Low earnings and underemployment are the main problems facing youth in Sub-Saharan Africa. Interventions aimed at improving agricultural productivity, encouraging informal sectors and providing safety nets can potentially alleviate working poverty.
With 60% of its population aged 24 or less in 2015 (compared to 42% globally and 30% in high-income countries), Africa has the youngest population of any continent in the world. In Sub-Saharan Africa, the percentage of youth rises to 63%. When productive, a large young population presents an opportunity for economic, technological and social development. However, failure to deliver good quality jobs for youth means that they can become a threat to social cohesion and political stability. Hence, the provision of productive employment for young people in need of work and for those who will enter the labour market in the near future is an important challenge for Sub-Saharan African countries.
The use of the conventional measure of unemployment rate – defined as the percentage of the labour force that is currently unemployed, but is available to work and actively seeking employment – to understand the extent of the problem in Sub-Saharan Africa is misleading. In the absence of an adequate labour market information system and with the non-existence of job centres, many young people in Africa are discouraged from seeking employment and, hence, are not counted as ‘unemployed’. This leads to the underestimation of the actual unemployment level.
Another key deficiency of the conventional measurement of unemployment is that it does not reflect the quality of jobs. Due to pervasive poverty and lack of social protection for the unemployed in Sub-Saharan Africa, people are forced to work even if the job pays little or offers employment for only a few hours a day. Hence, the 2012 African Economic Outlook and the 2013 World Development Report emphasize that the main problem in Africa is not so much unemployment per se, but low earnings and underemployment. The ‘working poverty’ of Sub-Saharan African youth is confirmed in ‘Youth and employment in Sub-Saharan Africa: working but poor’, edited by Hiroyuki Hino and Gustav Ranis, which provides a detailed analysis of youth unemployment in Ethiopia, Ghana, Kenya and South Africa. This report also highlights that youth unemployment and underemployment problems in Sub-Saharan Africa do not arise from a business cyclical problem, as in developed economies, but rather a deeper structural problem that characterizes African economies.
What works: enhance agricultural productivity
According to the 2015 African Economic Outlook, agriculture is the largest economic sector in Sub-Saharan Africa and accounts for around 60% of employment and about a quarter of GDP. Hence, to improve the livelihoods of the working poor, the natural solution is to enhance the productivity of smallholder farmers. Higher productivity in rural areas means higher demand for manufacturing and service sectors in urban areas and a reallocation of labour from rural to urban areas. Vietnam showcases the success of agricultural extension, land reforms and deregulation in the enhancing the agricultural productivity of smallholder farmers.
This view is endorsed by Michael Lipton, who emphasizes that virtually all mass poverty reductions since the 1700s have involved growth in income from employment and self-employment through the improved productivity of smallholder farmers. Luc Christiaensen and Lionel Demery also find agricultural growth to be effective in reducing poverty, especially in Sub-Saharan Africa. Based on a detailed review of studies in Ethiopia, Kenya, Madagascar and Tanzania, they stress that enhancing agricultural productivity is a critical starting point in designing effective poverty reduction strategies in low-income countries and list potential intervention areas to improve agricultural productivity. First, the authors recommend to address the technical and allocative inefficiency of staple crop farmers as it limits the expansion of their production area. Second, there is a need for location-specific analysis on the determinants of agricultural productivity, as they are complex and their relative importance varies substantially by location. Third, irrigation should be expanded and the merits of weather-based insurance should be explored, as most agriculture in Sub-Saharan Africa is rainfed, and the impact of weather related shocks is sizable. Fourth, the adoption of modern inputs such as fertilizer, improved seeds and integrated pest management can lead to efficient crop production.
In addition, Hino and Ranis argue that to tackle unemployment and underemployment in Sub-Saharan Africa, governments should focus on public investment in smallholder agriculture and other pro-employment macroeconomic policies, but should also encourage informal sectors (more supportive infrastructure and microfinance) and provide social safety nets for the poor (to ensure adequate nutrition and health).