February 16, 2018[caption id="attachment_22705" align="alignnone" width="1024"] Photo: iStock by Getty Images/subman[/caption]
Countries in sub-Saharan Africa need to diversify their economies, and the region’s youth need to be at the heart of it, says Axel Schimmelpfennig.
Schimmelpfennig is head of the IMF team for Uganda, and a coauthor of a study that looks at the potential benefits of a stepped-up diversification agenda in sub-Saharan Africa.
In this podcast, Schimmelpfennig talks about the need for sub-Saharan Africa to increase productivity in areas like agriculture and manufacturing to become more competitive in the export market and allow for increasing wages.
“Looking ahead, the challenge is for young people in school today to equip themselves with the skills they need to get into higher productivity jobs so that they can enjoy higher living standards,” Schimmelpfennig says.
Having a diversified economy has two main benefits, he adds: “First, diversification on average is associated with higher growth, especially at earlier stages of development. Second, growth volatility is lower, so there’s a steady growth path from year to year.”
With sub-Saharan Africa’s rapidly growing population, Schimmelpfennig says the youth are best placed to learn about, invent, and use new technologies to start businesses and develop those economic sectors that are small or nonexistent.
“Because tomorrow’s jobs are most likely going to be very different from today’s, they will require even more skills, he says. “So, education—helping the young people to succeed—is one of the key challenges to making all of this happen.”
On policies to help foster diversification, Schimmelpfennig’s team recommends a renewed focus on macroeconomic stability, access to credit, good infrastructure, a conducive business environment, a skilled workforce, and income equality. Of course, the right policy mix would build on each country’s strengths and help create an environment for the private sector to expand.