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Eliya Msiyaphazi Zulu (PhD.) Presented at the

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1 Challenges and Opportunities for Harnessing the Demographic Dividend in Africa
Eliya Msiyaphazi Zulu (PhD.) Presented at the ICPD Beyond 2014 Africa Regional Conference Experts Meeting Addis Ababa, 30 September 2013 – October 2, 2013 1 HIV Project Consultative Meeting Draft Presentation 1

2 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, which can help accelerate economic growth through increased productivity, greater household savings, and lower costs for basic social services provided to children. 

3 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 How does the demographic dividend work? There are two

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

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

6 Ratio of working age to dependent population
Sub-Saharan Africa

7 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. 

8 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 How does the demographic dividend work? There are two

9 Higher 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 those SOURCE: Mason, 2012

10 Consumption 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 resources Remittances Other 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

11 Consumption 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

12 Speeding the Demographic Transition
Reinforce progress in reducing child mortality Enhance education, particularly female school enrollment and general female empowerment Expand access to effective family planning to reduce unplanned pregnancies and births

13 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 15 and 18

14 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

15 Addressing barriers to contraceptive use would reduce unmet need and fertility substantially
% of Married women using modern FP and those with unmet need for FP Source: DHS Analytical Series (Forthcoming)

16 Due to differences in rates of decline in birth rates, age structures in Africa vary widely

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

18 Earning the Demographic Dividend
Macro-economic policies – the demand side Public health Education Youth and Female Employment Unemployment and underemployment Export orientation for labor demand Channeling savings into investment Address huge inequities in quality of human capital and economic opportunities between the rich and the poor

19 Women 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

20 Africa’s economic growth and natural resources critical for development
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 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.

21 But 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) 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.

22 Can 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 activities Ensure 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.

23 Africa 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 agriculture Adopt economic policies and reforms that help develop industries of comparative advantage to ensure creation of secure jobs and livelihoods, which will enhance savings and investments Improve governance and accountable use of pubic resources, including laws that prevent exploitative use of Africa’s natural resources by foreign investors and local companies

24 Africa 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

25 We should embrace positive change ongoing in Africa and learn from one-another
% of married women using modern Family planning

26 The DD and ICPD beyond 2014 Its 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 state Is 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.

27 Thank You


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