Africa’s unstable labour market

Africa workers factoryA report by McKinsey Global Institute claims Africa has the potential to boost its GDP and in the next eight years create more jobs. (Image source: Amy the Nurse)More than 60 per cent of people across the African continent are engaged in low-paying, unpredictable and informal jobs, which offer little security, according to the claims of a new report

The report by McKinsey Global Institute, entitled Job Creation and Inclusion Growth, suggested that poverty in Africa is falling, with an estimated 31mn people classed in the middle-class sector, although higher paid jobs are needed to sustain gains and distribute the benefits to the majority of the people.

The research stated that unemployment in the continent was nine per cent and 28 per cent of the continent’s workforce was engaged in stable jobs that provided safety nets. In Kenya, 32 per cent of the 15mn strong workforce were in stable paid jobs with 59 per cent in some form of unstable informal sector jobs, the report claimed.

Mulu Katuku, a chicken vendor in Kitengela, was among this group of informally employed Kenyans.

Katuku claimed he made a profit of US$82 on a weekly basis common, but the erratic nature of his business sector had forced him at times to withdraw his savings in a local bank in order to support his family. He added that running the business with his wife ensured that he could move across the country looking for chicken while his wife dealt with the customers.

“Business is low in months when schools reopen for a new term. Parents are running on tight budgets and chicken is rarely part of their menu. During festive seasons and school holidays we can make some handsome returns compensating for the low business periods,” added Katuku, a father of two school children.

Of Ethiopia’s 41mn workforce, only 10 per cent were reported to be in stable wage earning jobs while 85 per cent are in vulnerable employment and five per cent unemployed, according to the study. 

“Wage paying jobs are important in driving the economy with their multiplier effect- each person with a salary increases demand for consumer goods which in turn created two or three jobs,” observed Kwame Owino, CEO of the Institute of Economic Affairs in Nairobi.

The report further noted that Africa had the potential to create between 54mn and 72mn long-term jobs in the next eight years.

Experts noted that despite oil and gas recently discovered in parts of Africa with the potential to boost GDP, the petroleum sector had created few jobs.

“Oil does not directly employ a lot of people it is capital intensive but not labour intensive,” said Kenneth Okwaroh, a research analyst at Development Initiatives, a non-governmental organization on aid and poverty eradication.

Analysts at McKinsey suggested that much of the job growth would come from manufacturing, agriculture, retail and hospitality.

For instance, Kenya had been cited as a nation that could benefit from manufacturing given its good infrastructure and access the sea through the Port of Mombasa. More than 100mn people in the East African Community (EAC) market could also provide the incentive of setting up a manufacturing base in Kenya.

Already, the export promotion zones (EPZs) in Athi River, on the outskirts of Nairobi had created numerous formal wage earning jobs for thousands of people in the country.

The manufacturing of consumer goods such as shoes, clothes and automobile parts would make Kenya create more formal jobs, according to the World Bank’s lead economist to Kenya, Wolfgang Fengler.

“The fact is Africa is much better located than East Asia to major markets such as Europe and America”, observed Fengler.

Experts had also noted that smallholder intensive agriculture had become a new source of income and job creation in Kenya as the middle class tried their luck in urban and peri-urban agriculture.

Egg production, vegetable and flower enterprises on the outskirts of major cities and towns had spawned new incomes and created new formal jobs.

Agriculture had also shown huge potential in Tanzania.

With an estimated 38mn hectares of arable, unused land and now a focus on high value-added crops including biofuels and horticulture, Tanzania could create new jobs through farming.

“If Tanzania was to focus in this form of agriculture and exploit it to its advantage, it can create more jobs and also potentially feed its northern neighbours- Kenya and Ethiopia”, noted Ahmed Salim, programmes officer at the Society for International Development (SID’s) Dar es Salaam office.

Experts noted that increased investments in agriculture through provisions of credit facilities, extension services and encouragement of commercial farming, Tanzania could create huge number of jobs and boost its GDP.

Mwangi Mumero

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
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