Demographic dividends are the time periods in which populations have low dependency rates or bulge in the working age population, allowing for significant economic opportunities. The last example of a successful dividend was in Southeast Asia in the 1950’s and 1960’s. Investment in both public health and education combined with lowering fertility rates allowed the region to boom economically. GDP per capita growth averaged more than 6% a year, staggering growth for the region. Africa has the unique potential to harness a demographic dividend within the century, but what is it going to take to get there?
In order to have a population ready to work with the dividend, low dependency rates are crucial. Dependency rates are defined as the ratio of those under 15 or over 65 in relation to the working age population. Low dependency rates increase individuals spending on themselves and allows them to build capital over time. Rather than working to support children or elderly, individuals work to support themselves, increasing their relative amount. To achieve low dependency, it is crucial to decrease fertility rates. In fact, decreasing fertility rates is the first and most important step to even having a window of opportunity to achieve positive effects from the dividend. Achieving low fertility rates will be difficult. At 2010-2015 rates, fertility rates for Africa as a whole were at 4.72 with sub-Saharan Africa at 5.1 children per woman. Unlike other regions of the world, as mortality has decreased, fertility has not decreased in tandem. They’ve been distinctly off pattern to the rest of the world since the 1960’s.
Decreasing fertility in Africa is a multifaceted issue, but most important is secondary education for women. Unlike other regions of the world where women’s employment has a much larger impact, education has the largest impact for lower fertility rates in sub-Saharan Africa. Birth intervals, or time between pregnancies, play a huge role, as does the desired amount of children for a family. By empowering women through education to make decisions on their family lives and childbearing fertility rates can be decreased. Of course, this is not true in all countries or in every case. In some countries, such as Rwanda, aggressive contraception and anti child marriage campaigning can also significantly contribute to declining fertility. Simply put, in order to create the dependency rates necessary to harness the demographic dividend, there have to be fewer children born.
In order to create economic benefits for the dividend, it is crucial to increase spending in education and public health. Human capital is the key to the dividend, and health and education can significantly impact human capital potentials. Currently all African regions fall behind World Health Organization standards for 4.45 healthcare workers per 1000 individuals. Increasing quality healthcare access will allow for the continent to optimize conditions for the dividend. Education, both access to it and quality of it, is also crucial. Strong foundational education allows for children to grow up into productive citizens and workers, opening up job markets and opportunities.
Instability threatens the potential for a dividend. Young populations are often the most at risk for corruption and autocratization. Both climate change issues and political instability within the continent pose risks to the potential to harness the dividend. With such young populations, the chances for problems only continue to rise. It will be critical to both target education, healthcare, and other dividend resources as well as fighting difficulties such as climate change and corruption within nations if the dividend is to be captured.
There is a need for a strong capital base in Africa for the dividend, both public and private. Countries will take a hit in the beginning, undoubtedly, but the economic benefits in the end and as the dividend continues could be massive for the continent. Other nations, particularly China, have already laid their claims to supporting the groundwork of a dividend. By supporting infrastructure as part of the Belt and Road Initiative, China is building future allies when the dividend plays out. It will be essential to slow the emigration of skilled workers out of the continent to help the economy prosper.
The demographic dividend is achievable, but only if African countries invest in their young populations. There’s huge potential to be gained for both African countries and the world, depending on investment. Essential to the dividend will be international partners, but who takes up this work is still in question. As Africa grows into the largest populated continent in the world, super powers will need to decide whether they will be part of the journey.
Sources
https://pdf.usaid.gov/pdf_docs/PNADJ952.pdf
https://www.unicef.org/sites/default/files/press-releases/glo-media-Generation_2030_Africa_2.0.pdf
https://www.youtube.com/watch?v=0WIDWGrr4kM
https://www.hoover.org/research/africa-2050-demographic-truth-and-consequences
