Look for Labor-Intensive Industries to Echo Africa’s Population Boom

By the end of the century, two out of five people will be African, according to a recent United Nations report.


Can Africa summon strength in numbers? Today its 1.2 billion inhabitants account for 15 percent of the world’s population; by 2100 their ranks will swell to 4.2 billion, or 40 percent, forecasts an August report by the United Nations Children’s Fund.

Creating jobs for so many people will be difficult, notes Michael Herrmann, senior adviser on population and economics at the United Nations Population Fund in New York. With almost 64 percent of workers in the least developed African countries earning less than $1.25 a day as of 2009, according to International Labor Organization estimates, Herrmann sees an opportunity for investors to tap the continent’s vast pool of unskilled labor — and to serve consumers’ basic needs. “This whole nexus of food, water and energy is extremely promising,” he says.

Simon Freemantle, Johannesburg-based senior political economist with Standard Bank, warns that African population growth is outpacing income. He calls for reforms that shift economies toward agriculture and light manufacturing, which are capable of absorbing large amounts of labor. Africa’s rising middle class offers hope: In a recent report covering 11 sub-Saharan countries, excluding South Africa, Freemantle projects that households earning between $8,500 and $42,000 a year will triple by 2030, to 22 million. “There’s going to be tremendous opportunities in consumer-facing sectors and industries,” he says. • •