Why IMF is predicting record-breaking unemployment rates for Africa’s largest economies
In what can be only described as bad news, the International Monetary Fund (IMF) has come out to say that the unemployment rates in Africa’s two largest economies are going to hit new highs never experienced. The grave implication of this piece of news sinks further in when one considers the unemployment rate currently in place. In Nigeria, sub-Saharan Africa’s largest economy, the unemployment rate is already at alarming 14% while South Africa, the second largest economy, it is over 27%.
According to the IMF, these rates will further explode to all-time records highs due to certain factors working in synergy to make finding employment unavailable, especially for youths. First, the working age bracket in the region is exploding more than ever before. “By 2035, sub-Saharan Africa will have more working-age people than the rest of the world’s regions combined,” the IMF wrote in a blog post.
A second factor working against working age population in the region is the inability of the governments in those countries to stimulate the development of their economies so as to produce more jobs. The informal economy, consisting of trades like street vendors, household workers and off-the-radar cash jobbers was hitherto responsible for sucking up most of the unemployed people, with the IMF estimating that they were responsible for as much as 38% of gross domestic product in 2010-14.
While this may sound like hope, in reality, it is cause for concern as it represents a decline from nearly 45% in 1991-99 period. Furthermore, the “lack of protection in the event of non-payment of wages, compulsory overtime or extra shifts, lay-offs without notice or compensation, unsafe working conditions and the absence of social benefits” associated with the informal sector mean that less and less people are being engaged in it.
Thus, with an upward spiral in working age population and a downward spiral in the availability of adequate employment opportunities, the IMF sees no other choice than peak unemployment rates, which in turn would lead to economic, security and migration problems. Unless of course, the governments rise up to the challenge.