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Africa - A Demographic Dividend Around The Corner?

Over the first half of 2015, we have run three very successful programs across the African continent. Each one was in a different location and dealt with very pertinent local talent challenges.Over the latter half of the year, I have two more on schedule.

Every time I visit Africa, I am struck by the incredible gifts and challenges I see all around me. Having grown up in Asia during the 1970s and 1980s, some seem vaguely familiar, and yet, there are others which truly boggle the mind . Thinking about them all as I work on African case studies for an upcoming certification program, I was reminded of a post I had written on the short and medium term business potential of the Sunrise Continent. Here it is:

Africa today is a particularly interesting case study, and exhibits similar risks and opportunities seen in countries like China and India during the early 1990s. Back then, as both Asian tiger economies began opening up their markets for business, few global players knew how to react. It was truly difficult to assess how serious or committed their governments were. History tells us that companies who took capital in early and built strong local franchises, sit on golden business opportunities today.

The coming African sunrise too has its sceptics, but as we sit debating this online, smart long term capital has already starting slipping in under the door. Yet to the majority, Africa continues to be seen as a high stakes gamble - as some glaring risks linger.

For one, the new regimes in North Africa have yet to demonstrate their intentions and competence. On the other hand, Sub Saharan Africa lives with the deadly scourge of AIDS scything through the most productive part of its workforce. Some of the world’s least developed countries live in this neighbourhood, where the human immunodeficiency virus has singularly reduced life expectancy at birth by a staggering 10 years.

Looking over the fence though, there is every reason to be hopeful. For three main reasons-

1. Data emerging over the last five years has shown AIDS prevention efforts are finally starting to bear fruit. In a few key countries, HIV transmission numbers are finally in remission. With better health education and health care, many countries could be seeing a light at the end of this tunnel of horrors. Today, Africa is the world’s fastest growing continent in population terms and as mortality improves, is poised to experience its own demographic dividend in the midst of an otherwise ageing world.

2. Similar to India and China in the 1990s, the African middle class is on the cusp of emerging as an economic force. This is a bellwether sign for enhanced consumption and infrastructure investments. Within Africa, Botswana is a shining example to its neighbours. It provides proof that in spite of challenging health circumstances, it is possible to kick-start a virtuous economic cycle. Other African countries could emulate Botswana’s story, but this will take political will, stable governance and public support.

3. Which brings me to the most important factor- aspiration. Social aspirations are the world’s most powerful economic force. In many developed countries, younger generations take what they have for granted. In many emerging markets, the same younger generations are no longer satisfied or resigned to the life they have. The Arab Spring across North Africa and the Middle East was a chilling reminder to administrators that the youth will no longer accept chronic unemployment and hopelessness as a way of life.

In Africa’s future, significant challenges exist. There remains huge scope for honest governance, resource conservation, basic literacy and improving health; and most of these challenges are so severe, they will take a decade or two just to exit negative trajectory. The present though may prove the best time for global companies to start analysing the African talent landscape, and maybe even investing in developing future talent. The opportunities are plenty. Private enterprise already plays a pivotal role in social healthcare support within many African communities. Can private involvement in relevant education, skills development and talent development be seen as a good investment today? Should HR put this on the management agenda?

I certainly think so. The 2020s will be Asia’s decade; the 2030s could well be Africa’s.