The road to recovery for Africa: The potential of DFIs to halt the spiraling unemployment rate
DFIs directly or indirectly support over 6 million African jobs in the private sector
New report published today by the ONE Campaign and the African Centre for Economic Transformation (ACET) reveals that the 10 largest global bilateral development finance institutions (DFIs) could substantially reduce Africa’s spiraling unemployment rate by 2025.
The report titled Shifting and Accelerating DFI investments for more decent jobs in Africa estimates that nearly 6 million African jobs have been supported by DFIs to date, which if sustained may make a significant difference in the continent’s unemployment crisis. As Africa struggles to recover from the economic aftershocks of the covid-19 pandemic, which wiped out 20 million formal and informal jobs, and now with the huge impact of the on-going conflict in Ukraine, more must be done to prioritize the creation of new jobs.
Investing in transformative industries such as food systems, digitalization, manufacturing, and green jobs could be a win for everyone following the commitment by the largest DFIs at last year’s G7 Summit to invest an unprecedented $80 billion in Africa over five years. These are the areas where billions of dollars’ worth of investment may yield huge returns for investors, but they are also the ones where Africa’s unemployed youth could benefit the most.
Edwin Ikhuoria, Executive Director for Africa at the ONE Campaign, said: “African economies could build back stronger from the impact of the pandemic and the war in Ukraine, but only if job creation is given the attention it deserves. Disillusioned youths are suffering the burden of the ongoing unemployment crisis. Solutions that have the greatest potential for impact should not be left unaddressed. For these global development finance institutions, the $80 billion investment commitment at last year’s G7 provides a real opportunity here. A win-win situation for everyone is possible, but only if investments are made right away. This may result in meaningful returns for DFIs and a considerable reduction in the continent’s unemployment crisis.
Dr. John Asafu-Adjaye, Senior Fellow at the African Center for Economic Transformation, said: “DFIs can be what is needed to build a stronger and more inclusive continent, but they need to take on greater risks. The post-pandemic world and the Fourth Industrial Revolution presents an exciting moment for DFIs as their role becomes more critical for the successful recovery and transformation of African economies. There is a huge potential for the Fourth Industrial Revolution to transform African economies by increasing the participation of youth, women and people with disabilities. The key is to ensure that they are equipped with the appropriate skills for future work and have access to technologies.”
Notes to editor:
- See ONE/ACET Shifting and Accelerating DFI investments for more decent jobs in Africa report here. This is part of ONE’s jobs campaign launch where we recently published the People’s Charter on Jobs in Africa calling for 15 million decent jobs to be created annually along with the Jobs Now Africa Coalition Partners.
- The report focuses on 10 of the largest bilateral DFIs in Africa: US’ Development Finance Corporation (DFC), Germany’s DEG, The UK’s CDC group17, France’s PROPARCO, Canada’s FinDev, The Netherlands’ FMO, Norway’s NORFUND, Denmark’s IFU, Austria’s OeEB and Spain’s COFIDES18.
- By 2030, one-fifth of the global labour force – and nearly one-third of the global youth labour force – will be from Africa.
- By 2050, Africa’s population will double to 2.5 billion people and it will also be home to 38 of the 40 youngest countries in the world. More than two-thirds of non-student youth are currently unemployed, discouraged, or only vulnerably employed. While 10 to 12 million youth enter the workforce each year, only 3 million formal jobs are created, leaving more than half of the new entrants into the labour market unemployed. Job creation can no longer be an issue that is side-lined, but it must be tackled alongside all human needs such as healthcare and education.
About the report:
ACET and ONE collaborated to advocate for Development Finance Institutions (DFIs) to be more strategic and intentional in their investing in Africa to create more decent jobs, particularly to address Africa’s demographic bulge. This report is an advocacy and educational tool to shine a light on the potential for DFIs to invest in transformational areas which create the greatest number of good quality jobs across the continent. This report is based on our findings from desktop research and consultation with subject-matter experts on DFIs and their operations.
About ONE:
ONE is a global movement campaigning to end extreme poverty and preventable disease by 2030, so that everyone, everywhere can lead a life of dignity and opportunity. We are non-partisan and pressure governments to do more to fight extreme poverty and preventable disease, particularly in Africa, and empower citizens to hold their governments to account. Read more at www.one.org.
About ACET:
ACET is an economic policy institute supporting Africa’s long-term growth through transformation. We produce research, offer policy advice, and galvanize action for African countries to develop their economies, reduce poverty, and improve livelihoods for all their people. We are the pre-eminent African organization advancing African solutions to African challenges. Read more at acetforafrica.org.