Africa and the Demographic Dividend

(April 2013) Prepared for CoM 2013, “Industrialization for an Emerging Africa,” these five factsheets describe the demographic dividend and the opportunities that this dividend presents for Africa. The demographic dividend is the accelerated economic growth that may result from a rapid decline in a country’s fertility and the subsequent change in the population age structure. With fewer births each year, a country’s working-age population grows larger in relation to the young dependent population. With more people in the labor force and fewer young people to support, a country can exploit the window of opportunity for rapid economic growth if the right social and economic investments and policies are made in health, education, governance, and the economy. While the benefits of a dividend can be great, the gains are neither automatic nor guaranteed.

These factsheets were jointly sponsored by the United Nations Economic Commission for Africa (ECA) and the African Union Commission (AUC), with support from the United States Agency for International Development (USAID) and the Bill & Melinda Gates Foundation through the Johns Hopkins Bloomberg School of Public Health and the David and Lucile Packard Foundation. Technical research material was provided by David Bloom, David Canning, Andrew Mason, Ronald Lee, and the Population Reference Bureau.

Africa and the Challenge of Realizing the Demographic Dividend (PDF: 572KB)
Over the past decade, countries throughout Africa have experienced sustained economic growth. Despite this growth, almost two of every three people—or 660 million—are still living on less than $2 per day. Accelerated economic growth is needed to reduce inequality and poverty, and improve people’s lives across Africa. The experience of many countries in Asia and Latin America suggests a pathway to this accelerated economic growth. An economic window of opportunity opened in these countries as a result of a rapid decline in fertility, which increased the proportion of working-age people relative to dependent children. Countries responded by improving health and education, attracting foreign investments, and enacting economic policies that created jobs, which resulted in the accelerated economic growth that is referred to as the demographic dividend.

Initiating the Demographic Dividend by Achieving a Fertility Decline (PDF: 1.1MB)
The accelerated economic growth of the demographic dividend remains a possibility for many African nations, but for the process to begin, countries must prioritize strategic investments to lower fertility (children per woman) and child mortality (deaths). Until countries address their extremely young age structure through family planning, education, and other investments that contribute to smaller and healthier families, they will not achieve their full potential for economic growth that comes through a demographic dividend. For countries to realize a demographic dividend, they need to make investments that lead to having a smaller school-age population and a larger working-age population.

Toward a Demographic Dividend: Invest in Health and Education (PDF: 570KB)
Investments in human capital—health and education—foster opportunities for developing a skilled and healthy labor force. Through strengthening health systems to address the full range of child and adult health needs, children can grow into healthy adults who can contribute more significantly to economic growth. Education allows young people to learn skills to take on higher-quality jobs, and these jobs promote economic development. Through these investments, nations develop a labor force well equipped to move into new opportunities that emerge from a demographic dividend. Human capital is critical to realizing a demographic dividend.

Creating Jobs: Challenge for a Demographic Dividend (PDF: 566KB)
With a population expected to roughly double by 2050 and a gross domestic product (GDP) growth rate of more than 5 percent a year, Africa is the world’s second-fastest developing continent. Yet Africa faces the challenge of creating enough jobs to support its growing working-age population—especially the increasing number of young people. Within the past 10 years, Africa has created over 37 million wage-paying jobs; however, the pace of job creation must accelerate to keep up with the number of people that need employment and to maintain high levels of economic growth.

Beyond the First Dividend: Sustaining the Second Demographic Dividend (PDF: 550KB)
As a result of a “first” demographic transition, age structures of populations become older. Economically, people often move into higher-paying jobs and countries experience higher per capita income. These social and economic changes motivate people to accumulate greater personal wealth—a process known as the “second” demographic dividend. This second dividend operates in two ways: greater accumulation of wealth and greater investments in human capital.