The Demographic and Social Development in Africa

Abstract

The analysis of Africa’s recent economic development follows a wave motion, from the supposedly hopeless continent to the African economic miracle and, after the temporary end of the commodity boom, back to the ground of hard facts. The same phase sequence can be observed for the social trends in Africa.

The analysis of Africa’s recent economic development follows a wave motion, from the supposedly hopeless continent to the African economic miracle and, after the temporary end of the commodity boom, back to the ground of hard facts. The same phase sequence can be observed for the social trends in Africa. The 1980s and 1990s were determined by the necessity to reduce mass poverty in Africa and to establish basic food security. At the beginning of the new millennium, the perception completely turned around, and the tenor of the analyses was set by the spectacular rise of new African middle classes. Since the middle of the last decade, the third phase of recent socio-economic development has been initiated by a series of critical analyses of structural change and job development. (Asche, 2015)

In this third phase, few see Africa on the way back to the 1980s or 1990s, on the contrary: a continuation of a GDP growth of 4-5% is usually assumed; but a differentiated view also applies to the social trends, and in 2020, Covid-19 further complicated the forecasts (see below). The everyday perception of Africa’s new social reality is—hardly different from the scientific perception—determined by the dichotomy between the emerging middle class and still widespread poverty.

1 The New Middle Class

The dynamics of a “New African middle class” embodies all the positive expectations associated with the growth period of the last twenty years: the development of mass purchasing power beyond mere basic supply, progressive urbanization, the adoption of Western lifestyles and modern consumption patterns, which makes the African market even more interesting for Western companies. This middle class is also associated with the strengthening of modern societal elites and specifically entrepreneurship in Africa, although the empirical basis of knowledge about this is still thin. The new middle class finally stands for a series of social and political expectations—not least the consolidation of African democracies through the broadening of tax-paying and therefore political accountability (accountability) demanding layers, which can also support an active civil society. The phenomenon is thus complex (Kroeker et al., 2018; Lentz, 2015; Melber, 2015).

The definition of the new African middle class in the often-cited statistical analyses is not primarily made according to professional groups or property relations, but according to available income or consumption expenditures. The range of definitions varies greatly. The calculation of the African Development Bank, considered a milestone, is based on premises that Ravallion made clear following Banerjee/Duflo: Middle class is not defined according to the standards of industrialized countries, but according to those of developing countries; and it begins exactly where poverty ends (Ravallion, 2010). This location does not necessarily have to be the right one. In any case, it is important to know it, especially if it is assumed that the mentioned expectations of lifestyles, consumption patterns and political attitudes are indeed inspired by the parallel to industrialized countries. The corresponding classifications for Africa count everyone (adult) with an income of more than 2 US dollars per day as middle class, and thus arrive at estimates of 300 million Africans who belong to it¹ (AfDB, 2011). The fact that this cut-off limit is only slightly above the then international poverty line of 1.25 US dollars or exactly borders the slightly higher 2 dollar poverty line is clear to the statisticians of the African Development Bank. The statisticians include the “floating middle class” of 2–4 dollars consumption per person and day in their (further) middle class definition. At the top of the pyramid, people with > 20 dollars per day are considered rich. According to this reading, African societies in the base year 2010 were divided into 61% poor, 34% middle class and 5% “rich”. Deloitte sees the African middle class growing to 1.1 billion people by 2060 on the same basis—a huge consumption potential. All this shows how relative a formally absolute definition of middle class can be, or in other words: how much the desire for market development determines the calculations.

More realistic estimates, such as a (not freely accessible) study by the Standard Bank South Africa, calculate with a minimum of 15 US dollars per person and day, above which degrees of freedom in consumption become possible—and consequently a rising demand for higher-value and durable consumer goods. According to this, the middle class amounts to about 5500 dollars annual income in the eleven examined sub-Saharan countries still to 15 million households (Freemantle, 2014). Since the eleven countries account for about half of the African social product, the number can be roughly estimated to be 30 million households, compared to the 85 million (2008) to 128 million (2020) middle class households with discretionary consumption at McKinsey (Roxburgh et al., 2010), which are closer to the AfDB estimate. Depending on how this is extrapolated to population numbers, realistically a limited, albeit rapidly growing midfield of—by local standards—wealthy African consumers emerges.

2 Poverty in Africa

At the other social extreme, we still register widespread poverty and malnutrition. Although Africa had also politically set itself the goal of halving absolute poverty on the continent compared to the base year 1990 within twenty-five years (Millennium Goal No.1), and the global sustainability goals also envisage the eradication of poverty in Africa by 2030. The global pattern is well known: that a halving of poverty in developing countries by 2015 has actually been achieved is mainly due to China’s success. Africa has also made some progress. In the definition of the income limit by the World Bank at 1.90 US dollars per person and day, the poverty rate in 1990 was 56.8% and has fallen to 40.2% of the population by 2018.² Despite this percentage decrease, however, poverty in sub-Saharan Africa has increased by about 40% to approximately 440 million people since 1990. The largest number of poor people today is no longer in South Asia, but in Africa—about half of the poor in the world.

Obviously, the impressive growth since the end of the 1990s has opened up a new life perspective for many millions, but left others behind. Clues to the causes can be gained in part already from the poverty reporting itself: (1) Africa’s needy often live so deep below the poverty line that moderate growth does not help them permanently over the threshold (so-called poverty depth); (2) they often concentrate geographically where the growth is not—unlike the new middle class; (3) the particularly unequal income distribution in Southern Africa, for example, leaves them a relatively small share of economic growth (Chandy, 2015). As a result, the poverty elasticity of growth was only—0.69%, while it was—2.0% in other world regions (Filmer & Fox, 2014). The economic development is therefore, with the term introduced in the 2000s, not sufficiently ‘poverty-oriented growth’ (pro-poor growth), or with today’s broader social focus: there has not yet been enough ‘inclusive growth’. The promotion of inclusive growth has consequently become a core economic policy demand, especially for Africa.

In addition to the briefly mentioned distribution issues, this composite result contains two components—population development and job development.

3 Population Development

The population of Africa currently stands at around 1.3 billion people, of which around 1.1 billion are south of the Sahara. Sixty percent of Africa’s inhabitants are under 25 years old. What does their future life perspective look like? Disillusionment has recently set in on this question as well. According to the latest UN forecast, the African population is growing much faster than expected in the last estimate. Sub-Saharan Africa is the only world region that will still show rapid population growth by the end of this century (United Nations, 2019). The reason lies in the specific course of the so-called demographic transition in Sub-Saharan Africa, that is, the path from a starting stage with high death and birth rates and low population growth to a phase of rapidly falling death rates and, with a delay, slowly declining birth rates. In this phase, the population grows rapidly until both rates approach each other again at a low level in the final phase.

North Africa has essentially gone through the stages of the demographic transition. The first part of the transition has also been reasonably managed in Sub-Saharan Africa recently. Major successes in disease and pest control, to which state aid organizations, NGOs, private companies, and foundations all contribute, have recently reduced infant and child mortality so much that significant progress was made by the end of the decade (Table 5.1).

Table 5.1 Child mortality in sub-Saharan Africa (per 1000 live births)

However, the subsequent reduction in birth rates has not occurred to the expected extent. According to the UN calculation, an African woman still has an average of 4.5 children (Total Fertility Rate³ 2019). South of the Sahara, it’s almost five children. Accordingly, the decline in fertility is not accelerating as assumed in the models. A large group of countries has a fertility rate of about six children per woman: Angola, DR Congo, Niger, Chad, Mali, and others. The decline in birth rates has slowed or almost come to a standstill in some other countries after initial successes, surprisingly also in relatively advanced countries like Kenya or Senegal.

Fifteen years of high economic growth have refuted the critically connoted ‘African Exceptionalism’ for the better in many respects. However, in the central question of demographic transition and especially the total fertility rate, the divergence of Africa south of the Sahara from the rest of the world essentially remains at the point where it was already identified at the end of the 1990s.⁴

Therefore, according to the UN calculation, the population growth south of the Sahara remains at a high level of 2.65% in 2015–2020. This in turn is reflected in the low increase in per capita growth, which, unlike in East Asia, does not yet show any convergence with high-income countries (see Freytag in this volume).

In view of such a critical overall perspective, it is particularly important to continue to look at the 49 countries in Africa south of the Sahara in a differentiated manner. In the Republic of South Africa, the demographic transition is done; the problems start afterwards—with an unemployment rate that is 25% or 40% depending on the definition. A whole series of countries south of the Sahara and north of the Limpopo still have the chance to manage the demographic transition. Forecasts of this transition are notoriously particularly uncertain because they depend heavily on politically influenced factors in addition to fixed social norms: secondary education for girls; reproductive health, especially effective programs for access to contraceptives, attitude of the state leadership⁵, etc. Accordingly, demographers are constantly trying to divide Africa into groups of countries that have more or less managed the transition according to the respective stage of population development (Canning et al., 2015; Vimard and Fassassi, 2012).

A large country like Ethiopia presents almost the entire range of demographic development stages of Africa within its own borders—not least because the government is implementing a determined family planning policy in the densely populated and easily accessible regions of the country. Women with completed secondary education (= 12 school years) in Ethiopia have a TFR of <2, i.e. below the reproduction rate. In general, with the growth of modern middle classes in Africa, the advance of Western reproduction patterns is also associated—later marriages and smaller families. All analyses by the UN, World Bank and others converge in the recommendation to consistently implement the corresponding policies. However, a short-term change in the demographic pattern is not to be expected due to the characteristic base effect. This topic has not played the objectively required role in the development policy dialogue with Africa for many years.

In any case, that is, with or without effective reproductive health programs, according to the current UN forecast, by 2050 three African countries will be among the ten most populous in the world: Nigeria, DR Congo and Ethiopia. By 2100, there will be five; Tanzania and Egypt will then also be included. To make the dynamics very clear using one example: the three neighboring countries Nigeria, Niger and Chad alone will have half a billion inhabitants (more than the EU today) in 2050 and almost a billion in 2100. This is the medium variant in the UN calculations. It certainly implies a substantial decline in fertility rates, but in Africa, it will only reach the reproduction level (2.2) towards the end of the century. At the time of colonial rule, Niger and Chad each had only about 2.5 million inhabitants (1950) and today have 24 and 16 million respectively. Only with a very drastic, politically guided change in reproductive behavior could the result be mitigated by about 40% by 2100. The medium variant is realistic as a mathematical calculation, but the estimate of soon a billion people alone in the economic ecosystem Niger-Nigeria-Chad obviously exceeds any idea of what can actually happen. The regional sciences dealing with Africa are not yet good at developing complete scenarios. Such a scenario would have to calculate the following positions on the credit side:

• 1. Agro-ecological potentials of the subregions (taking into account the divergent effects of climate change)

• 2. A reasonably regulated intra- and trans-African migration (concentration movements to the growth poles in Africa; ‘demographic arbitrage’ between young and aging societies in Africa and Europe)

• 3. Forced population control programs.

On the debit side, irregular and conflict-ridden mass movements and absorption into war economies would have to be estimated in order to make such processes literally conceivable.

4 Youth Surplus or Demographic Dividend?

A growing—young—population in Africa offers a large potential of labor force and an interesting market. It is not per se and everywhere a problem. This should be considered in view of the fact that the projected population figures for 2050 or 2100 intuitively suggest a fundamental imbalance. This contrast has been discussed in the literature for many years in the conceptual extremes of the ‚Youth Bulge‘ on the one hand, the ‘Demographic Dividend’ (synonym: ‘Demographic Bonus’ or ‘Demographic Window’) on the other hand.

The thesis of the Youth Bulge, which describes a high proportion of youthful age cohorts of 15–24 years in relation to the total population, has been debated on a global scale since the 1960s. With reference to oversized cohorts of male youth, it is generally negatively connoted with the frequency of conflicts and wars. Thus, it became part of apocalyptic scenarios in Robert Kaplan (The Coming Anarchy) or Samuel Huntington (Clash of Civilizations), but also in the well-known Greed or Grievance-theorem for explaining civil wars over mineral resources (Collier & Hoeffler, 2000). However, the attempt to derive impending conflicts purely from the population composition or the proportion of male youth beyond a certain threshold value, i.e. without further control variables, was not empirically successful (Urdal, 2004). More differentiated variants therefore add a precarious economic situation and various types of political regimes as determining factors that block social perspectives for young adults. How explosive a large surplus of young male population can become has become a key question again with the Arab Spring.

However, such a situation does not characterize all development regions, and a priori not all of Africa. In fact, the opposing thesis has long been based on the fact that with a corresponding job offer, large cohorts of young workers rather open a demographic window for society. This is especially true when the decline in birth rates reduces the number of children to be fed (young dependent population) so much that the population structure stops looking like a pyramid, but gets the typical bulge in the cohorts of 15–24 years. In this constellation, young workers are available without limit, while young or old dependent, because non-working cohorts remain limited for a certain transition phase—the demographic dividend. Such a population dividend is computationally seen as the cause for more than a third of the East Asian successes in per capita growth (Bloom & Williamson, 1998; Bloom et al., 2002).

What is the likely scenario for Africa? African Union and OECD define Demographic Dividend(s) as one of five megatrends for Africa. They add a second dividend to the described dividend, as the described high phase of a relatively large working population, which has few young and old to feed, would also enable high savings and investment rates in Africa. However, in line with all other analyses, they make this double dividend dependent on actual job growth—obviously the critical factor (African Union Commission & OECD Development Centre, 2018). This forms the conceptual transition to a series of analyses on labor market development in Africa.

5 Structural Change and Employment

The more realistic assessment of prospects for Africa’s youth is not only based on the updated population forecast, but also on a series of research findings on structural change and employment in Africa. They mainly come from the first half of the last decade, but are still valid. The short version is: Since growth in the dominant group of African countries has not been driven by labor-intensive sectors like in Asia, but by oil, gas, and mining, the job and thus the poverty effect has been comparatively small. But what happened in resource-poor countries and thus in Africa’s economy as a whole? The research neither negates the growth successes that have occurred in resource-rich and -poor countries alike, nor the sector-specific boom in telecommunications, construction and banking, in modern retail (the so-called supermarket revolution) and in some export-oriented value chains. It only examines what structural change has occurred as a result of all this and how labor productivity and employment have developed. The analyses tie in with the basic fact that gains in labor productivity arise both within individual sectors, e.g. through new technologies, and through the shifting of labor between less productive (e.g. agricultural) and more productive occupations (in industry and services). In addition, the net employment effect depends on whether more productive sectors also employ more people, even though they require less labor input per unit.

In summary, the finding is that while overall labor productivity (also) in Africa has been growing, job development has partly gone in the ‘right’ direction—towards modern jobs—and partly in the ‘wrong’ direction—back to traditional employment relationships and to the state. The resultant of the various trends shows a considerable growth in jobs, but this has little to do with the notoriously optimistic McKinsey forecasts and above all shows far too little job growth in the manufacturing industry. This is especially true compared to other development regions at the same level of per capita income (Dabla-Norris et al., 2013; Fox et al., 2013; McMillan & Harttgen, 2014; McMillan & Rodrik, 2014; Mensah et al., 2018; Rodrik, 2015).⁶

Only 3% of employees have found wage work in modern industrial sector companies and another 13% in the ‘formal’ service sector. The World Bank authors predict that this share will rise rapidly in the ten years after their study, to about 26.5% in total. However, only 4.5% will find work in the broader sense in the industry. Three quarters of employees will continue to work on family farms and in other household enterprises (Fox et al., 2013).

Common to the analyses presented is the emphasis on a related imbalance. On the one hand, the expansion of general primary education is one of Africa’s great successes in the last 25–30 years. Many African states have formally achieved the relevant Millennium goal of full enrollment of age cohorts in primary schools. On the other hand, the quality of basic education in Africa (including South Africa) significantly lags behind the results in other development regions. To the objective imbalance, which can be extended into vocational education, is added a subjective one: newcomers to the labor market tend to look for their places where employment growth has occurred in the past—in the state and in the service sector (so-called aspirational mismatch).

The existing analyses consider it unlikely that anything fundamental will change in this perspective in the foreseeable future, ceteris paribus. The ceteris paribus clause can be positively turned and then reads:

To realize the dividend, countries in Africa must make strategic investments in policies that support demographic change, access to good quality health and education, more jobs, especially in labor-intensive formal sectors, and institutionalized programs and incentives for savings. (Canning et al., Knowledge Brief, 2015; my emphasis.)

Accordingly, jobs and especially youth employment have become a central issue for the social and economic future in development regions. Especially for Africa, this means, as the World Bank puts it: Moving jobs center stage (Filmer & Fox, 2014; S4YE (Goldin and Puerto), 2015; World Bank, 2013). A first set of proposals on this is known and nothing new in these analyses; it targets all measures to improve the general investment climate in Africa. However, repeating such proposals in this context is not trivial, as the corresponding potential in Africa is far from being fully exploited to this day, not even in countries like Rwanda or Ethiopia, which have made the biggest leaps in the Doing Business ranking. Apart from that, the specific recommendations mainly go in two directions, which result from the above. First: the overwhelming majority of the current generation of young workers will remain in the field of agriculture and non-agricultural small businesses (household enterprises):

Most young people will end up working where their parents do. (Filmer/Fox, op.cit.)

Therefore, it is necessary—finally—to achieve a breakthrough in productivity development in agriculture, which still averages hectare yields of 1-2 t/ha for main staples, and similarly in informal small businesses. Second: Labor-intensive light industry, which has a chance in Africa again with the beginning of the westward migration of jobs from China and other East Asian countries (Dinh et al., 2012), must be massively expanded. This also includes proposals for better integration of Africa into global value chains and logistics (Freytag and Schmidt in this volume). After Mauritius and the textile industry in some South African countries, which benefit from the US preference system AGOA, Ethiopia in particular has made exemplary progress in recent years (Oqubay, 2015). A truly challenging task begins after that. Except for South Africa, no country in sub-Saharan Africa has a nucleus of more complex industries, especially in mechanical engineering and ICT, which will not solve the job problem, but will develop technological core competence, which will be needed in the long term for a broader and deeper mix of sectors. Modern industrial policy, which is also demanded in Africa to support these trends, therefore needs a double core of promotional measures to be both job- and technology-relevant (Asche & Grimm, 2017).

In overcoming this double requirement, the German economy can also make a valuable contribution through investments in Africa.

In summarizing the trends presented, the overarching question arises for the observer as to what form of society will typically exist in Africa at the end of the long growth phase. With the exception of a single state economic regime (Eritrea), the market economy dominates throughout Africa. For 20 years, new series of censuses, household and company surveys, and employment statistics have provided much more information about the overall social reality of African countries than was previously known.⁷ Whole series of indices and rankings sort Africa by regime types and quality of governance. But to the crucial question of which African countries today have essentially established a modern capitalist market economy and are significantly supported by confident entrepreneurs, managers, professionals and freelancers, there are only elements of an answer. The question was last systematically asked at the end of the 1970s/beginning of the 1980s in the famous Kenya Debate. This was obvious, as almost all of East Africa’s industry and modern agriculture was concentrated in Kenya, but it was too early to really answer the question. Currently, analyses that diagnose an unpleasant ‘neopatrimonial’ entanglement of state and economy, or the neo-institutionalist assertion of the lack of modern state institutions as Africa’s fundamental evil (Acemoglu & Robinson, 2012), dominate—rightly or wrongly. This is a large, yet little explored field of research for economists and social scientists as well as contemporary historians (Hopkins, 2009), from which more comprehensive answers to the question of how the panorama of contacts for German companies in Africa has developed can also be expected.

As in other world regions, the Corona pandemic was the dominant social development in Africa in 2020. A final assessment of its consequences on the continent is not yet possible. Contrary to initial fears, Sub-Saharan Africa has coped well with the immediate medical threat of the pandemic compared to other world regions. In addition to structural factors (climate; age structure of the population; relatively low mobility), the energetic action of numerous African governments is also held responsible for this in the literature. Much more critical are (a) the economic consequences, starting with the collapse of tourism, and (b) the impact on the fight against other diseases in Africa. These consequences burden all statements made about the further development of Africa in this chapter.