A better future for Africa

Senior Advisor, Confederation of Danish Industry; Chair, Ad-Hoc Group on Africa of the Business and Industry Advisory Committee to the OECD (BIAC)

Marie Gad

In many African countries, where unemployment rates can run as high as 30%, there is strong potential for entrepreneurship and employment. Development must focus on bringing down the barriers to progress. 

”How do you expect me to make a living?” Those words sparked the incidents that have since become known as the Arab Spring. On 16 December 2010, the 26-year-old street vendor Mohamed Bouazizi set himself on fire after uttering these words following harassment by a local official.

The story of Mohamed Bouazizi tells us about the hopes and dreams of millions of young African men and women entering the labour market every year. Africa’s young generations want to work and to create a livelihood for themselves and their families, which will enable them to build a better future. Unfortunately, the story of Mohamed Bouazizi does not have a happy ending; instead it tells us about what happens when those hopes and dreams are turned into frustrations because there are no jobs available, and society is fighting their entrepreneurial efforts by putting up administrative barriers, asking for bribes and generally making it difficult to start and run a business.

Of Africa’s more than 1.2 billion people, 70% are under the age of 25. That makes Africa the youngest continent in the world. If you are an optimist, that constitutes a major opportunity for development, with Africa offering the last major workforce reserve in the world. If you are a pessimist, you see young people without sufficient education living on a continent that is not competitive enough to create attractive employment opportunities for even a fraction of the young generations—generations which can then potentially become a major destabilising factor locally, regionally and globally.

So how do we ensure that these young men and women contribute to a virtuous, rather than a vicious, circle of development in Africa? The answer lies in diversified private sector development. Increased employment in agriculture, industry and services can provide the basis for development which will allow African countries to benefit from globalisation and to give their citizens opportunities to prosper.

Africa is rich in entrepreneurial spirit, will and vision; unfortunately, a number of barriers make it difficult for business to flourish and grow, and thus to create the jobs and incomes that are currently in such short supply. Africa has consistently been the region of the world that offers the worst framework conditions to both domestic companies and foreign investors. Small improvements have been made, and certain countries have shown a will to reform. But overall, Africa is still far from providing a climate that supports private sector development.

Therefore, we need a new global consensus that creating jobs and entrepreneurship opportunities are the pillars of development, poverty eradication, and prosperity for the individual citizen and for society. Donors and developing countries must come together with civil society and the private sector in a joint effort to change the status quo.

A number of different conditions must be changed in order to meet the challenge of creating jobs and entrepreneurship opportunities. We all know that some barriers are difficult to overcome and require a lot of time and money to break down, while others mainly require the political will to reform. Let me give a couple of examples.

The issue I find most frustrating when I speak with colleagues from the African corporate sector is the lack of employees with the right skill sets. This is an unacceptable paradox in societies with unemployment rates of 20-30%. Many of these countries are actually spending a relatively large share of their resources on education, but they are not getting sufficient value for money.

Administrative barriers to business and the corruption that often follows are other issues which can and should be fought decisively by donors and governments. This requires will, but not necessarily a lot of time and money. In one case when a municipality piloted a streamlined approval process, time spent by businesses was reduced by 90%, and compliance costs by 75%. On top of that, revenue collection improved by 40% and first-time business registrations shot up.

Challenges and barriers, of course, vary from country to country, but a stronger public-private dialogue would no doubt result in a number of ideas such as those that are simple, easy to implement, and have direct effects on private sector development and employment creation. Good governance, infrastructure development, trade facilitation, tax reform, access to finance, and all the other elements that together provide a business environment conducive to creating jobs and entrepreneurship opportunities should remain top priorities.

“How do you expect me to make a living?” is a question asked by millions of young Africans today. Hopefully there will come a day in the not so distant future when it will not go unanswered.

International Collaborative Initiative on Trade and Employment 

A Better Future for Africa

The Africa Commission of Danemark 

©OECD Yearbook 2012

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