The People First Podcast is back for Season 4! In this first episode, we explore one of Africa's most pressing challenges with Andrew Dabalen, Chief Economist for the World Bank Africa region. Andrew and his team have just released the Africa’s Pulse report, "Pathways to Job Creation in Africa."
This conversation highlights job trends across the continent and examines opportunities to create sustainable employment for Africa’s growing working-age population.
Tune in to discover the realities behind Africa’s labor market and learn how infrastructure, access to finance, and market integration are shaping the continent’s future.
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"Africans actually work. Every year, millions of them show up and they find some work, but only 24% find jobs in wage employment. And the other 73% find jobs that are insecure, very volatile, do not really pay, don't occupy all the hours that people need to work."
Rama George: Hello and welcome to People First, the podcast from the World Bank that brings you stories and voices from Western and Central Africa. I'm your host, Rama George. In today's episode, we're exploring one of Africa's most pressing challenges, job creation.
On record, a lot of people have jobs, they are working, but the reality is that these jobs do not provide sustainable livelihoods. To help us unpack this paradox and explore solutions, I'm joined today by Andrew Dabalen, who is the Chief Economist for the World Bank Africa region. His team has just released the Africa's Pulse, Pathways to Job Creation in Africa.
Hello, Andrew, welcome!
Andrew Dabalen: Thank you, Rama, for having me.
Rama George: Now, before we start, can you tell us what is the Africa's Pulse and what is the theme for this year?
Andrew Dabalen: Thank you. Africa's Pulse is a report that we produce twice a year. One is in October, one is in April. And the main purpose of the report is to capture, as the title suggests, the pulse of the continent. Meaning, what's going on when it comes to issues around inflation, around government finances, debt, growth.
Each policymaker knows something about these things in their country, but do they really know what's going on at the regional level? And so that's what we do in the report. So that's the first part. Every edition takes up a particular theme that is of very high importance for the region that we can then dive deep into. And this time, we actually look at this big challenge of job creation in Africa.
Rama George: So now let's dig in. I'd like to focus our discussion today on the chapter on jobs. What are the main trends in the continent, and could you share some key figures with us, to illustrate these?
Andrew Dabalen: Absolutely. So, Africa faces a huge job challenge. We start with the demographic shift. Let's focus specifically the working age population, which is defined in this case as people who are between the ages of 15 and 64, because it's a very young continent...people work as early as when they are 15. So that's the bracket we take.
Africa's working age population is going to increase by more than 624 million people in the next 25 years. It’s not a group of people who will be born in the next 25 years. These are people who are already alive. They're three years old, five years old, maybe 10 years old, and in the next 20 years, they'll be knocking on doors, offices, hospitals, schools looking for jobs. So that's one big challenge: how to create jobs at scale for this expanding population. The second is that Africans actually work. Every year, millions of them show up and they find some work, but only 24% find jobs in wage employment. And the other 73% find jobs that are insecure, very volatile, do not really pay, don't occupy all the hours that people need to work.
So there's a lot of underemployment. And so that's the twin challenge that the continent faces, how to create massive jobs for the expanding population, but also how to create good quality jobs so that people can actually expect to have increases in incomes and have social mobility and get out of poverty.
Rama George: Why aren't these businesses able to generate quality jobs, as you mentioned earlier, and how can we change that?
Andrew Dabalen: So, there is a lot of entry of these low productivity businesses into the market. Most of them are basically under pressure to make a living because large and medium-sized businesses are absent. And so, what you get instead is single family, one person, two persons, maybe maximum four person enterprises, which cannot, for example, employ technology in order to improve their productivity. They do not have access to finance... to a lot of this infrastructure that they need to be able to expand. And so, as a consequence, they can't really take advantage of what has made businesses expand fast such as specialization of tasks, organizational production on the shop floor. And then overall, you actually have much higher productivity and much more efficiency. And as a result of that, actually they're incapable of creating mass jobs, of creating a lot of more jobs than the region needs.
Rama George: If these small firms were to get loans, how does equity finance, for instance, create a pathway for them to grow?
Andrew Dabalen: Access to finance in general, but equity finance in particular is very important for these types of businesses for the following reason. So a lot of these are small businesses. Some of them could be high growth businesses, they could actually expand much faster. But the challenge is that they can't bear debt because their businesses are still forming. It's not entirely clear whether in fact they will succeed or not.
So traditional banks cannot take a risk on them. So, they can't provide financing to them. What they would need instead is somebody who will take an equity stake so that if they succeed, the investor succeeds. If they fail, well, too bad. So that's the whole idea about risk sharing because they don't really have a lot of cash flow often to pay back their debt.
So, what they would prefer is equity finance. So, equity finance is the most important thing for such high growth startups in Africa, and equity financing is completely absent. 80% of all startups in Africa, 80% of financing come from outside of Africa. So that is the challenge, right?
So yes, exactly. And it's also not only 80% of all startup financing coming from outside of Africa, it's also concentrated in very, very few places. It's Johannesburg, it's Cape Town, it's Nairobi, it's Lagos, and probably nothing else. Then there are maybe medium tier cities like C?te d'Ivoire, Abidjan, or Accra… but mostly most of it is just these four cities.
Rama George: So, how critical are infrastructure investments such as electricity, transport, digital connectivity in unlocking these opportunities and creating jobs?
Andrew Dabalen: Absolutely critical. If you want to have large scale job creation, you want businesses to expand, and you want high growth businesses to enter the market. So those two things are very important.
What we find out is that 71% of businesses in Africa complain about outages, reliability of electricity. And when we look at the data and we do these studies, we find out that outages actually lead to five to 14% reduction in employment whenever they happen. We looked at this in about 21 countries, across 21 countries in Africa. Something like lack of electricity and reliability actually is a job destroyer.
Moreover, if a business knows that a country doesn't have reliable electricity or even it's difficult to access, they wouldn't enter that market. The ones who enter often have to really think about shedding jobs most often.
Same thing with digital technologies, very, very important for modern businesses they can't do without. We find out that countries where high broadband internet has arrived have found themselves attracting more FDI, in Foreign Direct Investment. They have found themselves increasing productivity of their businesses, job creation. They found themselves reducing poverty.
Rama George: So, do you see in this landscape also regional integration and international markets playing a bigger role?
Andrew Dabalen: Absolutely! There's one set of things that will make businesses create a lot of jobs, and that is things that reduce cost of doing business, such as we've talked about. Another set of policies that will allow businesses to expand is market access. And so domestically, what that means is countries need to create a level playing field for all companies so that they can compete fairly, right?
So, issues around licensing. Do you favor one set of companies and others, right? If you do that, you're reducing competition and you're reducing value addition. Do you introduce all kinds of tax treatments that are unequal and unfair? It's a problem. Do you protect certain industries and not others? That's a problem, right? So, creating a level playing field is one of those things that actually blocks companies from accessing markets, and that creates a lot of problems. The companies can't expand and they can't create jobs.
Regionally, that means integration, right? A lot of these countries have very small markets…and if there is no open markets and trade, you're basically looking as an entrepreneur, servicing whatever you can get out of 10 million people. But if you have hundreds of millions of people, that's a much larger market.
So, expansion and entry of firms requires cost of reducing poverty, sorry, cost of reducing doing business, but also market access.
Rama George: In the long run, what does this mean for households and small firms?
Andrew Dabalen: When all of this is working, if you can get businesses to expand….the markets are working…what you get is basically a lot of, a plentiful supply of decent jobs that will allow people to make a living, to support their families, to exit poverty, to have social mobility, and to prosper in general.
Rama George: Now, in your own view, if you had to pick the top three priorities to transform Africa's job landscape, what would they be considering also the growth of the population by 2050?
Andrew Dabalen: The top three priorities?
Rama George: Mm-hmm.
Andrew Dabalen: Okay. One priority will be making cost of borrowing and access to finance for enterprises to expand less costly. The second I would say is market access. Businesses really, really need access to markets. The final, I would say is how to create an ecosystem of training and skills that will increase the capabilities of the population so that they can be the workers who will increase the productivity of funds. They're the ones who are going to create new products. They're the ones who are going to start new businesses, entrepreneurs, and so on and so on.
Rama George: Thank you, Andrew, for sharing these insights. Africa needs more jobs for an expanding working-age population. We can find out more about this in the latest Africa’s Pulse. We will provide a link to the report in the transcript.
It’s clear that solving Africa’s jobs challenge isn’t about one quick fix, but about building the full ecosystem—financing, infrastructure, and markets—that allows firms to thrive and create meaningful opportunities between now and 2050.
I'm Rama George, and you've been listening to People First, the podcast featuring not only the voices but also the programs and initiatives supported by the World Bank in Western and Central Africa.
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About People First Podcast
provides a human angle to concrete development topics as they affect people in Western and Central Africa. It also features World Bank project and initiatives. Join us for a sustainable and inclusive development!
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木瓜影院 Group is one of the world's largest sources of funding and knowledge for low-income countries. Its five institutions share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development.