KIGALI, WEF Africa: MASS jobs or productivity? Every year some 11 million young Africans enter the job market, only to join tens of millions of others struggling with limited work opportunities on the continent, creating the conditions for social unrest.
African governments once thought thought they had the answer: invest more in labour-intensive agriculture so that it becomes productive enough to move more people into higher-paying industry, especially export led, and services.
It is a tried and tested path: for many countries, adopting new technologies anchored their growth strategy—from the Industrial Revolution and the post-Second World War spurt in the West, to the Asian Tigers between the 1960s and 1990s, and China in the last 20 years.
Yet the buzz around the World Economic Forum is currently around of a “4th Industrial Revolution”, essentially “smart” development —think the Internet of Things (IoT) — which brings together previously disjointed fields such as artificial intelligence, machine learning, robotics, nanotechnology, 3D printing and genetics and biotechnology, all building and amplifying each another, and making things easier, and more efficient.
Scarce jobs lost
But it could also means million of already scarce jobs lost. So how does the continent reconcile the need to “leapfrog” into knowledge-based economies with its persistent unemployment problem?
Both can be done but it is a balancing act, the World Economic Forum on Africa heard here in the Rwandan capital.
“Unemployment is still high on the continent, so we should fix that with labour intensive economies as we look to embrace innovation and technology,” Geoffrey Qhena, the CEO of South Africa’s Industrial Development Corporation (IDC), said.
It is also not straight-forward.
“It needs a multi-faceted approach so solve a complex issue. It takes time though,” Johan Aurik, the managing partner of global consulting firm A.T Kearney, said.
“Africa needs to run faster and grow its [production] systems. It can be done, see China, but there are no silver bullets.”
With China expected to shift 85 million jobs as it rebalances its economy, Africa could position itself to take advantage of this, experts said.
Cheap labour has been part of Africa’s marketing pitch to foreign investors, promising high returns for footloose manufacturers, and through this carving for itself a path to rapid economic growth in line with the Agenda 2063 blueprint drawn up by the African Union.
The answer is within
But studies find that wage differential advantages are no longer much of a factor— in the advanced economies of the US and China, recent developments in robotics and additive manufacturing are allowing their firms to bring (automated) production much closer to their domestic markets, thus cutting costs and reining in the offshoring of jobs.
The more durable answer may lie within. The continent’s untapped market holds deep potential in meeting the search for an ubiquitous but as yet elusive “Made in Africa” brand, and dispersing the myth that it is okay for African firms to remain as micro-businesses.
“We’ve got a lot of demand in terms of products and market here that needs to be met,” Ally Angula, the co-founder of Namibian apparel manufacturer Leap Holdings said. The challenge for her firm so far has been filling the “missing” links within the supply chain, while skills gaps were also a big challenge, she said, urging selling Africans to the fact that manufacturing was not as difficult as perceived, and that upgrading skills of workers is critical.
Research has found that skilled jobs are inherently less susceptible to disruptions by technology.
The continent also has big internal advantages, the experts said.
“Population growth is the biggest driver of growth in Africa; no other continent has this,” Aurik said. “The key is to avoid external companies selling things to the continent that could be made in Africa.”
The prevalent image of the factory plant as representing manufacturing was misleading, he said. “It’s all about getting the systems right, the value chains—sourcing, distribution, innovation.”
Not any less creative
Despite the size of Africa’s potential market, the percentage of GDP represented by manufacturing has remained low – 9% in Nigeria, 12% in Kenya and just 8% in Zambia, compared to 30% in China.
The continent is however not any less creative than places such as America’s Silicon Valley, the difference was only in the ease of access and the size of the opportunity, the meeting heard.
To tackle this gap, Africa needed to keep barriers to trade low, and to focus on implementing the multiplicity of existing policies including on infrastructure and training.
The continent should also not throw in the towel yet on good old manufacturing. Its impact was more long-lasting: new technologies—and service jobs—tended to be themselves be replaced by others.
“And agriculture has suddenly become very sexy to young people in Africa,” Angula said.