S&P Global Ratings
The working-age population of sub-Saharan Africa (SSA) will increase more than 200% by 2050, providing a significant opportunity for economic growth across the region, S&P Global Ratings economists said in a recent report: “Sub-Saharan Africa’s Demographic Transition: A Window Of Opportunity For Growth“.
“Countries in sub-Saharan Africa are now experiencing the most significant demographic transition in their history. Unprecedented decreases in fertility rates, lower child mortality, and increases in life expectancy will be of crucial importance for the region’s economic outlook for decades to come,” said S&P Global Ratings Economist Valerijs Rezvijs.
“Age composition in a country’s population is critical for economic growth. For the region, which has experienced subdued economic performance during the past decade, demographic transition may present a chance for stronger growth, but could also be a major source of instability and fragility.”
KEY TAKEAWAYS
- By 2050, sub-Saharan Africa’s working-age population is projected to increase more than twofold.
- We estimate that this will add up to 3 percentage points to average annual GDP growth in the next 10 years among key sub-Saharan economies.
- At present, sub-Saharan Africa risks being insufficiently prepared to reap the benefits of this demographic transition and, without correct and timely policy responses, the region’s catch-up with developed economies may take a lot of time.
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OTHER FINDINGS
In sub-Saharan Africa, fertility rates (the number of children per woman over her lifetime) have declined steadily to 4.6 in 2020 from 6.3 in 1990. According to recent UN projections, fertility rates in the region will continue to fall, and by 2050, some SSA countries will reach levels close to a natural replacement rate (2.1 births per woman).
By 2050, with exception of small island economies, such as the Seychelles or Mauritius, all countries in sub-Saharan Africa will experience an increased share of working-age populations. Since most other countries in the world have already finished their demographic transition, sub-Saharan Africa will be the main driver of working-age population growth in the world in the 21st century. In the next 30 years, sub-Saharan Africa’s working age population will increase more than twofold, with its working-age population growth accounting for 68% of the world’s total growth.
To reap the benefits of this demographic transition, governments across the region must wisely adapt economic policies. If jobs are not created in tandem with growth in the working-age population, it could become a source of political instability due to high youth unemployment. Investments in human capital are necessary so that families can use savings from declining birth rates to access better education for their children. If banking services are not widely available and capital markets are not developed, an increase in savings won’t necessarily correspond to an increase in investments or translate to increased labor productivity and more sophisticated goods and services.
“All in all, demographic transition could be a source of unprecedented economic growth, but also of unprecedented instability. At present, sub-Saharan Africa risks being insufficiently prepared to reap the benefits of demographic transition.
However, with the right policy response, this situation could swiftly change,” said Mr. Rezvijs.