## The African Century ## Source details **Canonical URL:** [The African Century](https://www.imf.org/en/publications/fandd/issues/2021/12/african-century-abebe-selassie) ## Other formats - [Markdown version](/en/publications/fandd/issues/2021/12/african-century-abebe-selassie/index.md) - [Structured JSON version](/en/publications/fandd/issues/2021/12/african-century-abebe-selassie/index.json) - [Bundle manifest](/en/publications/fandd/issues/2021/12/african-century-abebe-selassie/bundle-manifest.json) ## Bibliographic details - Authors: ABEBE AEMRO SELASSIE - Published: December 2, 2021 --- ### Overview and vision - Fast-forward to 2081: demographic boom in most sub-Saharan African countries could transform many of the region’s economies into the largest and most dynamic in the world. - Three influential factors for this vision: - The demographic transition that is underway: By 2050, many sub-Saharan African countries will be among the few with a rising working-age population. - The ongoing digital revolution—which offers much scope for the diffusion of know-how, new business opportunities, and more efficient service delivery. - How effectively the region’s economies deal with the transition to a low-carbon economy and the adverse consequences that climate change is set to unleash. - Near-term constraints: vaccination rates averaging about 2½ percent of the population across sub-Saharan Africa by early October 2021; most countries have limited fiscal space; near-term growth prospects remain below pre-pandemic projections. - Strategic priority: balance addressing immediate pandemic-related challenges with transformative economic and structural reforms and significant external concessional financing to recover and maximize long-term potential. ### Demographic transition and human capital - Key statistics and projections: - Population of sub-Saharan Africa projected to double from 1 billion to 2 billion by about 2050. - This will account for half of global population growth, with the working-age population growing faster than any other age group. - Reference point: "30 to 40 years ago" many would not have predicted the rise of China, India, Indonesia, or Turkey. - Findings: - The demographic trend is potentially the region’s single greatest opportunity—growing pool of human talent and large market size. - Realizing the demographic dividend is not automatic and requires astute policy choices. - Policy and investment priorities: - Invest in high-quality educational opportunities at primary, secondary, and tertiary levels to meet demands of growth sectors. - Expand investment in health care, including broader access to a variety of vaccines (potentially through regional production hubs), ensure widespread access to at least a minimum level of health services, and family planning. - Implement multiyear plans to build infrastructure, train teachers and health professionals, and balance ramping up services to capacity against near-term provision. - Close gender gaps in access to education and job opportunities to help lower fertility and boost productivity. - Promote private sector development: cultivate a growth-friendly business climate and promote private sector investment to create jobs and catalyze capital accumulation. ### Jobs, private sector, and structural change - Findings: - Training the next generation must be matched with the creation of good jobs; job growth must keep up with a relentless increase in new job seekers. - Digitalization and services may alter traditional development paths; light manufacturing-led paths may be less viable. - Policy recommendations: - Unleash private sector potential through reforms that improve the business climate and incentivize investment. - Support sectors such as business process outsourcing, e-commerce, and fintech while balancing fintech benefits against risks to financial stability. - Prepare for potential downward pressure on the labor share of income from automation and artificial intelligence; focus on policies that enhance labor rather than replace it. ### Digitalization in Africa - Opportunities and impacts: - Digital reforms and infrastructure can help the region leapfrog—boost resilience, efficiency, access to global markets, public service delivery, transparency and accountability, and job creation. - Government efficiency examples: online tax filing and business creation, computer systems in customs administration, social assistance through mobile money. - Transparency improvements: publishing information online, e-participation, automation of service delivery to reduce in-person contact that could generate corruption. - Digitalization promotes entrepreneurship by allowing firms to grow rapidly with less physical capital and a limited geographic footprint. - Risks and trade-offs: - Automation and artificial intelligence could reduce labor demand and pressure the labor share of income if they replace rather than enhance labor. - Fintech should be balanced against risks to financial stability. ### Managing climate change risks and the low-carbon transition - Findings: - Climate change poses a great threat; impacts vary (droughts, rising sea levels, cyclones, floods, rising temperatures, rainfall anomalies). - Sub-Saharan African countries share limited climate resilience, reliance on rain-fed agriculture, and greater economic weight of climate change relative to elsewhere. - Adaptation and mitigation priorities: - Accelerate adaptation through targeted investment in infrastructure, people, and coping mechanisms to raise resilience, boost productivity, and reduce inequality. - Examples: better and more widespread irrigation, more robust buildings and drainage, investments in health care and education, social assistance, and access to finance. - Good macroeconomic policies: increase fiscal space, enhance economic diversification, and pursue exchange rate flexibility to limit climate shock impacts. - For oil and gas exporters: pursue rapid economic diversification to offset lower revenues and less related investment. - Transition the region toward greener industrial activity and energy generation—policies ranging from financial regulations to large-scale investment in renewable energy such as solar and wind power. - Facilitate technology transfers from more advanced economies and manage pressures to preserve carbon sinks and reservoirs against logging and mining opportunities. ### Financing the transformation and IMF engagement - Recent IMF engagement: - 60th anniversary of the IMF’s African Department (founded in 1961, 17 years after the Bretton Woods conference). - During the COVID-19 crisis, nearly $27 billion in financial assistance provided to 39 African countries. - Three-quarters of this lending came from the Poverty Reduction and Growth Trust—the IMF’s vehicle for zero-interest loans to low-income countries. - Financing challenges: - COVID-19 has left many sub-Saharan African countries with limited fiscal space and higher debt burdens. - Increase in debt across the continent during the past two years raises concern about uptake of new debt. - Policy and financing recommendations: - Intensify efforts to develop fiscal revenues through efficient tax policy, comprehensive public financial management, and transparency and good governance. - Multilateral development banks and development partners should step up financing efforts with grants and concessional loans where possible. - Rechanneling Special Drawing Rights from advanced economies with strong balance of payments positions may provide longer-maturity loans. - Ensure new debt finances projects with good returns: target high-quality projects backed with comprehensive feasibility studies and robust and transparent public procurement. *ABE SELASSIE, "The African Century," F&D Magazine, December 2021.* --- ## Content in this bundle - **El siglo de África ● Finanzas y Desarrollo ● Diciembre de 2021** - [El siglo de África ● Finanzas y Desarrollo ● Diciembre de 2021 (Markdown version)](/-/media/files/publications/fandd/article/2021/december/es/selassie.pdf.md){rel="alternate" type="text/markdown"} - [El siglo de África ● Finanzas y Desarrollo ● Diciembre de 2021 (PDF)](/-/media/files/publications/fandd/article/2021/december/es/selassie.pdf){rel="external" type="application/pdf"} - **Selassie** - [Selassie (Markdown version)](/-/media/files/publications/fandd/article/2021/december/fr/selassie.pdf.md){rel="alternate" type="text/markdown"} - [Selassie (PDF)](/-/media/files/publications/fandd/article/2021/december/fr/selassie.pdf){rel="external" type="application/pdf"} - **Век Африки – Финансы и развитие – Охрана здоровья и благополучия населения мира – декабрь 2021 года** - [Век Африки – Финансы и развитие – Охрана здоровья и благополучия населения мира – декабрь 2021 года (Markdown version)](/-/media/files/publications/fandd/article/2021/december/ru/selassie.pdf.md){rel="alternate" type="text/markdown"} - [Век Африки – Финансы и развитие – Охрана здоровья и благополучия населения мира – декабрь 2021 года (PDF)](/-/media/files/publications/fandd/article/2021/december/ru/selassie.pdf){rel="external" type="application/pdf"} - **The African Century** - [The African Century (Markdown version)](/-/media/files/publications/fandd/article/2021/december/selassie.pdf.md){rel="alternate" type="text/markdown"} - [The African Century (PDF)](/-/media/files/publications/fandd/article/2021/december/selassie.pdf){rel="external" type="application/pdf"} - **非洲的百年大计 ●《金融与发展》● 2021年12月号** - [非洲的百年大计 ●《金融与发展》● 2021年12月号 (Markdown version)](/-/media/files/publications/fandd/article/2021/december/zh/selassie.pdf.md){rel="alternate" type="text/markdown"} - [非洲的百年大计 ●《金融与发展》● 2021年12月号 (PDF)](/-/media/files/publications/fandd/article/2021/december/zh/selassie.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2021/12/african-century-abebe-selassie_