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1 The Demographic Dividend - Conceptual framework and Global/ Regional Experiences Eliya Msiyaphazi Zulu (PhD.) Presented at the Regional Public Dialogue.

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Presentation on theme: "1 The Demographic Dividend - Conceptual framework and Global/ Regional Experiences Eliya Msiyaphazi Zulu (PhD.) Presented at the Regional Public Dialogue."— Presentation transcript:

1 1 The Demographic Dividend - Conceptual framework and Global/ Regional Experiences Eliya Msiyaphazi Zulu (PhD.) Presented at the Regional Public Dialogue on the Demographic Dividend Serena Hotel, Kampala, Uganda 4 th July, 2014

2 Outline of Presentation Linkages between population change and development Meaning and pathways for achieving the demographic dividend Global Experiences African Experiences Implications for policy and action

3 Population dynamics and the “African Century” Africa is undergoing phenomenal population changes and has immense economic opportunities Population projected to grow from 1.2 to 2.4 billion by 2050 Majority of African to live in Urban areas by 2050 Migration likely to increase, with increasing regional integration and globalization High child dependency burden a key barrier to development – BUT if mortality and fertility decline rapidly child dependency burden will decline and having more people of working age a can provide a valuable impetus for rapid economic growth

4 Africa on the rise – growing economic opportunities and unprecedented growth Economies expected to continue growing at a steady rate, despite global recession – In 2014, Sub-Saharan Africa economies to grow by 6.1% (global average of 4%) – IMF, April 2013 – Foreign Direct investment projected to increase from $37 in 2012 to $54 billion in 2015 – Infrastructure development is improving across the continent, especially in East and Southern Africa – "It is expected that by 2020, only four or five countries in the region will not be involved in mineral exploitation of some kind” (World Bank) – Diaspora remittances playing a key role in development – Most countries have long-term development strategies to guide socioeconomic transformation

5 Population sizes will at least double in all EAC Member States by 2050 Source: United Nations Population Division – Medium Variant UN Projections 2012 Edition Past and Projected population size (Millions) Burundi Kenya Rwanda Tanzania Uganda TOTAL

6 population (millions) Population Momentum The population of Uganda will continue growing for 6-8 decades even after reaching replacement level fertility of Total fertility rate: 6.2 (2010) UN Newest Projection 2010 Current population

7 The year in which a country reaches replacement level fertility has a major impact on its ultimate population size. Total fertility rate: 4.5 (2010)

8 The year in which a country reaches replacement level fertility has a major impact on its ultimate population size. Total fertility rate: 5.4 (2010)

9 population (millions) Total fertility rate: 4.6 Population Size (2010): 40 million The year in which Kenya reaches replacement level fertility will have a major impact on its ultimate population size UN Medium Projection 2010 Current population

10 Urbanization is on the rise – what will this mean for socioeconomic development for East Africa? Source: United Nations Population Division – Medium Variant UN Projections 2012 Edition Past & projected % of population living in urban areas Burundi21128 Kenya72446 Rwanda21939 Tanzania52650 Uganda41534

11 As fertility declines, child dependency ratios will decline and working age population will increase, creating a window of opportunity for accelerated economic growth Past and projected trends in Child dependency ratios Burundi Kenya Rwanda Tanzania Uganda Source: United Nations Population Division – Medium Variant UN Projections 2012 Edition

12 Defining the Demographic Dividend The Demographic Dividend is the economic benefit arising from a significant increase in the ratio of working-aged adults relative to young dependents. When birth rates decline significantly, the age structure shifts in favor of more working-aged adults, accelerating economic growth through increased productivity, greater household savings, and lower costs for basic social services provided to a young population.

13 Kenya and Thailand’s age structure differ remarkably due to differences in birth rates 13 Source: UN Population Division (MEDIUM VARIANT), 2011 TFR: 7.5 TFR: 6.1 TFR: 4.6 TFR: 1.6 TFR: 2.7 TFR: 1.7

14 Asian Tigers: Success Story Between ¼ to 1/3 of economic growth since 1970 in East and South East Asia can be attributed to the Demographic Dividend” (Bloom and Williamson, 1998; Mason, 2001) The economic success was made possible by sustained investments in education, health, family planning, and economic reforms 14

15 Ratio of working age to dependent population Sub- Saharan Africa Source: UN Population Division (MEDIUM VARIANT), 2011

16 Pathways for Accelerated Economic Growth through the Demographic Dividend 1.The first Demographic Dividend: Increased productivity from “surplus” labor supply generated through: – Rapid fertility (and mortality) decline – Greater involvement of women in the labour force – Productive employment of the extra workers 2.The Second Demographic Dividend: Increased savings and investment due to higher incomes and reduced child dependency burden: – Increased savings and investment capital stock – Improved human capital due to higher investments in health and education and reduced childbearing burdens for women – Growth in domestic demand and purchasing power due to higher incomes

17 Consumption and Labor Income by Age, Nigeria 2004 Labor income (500 trillion Naira)Consumption (500 trillion Naira) Source: National Transfer Accounts estimates (www.ntaccounts.org) - Mason 2012www.ntaccounts.org Economic needs of children are enormous: about 80% of total labor income. Labor surplus is less than 20%. Shortfall is met by relying on: Natural resources Remittances Other asset income. Little remains for saving and investment. 17

18 Labor income (3000 trillion won)Consumption (3000 trillion won) Consumption and Labor Income by Age, S Korea 2000 Source: National Transfer Accounts estimates (www.ntaccounts.org) - - Mason 2012www.ntaccounts.org Child deficit is very small in S Korea: about 35% of labor income. Working age surplus is about 30% of total labor income. S Korea is investing asset income. 18

19 The demographic dividend contributed significantly to GDP growth in East & South East Asia RegionDemographic Dividends: contribution to growth in GDP/N 1 Actual growth in GDP/N 1 FirstSecondTotal Industrial economies East and Southeast Asia South Asia Latin America Sub-Saharan Africa Middle East and North Africa Transition economies Pacific Islands Source: Mason,

20 Africa’s labour force surplus will peak later & at a lower level if fertility continues to decline slowly 20 Source: UN Population Division (Medium Variant)

21 Speeding the Demographic Transition Reduce child mortality – replacement effect Enhance education, particularly female school enrollment and general female empowerment Expand access to family planning, focusing on underserved sub-groups such as youth 21

22 Fertility rates have declined considerably in some African countries over the past 4-4 decades

23 The demographic transition is not sufficient to harness the demographic dividend as the case in Tanzania and Tunisia has show 23

24 Addressing demand and supply barriers of access and use of contraception will help accelerate fertility decline % of married women using family planning and with unmet need for family planning

25 African countries still need to do more to reduce child mortality

26 There is urgent need to address relatively early entry into marriage in West, Middle, and East Africa % of women aged who got married by age 18

27 Many young people’s lives are wasted through early childbearing

28 The reality is that young people are or will soon be sexually active

29 Adolescence is a time when changes in sexual activity happen fast % of year olds who had sex by certain ages

30 Earning the Demographic Dividend Macro-economic policies – the demand Public health Education Youth and Female Employment Unemployment and underemployment Export orientation for labor demand Channeling savings into investment Address huge inequities in demographic transition and opportunities between the rich and the poor 30

31 In order to EARN the demographic dividend, African countries should simultaneously prioritize investment in all the five pillars or wheels of the demographic dividend 31

32 Governments and development partners must pledge universal secondary education, especially in West, Central and East Africa % of secondary school age boys and girls who are enrolled in school

33 Reality Check: Africa’s economic boom is not reducing poverty & creating enough jobs High levels of underemployment and reliance on the informal sector, especially among women and youth Heavy reliance on mining and mineral resources, which are often mismanaged and are not labour intensive Agricultural sector, which provides livelihood to most people, is still largely underdeveloped and vulnerable to climate change Rapid but poorly managed urbanization not effectively used as an engine for socioeconomic development "Better governance will need to underpin efforts to make growth more poverty reducing," (World Bank) High child dependency burden one of the key factors undermining development if quality human capital and poverty reduction

34 African countries can harness the demographic dividend, but much more needs to be done… 1.Enhance political will and investments for strong family planning programs, education, and general empowerment of women 2.Enhance investments in public health for greater child survival and healthy workforce 3.Adopt economic policies and reforms that help develop industries of comparative advantage to ensure mass job creation and enhance savings and investments 4.Improve governance and accountable use of pubic resources – invest in people!

35 Thank You 35


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