The Demographic Dividend in Africa

David Canning

Harvard Center for Population and Development Studies

Wilson Center, Washington DC

October 15th 2013 1

Policies for Fertility Decline Decrease Child Mortality

2 *World Development Indicator Data. 2010

Female Education Is a Major Diver of Fertility Rates

3

4

Male-Female Education Gap in Sub-Saharan Africa--Secondary Enrollment

Contraceptive Prevalence and the Total Fertility Rate and Sub Saharan Africa

5

2

3

4

5

6

7

8

0 10 20 30 40 50 60 70

TFR

CPR

Rural

Urban

Linear (Rural)

Linear (Urban)

Proximate Determinants of Fertility

6

A Family Planning Intervention Reduced Fertility in Navrongo, Ghana

Treatment Area:

Comparison Area

7 n

Economic Consequences The Demographic Dividend

• Working age share 30 – 50 year boost – Labor force per capita

• Youth Bulge – Underemployment, Agriculture/Unpaid

• Female Labor Force Participation – Only educated/urban women

• Savings - not yet in Africa but FDI • Child Health – birth timing/spacing effects • Education – move to higher levels

8

0

0.5

1

1.5

2

2.5

3

12-14 years 15-19 years 20-24 years 25-29 years(Reference)

30-34 years 35-39 years 40-44 years 45-49 years

Infant Mortality Adjusted RRR: Age of Mother at Birth

Short Birth Spacing Increases Infant Mortality

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

7-11months

12-17months

18-23months

24-29months

30-35months

36-47months

(ref)

48-59months

60-95months

>95months

Adjusted Relative Risk by Birth Interval

10

3% 3% 4%

0%

5%

10%

15%

20%

25%

30%

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

% o

f pop

ulat

ion

Source: World Bank: Health, Nutrition and Population Statistics

Elderly as Proportion of Population (1960-2050) International Comparison

WLD SSA SAS NAC MEA LCN EUU EAS

Aging in Sub-Saharan Africa? • In SSA, the elderly are projected to form 5% of the population by 2050

• The proportion has been stable at 3-4% and is likely to increase beyond 4% by 2030

• In comparison to other regions of the world, this proportion is the lowest

EUU, 28% EAS, 23% NAC, 22% LCN, 19% WLD, 16% MEA, 15% SAS, 13%

SSA, 5%

11

Increasing Youth Cohorts I Sub Saharan Africa

0

5

10

15

20

25

30

35

40

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Year

ly C

ohor

t 15 -

24 (

Mill

ion)

Eastern Asia South-Central Asia Sub-Saharan Africa

12

Impact of 10% Increase in youth cohort size in SSA

Distribution of Work Percentage Point Change

Unpaid Work +13

Wage Employed -6

Self Employed -5

Sector of Work Percentage Point Change

Agriculture +8

Industry -2

Services -6

Labor Market Activity Percentage Point Change

Not in Labor market +13

Working -10

Unemployed -3

13

14

Household Savings Rates Vary with Age and Peak in Late Middle Age

-3

-2

-1

0

1

2

3

4

5

6

1961-1965 1966-1970 1971-1975 1976-1980 1981-1985 1986-1990 1991-1995 1996-2000 2001-2005 2006-2010

Figure 1. Annual Growth Rates (29 balanced countries): GDP & GDP per capita

GDP growth GDP per capita growth

Economic Growth in Sub-Saharan Africa

15

Where is capital coming from?

16

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Net FDI inflows/GDP (%)

4

6

8

10

12

14

16

Domestic saving per GDP (%)

Nigeria TFR under Low Medium and High Fertility Scenarios

17

0

1

2

3

4

5

6

Key:

Nigeria Population under Different Fertility Scenarios

18

0

200

400

600

800

1,000

1,200

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Key:

Nigeria GDP per Capita Under Different Fertility Scenarios

19

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090 2095 2100

Key:

20

Goals Polices

Speed the Demographic Transition

To affect Fertility Child mortality, female education, social norms, family planning

Realizing the Labor Force Dividend

To absorb Youth Bulge FDI, domestic saving, human capital, migration (Agriculture and natural resources not sufficient)

To harness the 1st dividend

Improve educational attainment, move up value chain

Realizing the Savings Dividend

Harness the 2nd dividend Improve policies and institutions for domestic savings

21

Success

Failure

Africa undergoes rapid fertility transition

Slow fertility transition and persistent youth bulge

Human capital is harnessed and makes Africa the workbench of the world

Large scale underemployment of human resources

Positive feedback -demographic change and economic development

Political instability due to frustrated youth