a major source of vulnerability.”
The report highlights that the fertility rate is steadily declining, from 6.3 in 2019 to 4.6 children per woman in 2019. 2.1 by 2050.
In comparison, the average fertility rate in Southeast Asia and Latin America is expected to fall below 1.85 in 2050 and 2.2 in 2020, while the Middle East and North Africa are the only regions that are projected to be above Normal exchange rate for 2050. Pending. In high-income economies, the current rate is around 1.6 and is expected to remain at that level.
However, the pace is not the same in South Africa, Kenya and Ethiopia, with low fertility rates, while Nigeria continues to record rates above 5..
Politics is important for demographic gains
At current rates, sub-Saharan countries could be set for a “demographic dividend,” according to a Standard & Poor’s report. The demographic dividend refers to an increasing proportion of people of working age compared to non-working people (i.e. children or the elderly). With fewer people supporting it, the country has a window of opportunity for rapid GDP growth.
However, the economic policies of governments will be critical to the ability of sub-Saharan African countries to benefit from the growing labor force, and Pandey noted that the region is currently at risk of not being prepared to reap the benefits of change in the labor force. Population.
“If jobs are not created together, population growth may lead to instability, as the relative proportion of unemployed youth will increase,” the report said.
“In this case, families will not be able to invest in a better education for their children, so an increase in savings will not lead to an increase in human capital. It does not have to be an increase in investment.”
Although historical evidence shows a clear positive relationship between the increasing proportion of employed employees and economic growth, the report highlights that at some point, a decline in the birth rate will eventually lead to an increase in the population. This means that the window of opportunity is limited.
Besides creating jobs through education and investing in “human capital,” Standard & Poor’s emphasized the importance of investing in fixed assets, because “increasing capital” increases worker productivity and “adding more value” produces more possibilities.
“In Singapore, for example, per capita social capital has multiplied by 11 in the past 50 years, while in Nigeria and South Africa it has only increased by 50%. In Ghana, per capita social capital has remained virtually unchanged. It happened.
Ultimately, sustainability policies are important because population growth places more pressure on the natural environment. For example, agricultural land degradation can lead to poor farmers and sustainable urbanization.”
The report states that the top five economies of the Indian subcontinent are SSA-5 (South Africa, Nigeria, Ghana, Kenya and Ethiopia), more jobs and investment in human capital will have to be created to simulate the “demographic dividend success story” in East Asia.
By analyzing the data, Standard & Poor’s estimates that a growth scenario in East Asia is feasible for some SSA-5 agreements. For example, Nigeria could reach 45% of GDP per capita in the United States by 2050 if it can successfully replicate South Korea’s growth experience.
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