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Youth Employment in Africa: what policy makers can do January 25, 2016

Posted by OromianEconomist in Africa, Youth Unemployment.
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Odaa Oromoo



Sub-Saharan Africa is experiencing a learning crisis: While more children are attending school, many learn very little. By grade 3, many students cannot recognize a single word of a simple paragraph. At the end of the primary cycle, results from an assessment of math skills in 14 Southern and Eastern African countries found that 60% did not get beyond the designation of “basic numeracy,” and arecent assessment in 10 Western and Central (francophone) African countries found that 60% did not get beyond the ability to answer brief questions by calling upon factual knowledge or a specific procedure (defined by the authors as the “sufficient” competency threshold). By addressing these urgent education issues, governments could ensure that young Africans have the basic skills to build on through further education or on-the-job experience. Other dimensions of human capital merit action. Governments should put in place programs that ensure early child development; young children who start off with appropriate nutrition and stimulation have greater success later in life. Also, employers demand workers with high levels of socioemotional skills, which are also rewarded in household enterprises. There should be attention to developing these skills; for example, “life skills” training for adolescent girls has resulted in higher earnings.


Youth Employment in Africa: what policy makers can do




Just under two years ago, I—along with a team from across the World Bank—co-authored a report, Youth Employment in Sub-Saharan Africa, which tackled the growing gap between the aspirations of African youth and the realities of the job markets—and what governments should do about it. With an expected 11 million young Africans entering the labor market every year well into the next decade, the findings and main messages of the report remain relevant.

Boosting youth employment is not a one-dimensional task that can be solved, for example, by merely increasing training opportunities—a frequently touted response. The key is to ensure that young people—and other workers—can earn a decent income in whatever work they do. Young people need strong foundational skills—human capital—to bring to their jobs; farm and business owners, entrepreneurs and investors need a conducive environment to create more productive opportunities. Governments must address the quality of basic education and remove obstacles that hinder progress in agriculture, household enterprises, and manufacturing.

Nearly 80% of Africans work in the informal sector on small farms or in household enterprises. Most people in these sectors earn meager incomes. The challenge is beyond unemployment it is that of boosting earnings across the board.

Africa’s impressive economic growth
over the past 15 years (about 7% a year) was not associated with large-scale job creation or poverty reduction. Much of this growth was in the extractive industries that are less labor-intensive. Although the formal wage sector grew quickly in some countries (10% a year in Ghana) even in the best-case scenario, this sector will not create enough jobs in the near future. The report featured estimates of what kinds of jobs workers would have in 2020 based on optimisticprojections of overall economic growth, andhigh estimates of the formal sector wage job creation that would be associated with that growth—using the cases of countries such as Bangladesh and Vietnam as sources (Fox et al. 2013). The results were sobering: while the number of jobs created would be impressive, the structure of the labor force would remain remarkably similar to what it is today—low-income African countries would have close to 60% of workers in agriculture, 20% in household enterprises, 13% working for wages in the services sector, and only 6% working for wages in the industrial sector. Demography and the difference between stocks and flows mean that any change will take a long time.

What, then, is a government to do? The report provides a framework for systematically assessing constraints to higher earnings related to the human capital that workers bring to their jobs, and the business environment that ensures that those jobs are productive. The framework looks not just at the formal wage sector, but also at how to increase productivity in agriculture and in household enterprises. It recommends what should be “done now for now” and what should be “done now for results later.”

Key recommendations for policy makers include:

  • Carry out business environment reforms that attract investment into large enterprises that can create a lot of formal wage jobs, and help make these firms more competitive. Priority reforms include improving access to finance and infrastructure services, improving trade logistics, and easing regulatory constraints to entrepreneurship.
  • Ramp up efforts to support the informal sector. Recognize its importance and ensure the legal status of those who work in it. Provide support by ensuring access to (i) land or (legal) space to operate a business, (ii) public services (such as security services) and infrastructure (such as electricity) so that small businesses can be secure and have a predictable operational environment, and (iii) finance so that even smallholder farmers and household enterprises can invest in their businesses to make them more productive.
  • Ensure that youth have solid foundational skills. Sub-Saharan Africa is experiencing a learning crisis: While more children are attending school, many learn very little. By grade 3, many students cannot recognize a single word of a simple paragraph. At the end of the primary cycle, results from an assessment of math skills in 14 Southern and Eastern African countries found that 60% did not get beyond the designation of “basic numeracy,” and arecent assessment in 10 Western and Central (francophone) African countries found that 60% did not get beyond the ability to answer brief questions by calling upon factual knowledge or a specific procedure (defined by the authors as the “sufficient” competency threshold). By addressing these urgent education issues, governments could ensure that young Africans have the basic skills to build on through further education or on-the-job experience. Other dimensions of human capital merit action. Governments should put in place programs that ensure early child development; young children who start off with appropriate nutrition and stimulation have greater success later in life. Also, employers demand workers with high levels of socioemotional skills, which are also rewarded in household enterprises. There should be attention to developing these skills; for example, “life skills” training for adolescent girls has resulted in higher earnings.
  • Promote the dynamic private market for vocational education and training(which includes apprenticeships). Priorities include providing information and facilitating access to existing training for disadvantaged youths as well as well as ensuring the availability of better training options (this does not necessarily mean providing these services). In the presence of active training markets, public interventions need to be selective, performance driven, and evidence-based. One interesting finding is that programs that combine training with access to finance (to start or invest in a business) seem to show substantial promise.

While there is no silver-bullet that will solve the challenge of youth employment, a number of actions can, and should, be taken to ensure that young Africans are well-prepared for work—and that the work that they will engage in will yield substantially higher incomes than it does today.

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The rhetoric of #Africa’s economic ‘rise’ does not reflect reality June 19, 2015

Posted by OromianEconomist in Africa, Africa Rising.
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???????????Dounle digit Ethiopia

 Ethiopia Least competetive GCI 002

‘African economies consistently underperform the Southeast Asian average across all the pillars. The most critical gaps continue to be seen in the areas of basic requirements of competitiveness: institutions, infrastructure, and education and skills.19 This is troubling because the majority of African economies are classified as factor-driven economies (see Table 1), so these areas are currently the most critical areas for the competitiveness of these countries. On a more positive note, Africa’s financial, goods, and labor markets function comparatively well (on par, or nearly on par, with Latin America). However, ease of entry and exit from low-wage, low-productivity jobs will not lead to improved competitiveness. It will be important to build upon the region’s comparatively efficient markets by investing in  other competitiveness-enhancing reforms. A particular point of concern is the continent’s weak institutions. Although Africa’s performance is similar to that of Southeast Asia and Latin America and the Caribbean in this pillar, the institutions in all three regions receive scores below 4 out of 7. This suggests that more effort should be made to increase the capacity of the institutional framework, as it provides a critical foundation for the other dimensions of competitiveness. Indeed, the quality of institutions has actually been deteriorating in both OECD and African economies according to the GCI. This might explain in part why Africa’s competitiveness seems to have stagnated in comparison to OECD economies
(see Figure 11a). In Africa, a decline in security and government efficiency—two components of the public institutions subpillar—would appear to be at the core of this decline. Sound public institutions and governance are an important prerequisite for economic development.’-    

Is Africa really rising? History and facts suggest it isn’t

Grieve Chelwa, Africa is A Country
In the year 2000, the Economist ran a cover story with the title “Hopeless Africa”. Four years later, Robert Guest, who served as the newspaper’s Africa Editor, published “The Shackled Continent”, a book that pretty much concluded that, absent any miracles, Africa’s future was bleak. The book was widely praised, not least of all by all-round Africa expert Bob Geldof who said “[it] was written with a passion for Africa and Africans”.  Then in 2011, the current era of Afro-euphoria signalled its triumphant entrance with the Economist’s Africa Rising cover story. In contrast to their cover story of just a couple of years back, this one declared that there was hope for the hopeless continent (TIME did exactly the same thing in 2012).

We’ve written about the Africa Rising meme on this site, from culture to politics to music to fashion, again and again and again and again and again and again andagain and again. Now for the economics.

To be sure, African economies have begun growing again after contracting for most of the 1980s and 1990s. According to the World Bank, real GDP per capita shrank at a rate of 1% per year over the period 1980 to 2000 for sub-Saharan Africa as a whole. Since 2000, real GDP per capita has grown at the more respectable rate of 2% per year. And it appears that the incidence of poverty, at least as measured by the World Bank, also declined, although marginally, during the last decade.

Many so-called Africa watchers seem to have caught the “Africa rising” bug. There is now wide expectation, undergirded of course by the likes of the Economist, that growth will continue unabated going forward. Africa’s time is now! So declared a piece in the trendy Harvard Business Review.

The “Africa rising” narrative suggests the continent is now well on its way to self-sustaining growth. The kind of growth that the East Asian “tigers” and the countries known as the West experienced during the times they were rising. The kind of growth that has led to a massive reduction in poverty in China within a generation. Unfortunately here is where reality stands at odds with the euphoria.

Africa’s current growth revival (the continent did grow, and healthily so, from the 1960s to the 1970s) seems to be largely driven by external factors: China’s spectacular growth and along with it an increase in the price of commodities, whose exports Africa relies on to a great extent. So any slowdown in China’s growth, as is likely to happen as its economy matures, is likely to impact greatly on Africa’s performance.

To be sure, there have also been some internal drivers of growth: price distortions have been reduced in agriculture, macroeconomic stability has been restored (inflation rates are low and stable across most of the continent) and political institutions have improved (democracy and elections are now more common on the continent than before). But the prospects of these internal policies to sustain long-run growth are dismal. The Harvard economist Dani Rodrik, in a highly insightful essay titled “An African Growth Miracle?”, points out that the relationship between standard measures of good policies (macroeconomic stability, reduced price distortions, etc…) and economic growth tends to be weak. At best, good policies make economic crises less prevalent but cannot sustain and drive growth on their own. The same is also true of institutions, which following the much publicized work of Daron Acemoglu and friends, has become the be all and end all of development thinking. Rodrik points out that Latin America has experienced positive institutional changes within the last 20 years with a small payoff in growth. On the other hand, impressive growth in South Korea (until the 1990s) and China (today) has occurred alongside rampant cronyism and corruption.     

According to Rodrik, self-sustaining growth begins to occur when an economy undergoes a structural transformation from relying less on agriculture to relying more on industry. That is, self-sustaining growth is underpinned by large-scale industrialization. This is the historical lesson of the East Asian tigers, of China, and of even the West. Unfortunately the facts for Africa point in the opposite direction. Yes, African labour has moved out of agriculture in large numbers, but the beneficiary has not been manufacturing but services. The service sector tends not to be as “productive” as the manufacturing sector. And productivity, which is the ability to produce ever more output from the same amount of inputs, is what drives and sustains growth. The share of manufacturing in the economies of most African countries has declined from about 15% in the 1970s to around 10% today. That is Africa has in fact deindustrialized! And even the 10% of GDP that is manufacturing is mostly made up of small informal firms that are not particularly productive and are unlikely to evolve into big formal firms. Rodrik sums up his prospects for Africa thus:

“To sum up, the African pattern of structural change is very different from the classic pattern that has produced high growth in Asia, and before that, the European industrializers. Labour is moving out of agriculture and rural areas. But formal manufacturing industries are not the main beneficiary. Urban migrants are being absorbed largely into services that are not particularly productive and into informal activities. The pace of industrialization is much too slow to [spurn self-sustaining growth].”   

So what can be done? Rodrik suggests that industrialization can be helped along by improving the “business climate” in Africa. But the problem with the business climate argument, apart from being vague, is that it does not confront the fact that Africa was more industrialized in the 1970s, at a time when the business climate was likely no different from what it is today. In my opinion, the Structural Adjustment Policies (SAPs) that were administered beginning in the early 1980s are largely responsible for halting the pace of industrialization on the continent. With SAPs, Africans were told by their betters to stop supporting industry because doing so was “wasteful”. Subsidies to industry were reduced. Protective trade barriers were removed. Planning for industry was done away with. All this advice was dispensed in spite of the fact that today’s developed countries industrialized behind a veil of considerable state support. For instance, the historian Sven Beckert points out that Britain’s cloth manufacturing industry, which was largely responsible for the Industrial Revolution, was shielded from competition from India for most of the 18thCentury. The Cambridge economist Ha-Joon Chang has called this phenomenon of rich countries forcing policies on poor countries that they themselves did not implement during their time of take-off as “kicking away the ladder”.   

Africa needs to industrialize for it to really rise. Unfortunately the rhetoric around “Africa rising” is giving us a false sense of comfort and distracting us from the real work that needs to happen.



Youths, Economy and Corruption: The African Outlook at World Economic Forum on Africa 2015 June 6, 2015

Posted by OromianEconomist in Uncategorized.
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The Nigerian Association of Criminology, Terrorism and Political Violence Studies

By Femi Senu, Director of Research – NACT-PVS

The 25th World Economic Forum (WEF) on Africa was held in Cape Town, South Africa, between 3 June 2015 and 5 June 2015. Over 1,000 leaders from business, politics and civil society convened including South Africa’s current President, Jacob Zuma and former British Prime Minister, Gordon Brown.

During the WEF, African political and business leaders made clear that transparent and accountable financial systems had to be promoted to aid social and economic rights such as education and healthcare for the continent’s youth. With Africa losing millions from illicit financial flows, the focus on economic growth has given rise to deep inequalities, pervasive poverty and struggling infrastructure despite the fact that Africa swims in mineral resources and a large labour market.

Reflecting on the three day conference, its aim has been to connect Africa to the world, creating ethical business operations with concurrent…

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Ethiopia: The Declining of the Much Vaunted GDP Growth, the Rise of Youth Unemployment, Extreme Poverty & Social Discrimination February 9, 2014

Posted by OromianEconomist in Africa, African Poor, Aid to Africa, Colonizing Structure, Corruption, Development, Dictatorship, Economics, Economics: Development Theory and Policy applications, Environment, Ethnic Cleansing, Food Production, Human Rights, Janjaweed Style Liyu Police of Ethiopia, Land Grabs in Africa, Ogaden, Oromia, Oromo the Largest Nation of Africa. Human Rights violations and Genocide against the Oromo people in Ethiopia, Slavery, The Colonizing Structure & The Development Problems of Oromia, The Tyranny of Ethiopia, Tyranny, Uncategorized, Youth Unemployment.
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Odaa Oromoo

‘The second poorest country in the world according to the United Nations Development Programme (UNDP) Multidimensional Poverty Index, [2] Ethiopia consistently ranks extremely low upon a variety of socioeconomic, development and human rights indicators. [3] Recently, however, Ethiopia has experienced economic growth – making it amongst ‘Africa’s best performing economies.’ [4] This development reiterates the Ethiopian government’s lofty ambitions to attain ‘middle-income status by 2020.’ [5] The validity, sustainability, and possible ramifications of Ethiopia’s purported and ambitious economic transformation in the near future – which could prove beneficial domestically and regionally – merits closer analysis.’  – http://pambazuka.org/en/category/features/90435

To begin with, it is important that Ethiopia’s economic growth translate into broad scale development. While Ethiopia has reportedly witnessed tangible progress on the UN’s Millennium Development Goals (MDGs), [7] the International Monetary Fund (IMF) has noted that there still remains ‘a pressing need for policies to translate positive growth outcomes into stronger employment gains and further reduction in poverty and set off a dynamic, virtuous cycle of self sustaining and broad-based growth.’ Further challenges include high levels of youth and female unemployment, greater efforts being required to identify and address the needs of those in severe and chronic poverty (approximately 25 million or 27 percent of Ethiopians live in extreme poverty), and pervasive malnutrition. [8]

Ethiopia’s economic growth also arouses questions of equitable growth and redistribution. Handley et al. (2009) outline that, although essential, economic growth is not always wholly sufficient to reduce poverty or inequality. Rather, an assortment of measures must be undertaken to ensure that poorer strata of society are incorporated into national economic growth. [9] Even with Ethiopia’s past reduction of much national inequality, dramatic inequities in education and employment – and broad discrimination – along rural-urban, gender, and ethno-religious lines are starkly apparent. [10]

Another critical issue emanating from Ethiopia’s economic growth and general developmental efforts is the manner in which they have been pursued. For example, a vital component of Ethiopia’s agricultural development strategy is the ‘villagization’ program that entails the relocation of millions of people from locations reserved for industrial plantations. [11] Ethiopia is an agrarian-based society in which more than 80 percent of Ethiopians depend on agriculture and pastoralism for subsistence. Issues arising from the program have led to greater food insecurity, a destruction of livelihoods and the loss of cultural heritage. Additionally, the program, which frequently utilizes forced evictions, has been plagued by a plethora of human rights violations. A variety of human rights groups have documented beatings, killings, rapes, imprisonment, intimidation and political coercion by the government and authorities. [12]

While Ethiopia has suggested that leasing land to foreign investors is necessary to modernize farming, enhance domestic food production and generate employment, [13] it continues to struggle mightily with hunger, under-nutrition and stunting. [14] Further, a UN report has even suggested that such investment deals negatively impact local populations. [15]

Importantly, projections of Ethiopia’s forthcoming evolution into a middle-income country must address the fact that Ethiopia remains overwhelmingly dependent on foreign aid. Long unable to produce enough food for its population, the nation has been dependent on foreign food aid for decades; [16] recent World Food Programme data illustrates that the country remains one of the largest recipients of food aid in the world. [17]

Siyoum, Hilhorst, and Van Uffelen (2012) also note that more than 8 million Ethiopians rely on food aid. Furthermore, the authors find that Ethiopia’s food insecurity stems from government failures in addressing major structural problems including poor soil fertility, environmental degradation, population pressure, fragmented landholdings and a severe lack of income-generating opportunities outside of agriculture. [19]

In addition to its reliance on food aid, Ethiopia is highly dependent on external economic assistance. In 2011, Ethiopia was the world’s fifth largest recipient of official humanitarian aid and received $3.6 billion in total assistance, [20] the latter figure representing between 50-60 percent of its total budget. [21] Additionally, Ethiopia’s 2011 share of total official development assistance – approximately 4 percent – placed it behind only Afghanistan.

According to Finland’s Country Strategy for Development Cooperation in Ethiopia, published by the Finnish Ministry of Foreign Affairs, Ethiopia’s dependency challenges include the fact that its ‘…humanitarian support programmes are fragmented,’ [22] an outcome likely influenced by the expansive network of foreign development, religious, and charity organizations (2000-4000 in total). [23] The Finnish report also notes that ‘a large proportion of the Ethiopian people have limited coping mechanisms at their disposal.’ Furthermore, the country is faced with ‘an immediate need [to] transition from humanitarian aid to development [and]…without a range of dynamic and comprehensive activities to promote effective private sector development, particularly in agriculture, it will be very difficult to achieve the anticipated growth rates under the [growth and transformation plan].’ [24]

In fact, recent years have seen Ethiopia’s vaunted annual GDP growth rate decrease. [25] Utilizing World Bank data, which reports Ethiopia’s 2012 GNI per capita as $380 (current US$), [26] Ethiopia’s transition to lower middle-income status (between $1,036 – $4,085) [27] would require an annual growth rate of approximately 20 percent. This would appear to be highly unlikely, even if overlooking its recent descending economic trend or the negative effects of inflation.

These issues may be exacerbated by an array of financial risks. According to the IMF, Ethiopia faces growing external debt, [28] even though it was the beneficiary of debt cancellation in 2005 via the Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiatives (MDRI) programs. [29] Additionally, it is has experienced a worsening of its foreign exchange shortage, and a lack of sufficient financing for its growth and transformation plan. [30]

Beyond the aforementioned developmental challenges, issues of aid dependency and financial risks, domestic governance and external geopolitical factors represent critical concerns for Ethiopia. A multicultural, ethnically-diverse country with a state-structure built along institutionalized ethnic entrenchment in a nominal federal arrangement dominated by a single minority group; rising tensions with a resilient, large and historically repressed Islamic constituency; and troubled ties with neighbours are both challenges and possible impediments to Ethiopia’s projected economic growth unless adequately addressed.

Currently, political oppression, ethnic discrimination, extrajudicial executions, torture and other abuses in detention, [31] in addition to economic factors, have led hundreds of thousands of Ethiopians to flee the country. Many fall prey to human smugglers and traffickers who engage in a variety of the most depraved forms of abuse or exploitation. [32]

Additionally, Ethiopia has been at the forefront of a variety of conflicts. The separatist Ogaden National Liberation Front (ONLF) continues to wage an insurgency against the central government, [33] while terrorism – largely arising from Ethiopia’s policies and interventions in neighbouring regions – has been a constant threat. According to Global Humanitarian Assistance, in each of the years from 2002-2011 Ethiopia was engaged in some form of active conflict. [34] Prior, the 1998-2000 period saw Ethiopia wage a costly war against Eritrea. Since then, Ethiopia has failed to abide by its obligations as ruled by the international Eritrea-Ethiopia Boundary Commission, [35] and instead continues to occupy sovereign Eritrean territories – thus posing an unnecessary problem to both countries and the surrounding region. [36] Ethiopia’s recent tension with Egypt regarding the construction of Ethiopia’s Renaissance Dam is an additional dimension that complicates an already tenuous regional political landscape. [37]

Last, a potential crisis within or outright collapse of the Ethiopian state calls into question any projections of Ethiopia’s impending transition to middle-income status. Since 2006, Ethiopia has experienced a downward trend in the Fund for Peace (FFP) Failed States Index, while for 2013 it received amongst the lowest rankings. [38] This outcome is buttressed by Marshall and Cole’s (2011) State Fragility Index and Matrix which classifies Ethiopia as one of the eight ‘most fragile’ states in the world. State fragility is reported as an aggregate score of an array of governance categories including state effectiveness, legitimacy, security, armed conflict and other socio-economic and political factors. [39] Finally, the National Intelligence Council’s Global Trends 2030: Alternative Worlds (2012) suggests that Ethiopia is among the top 15 ‘high risk’ nations slated for state failure by 2030. [40]

In conclusion, Ethiopia’s recent economic growth and developmental progress are respectable achievements, particularly within a region long plagued by a variety of ailments. However, suggestions of Ethiopia’s socioeconomic transformation may prove fanciful if they fail to consider and address a variety of significant concerns.

-Fikrejesus Amahazion, a PhD candidate focusing on Political Economy, Development and Human Rights.
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Related reference:

The Food Index

The interactive snapshot of 125 countries showing the best and worst places in the world to eat, and the challenges people face getting enough of the right food.

Around the world, one in eight people go to bed hungry every night, even though there is enough food for everyone.

Ethiopia ranks 123 (worst)  in over all food availability.