Presentation on theme: "Eliya Msiyaphazi Zulu (PhD.) Presented at the"— Presentation transcript:
1Challenges and Opportunities for Harnessing the Demographic Dividend in Africa Eliya Msiyaphazi Zulu (PhD.)Presented at theICPD Beyond 2014 Africa Regional Conference Experts MeetingAddis Ababa, 30 September 2013 – October 2, 20131HIV Project Consultative Meeting Draft Presentation1
2Defining 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, which can help accelerate economic growth through increased productivity, greater household savings, and lower costs for basic social services provided to children.
3Asian 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 reformsHow does the demographic dividend work?There are two
4Kenya and Thailand’s age structure differ remarkably due to differences in birth rates TFR: 7.5TFR: 6.1TFR: 4.6TFR: 1.6TFR: 2.7TFR: 1.7Source: UN Population Division (MEDIUM VARIANT), 2011
5Ratio of working age to dependent population Sub-Saharan AfricaSource: UN Population Division (MEDIUM VARIANT), 2011
6Ratio of working age to dependent population Sub-Saharan Africa
7Defining 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.
8Asian 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 reformsHow does the demographic dividend work?There are two
9Higher human capital spending is associated with lower fertility Note. Human capital spending is health and education spending per child over the 0-25 age span relative to labor income of thoseSOURCE: Mason, 2012
10Consumption and Labor Income by Age, Nigeria 2004 Labor income (500 trillion Naira)Consumption (500 trillion Naira)Labor surplus is less than 20% .Shortfall is met by relying on:Natural resourcesRemittancesOther asset income.Little remains for saving and investment.Economic needs of children are enormous: about 80% of total labor income.Source: National Transfer Accounts estimates (www.ntaccounts.org) - Mason 2012
11Consumption and Labor Income by Age, S Korea 2000 Labor income (3000 trillion won)Consumption (3000 trillion won)Working age surplus is about 30% of total labor income.S Korea is investing asset income.Child deficit is very small in S Korea: about 35% of labor income.Each box represents one-tenth of total labor income in Nigeria and South Korea, respectively. They are just summarizing the values in the graphs for three broad age groups: 0-24, 25-59, and 60+. In Nigeria, prime age adults have a surplus of about 20% of their labor income (two boxes) after they fund their own consumption. The needs of children are about 80% of total labor income. Nigeria is relying on income from assets including natural resources and remittances to fund the consumption of children with little left over for pro-growth efforts, e.g., investing in human capital or funding entrepreneurial activities. In South Korea, however, the surplus of 30% during the working ages is almost sufficient to fund all of the needs of S Korean children. So S Korea can use almost all of the income from non-labor sources to fund pro-growth efforts. The key point of the two slides is that high fertility requires that an enormous share of a country's resources must be devoted to the basic needs of children. As a consequence, too little is available for growth objectives, e.g., investing in human and physical capital. I don't know much about Tunisia so I cannot really comment on whether or not they have realized a demographic dividend. I did look briefly at the population and I see that the support ratio will soon reach its peak. So I would say that its current demographic structure is quite favorable. The important thing is to use the favorable conditions to establish a strong foundation for continued growth, what I call a second demographic dividend, by investing in children, improving the physical infrastructure, creating entrepreneurial opportunities, and so forth. We have NTA estimates for only five African countries (Nigeria, Senegal, Kenya, South Africa, and Mozambique). A team in Egypt is working on estimates there. If other countries are interested in constructing NTA, we would need to field a strong research team to carry out the work and we would need to mobilize the resources needed to support the substantial work that is required. Source: National Transfer Accounts estimates (www.ntaccounts.org) - - Mason 2012
12Speeding the Demographic Transition Reinforce progress in reducing child mortalityEnhance education, particularly female school enrollment and general female empowermentExpand access to effective family planning to reduce unplanned pregnancies and births
13There is urgent need to address relatively early entry into marriage in West, Middle, and East Africa% of women aged who got married by age 15 and 18
14Governments 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
15Addressing barriers to contraceptive use would reduce unmet need and fertility substantially % of Married women using modern FP and those with unmet need for FPSource: DHS Analytical Series (Forthcoming)
16Due to differences in rates of decline in birth rates, age structures in Africa vary widely
17Africa’s labour force surplus will peak later & at a lower level if fertility continues to decline slowlyTunisiaSource: UN Population Division (Medium Variant)
18Earning the Demographic Dividend Macro-economic policies – the demand sidePublic healthEducationYouth and Female EmploymentUnemployment and underemploymentExport orientation for labor demandChanneling savings into investmentAddress huge inequities in quality of human capital and economic opportunities between the rich and the poor
19Women in many African countries are already involved in informal economic activities. In order to seize the DD, there should be a shift to the formal sector
20Africa’s economic growth and natural resources critical for development Economies expected to continue growing at a steady rate, despite global recessionIn 2014, Sub-Saharan Africa economies to grow by 6.1% (global average of 4%) – IMF, April 2013Foreign Direct investment projected to increase from $37 in 2012 to $54 billion in 2015Infrastructure 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 developmentBut World Bank economists cautioned that high inequality and a dependence on mining and mineral exports in many countries had actually dampened the poverty-reducing effect of income growth. Countries rich in natural resources, such as Gabon, Equatorial Guinea and Nigeria, performed less well than those lacking this apparent head start.The World Bank said better administration of mineral wealth, development of agriculture and a careful managing of rapid urbanisation would help governments to lift more people out of poverty. "Better governance will need to underpin efforts to make growth more poverty reducing," the report said.
21But 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 youthHeavy reliance on mining and mineral resources, which are often mismanaged and are not labour intensiveAgricultural sector, which provides livelihood to most people, is still largely underdeveloped and vulnerable to climate changeRapid 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)But World Bank economists cautioned that high inequality and a dependence on mining and mineral exports in many countries had actually dampened the poverty-reducing effect of income growth. Countries rich in natural resources, such as Gabon, Equatorial Guinea and Nigeria, performed less well than those lacking this apparent head start.The World Bank said better administration of mineral wealth, development of agriculture and a careful managing of rapid urbanisation would help governments to lift more people out of poverty. "Better governance will need to underpin efforts to make growth more poverty reducing," the report said.
22Can Africa harness the DD? Yes … but much more needs to be done… Make a conscious decision that the status quo is not acceptable and not sustainable – and mobilize the people to act.Ensure universal access to family planning & other SRH and general public health services and general empowerment of women, which will facilitate voluntary fertility decline and enhance women’s participation in economic activitiesEnsure universal access to quality and labour-market oriented education focused on developing innovation and economic skills, with particular focus on secondary and higher levels and closing all gender and related inequities.
23Africa can harness the DD? Yes … but much more needs to be done… Optimize the role of urbanization in development and enhance rural development and modernization of agricultureAdopt economic policies and reforms that help develop industries of comparative advantage to ensure creation of secure jobs and livelihoods, which will enhance savings and investmentsImprove governance and accountable use of pubic resources, including laws that prevent exploitative use of Africa’s natural resources by foreign investors and local companies
24Africa can harness the DD? Yes … but much more needs to be done… Adopt inclusive and people centered development - the most important resource for development is human capital and not minerals or size of armies – invest in people!Enhance local technical capacity in research, documentation and operationalization of Africa’s promising and success stories to inform scale-up and closure of the policy-implementation gaps
25We should embrace positive change ongoing in Africa and learn from one-another % of married women using modern Family planning
26The DD and ICPD beyond 2014Its not the silver bullet solution to Africa’s development challenges – it’s a bonus for doing what governments should to develop their countries and people, when you start from a high fertility stateIs talking about population and the DD incompatible with the ICPD PoA?NO – as long as governments and all stakeholders preserve the right of couples to decide freely and without coercion when they want to have children and how many children to have, and support those who want to have fewer children do so.DD reinforces ICPD PoA and MDGs - integrated development that focuses on developing quality human capital, job creation and economic security, empowering women and preserving sexual and reproductive health and rights.