Youth and Rural Development in ACP countries The

Youth and Rural Development in ACP countries The Challenges of Youth Employment in ACP Countries: A Global Perspective Brussels Briefings 16 th June 2010 Bruno Losch

General Positioning p Youth in ACP countries like in many developing countries are often unemployed and they mainly participate in the informal labor market: they face high economic insecurity and poverty rates p Youth represent around 20% of the total population BUT more than 30% of the active population (EAP or 15 -64 group): => 37% in SSA, 32% and 28% in Pacific and Caribbean regions p Answering the youth employment challenge is critical for poverty reduction and the future of DCs p While targeted solutions are useful, they must be part of broad development strategies addressing the structural transformation of economies and societies

Basics 1: Demographic Transition p ACP countries face a large demographic growth: this is firstly the case of SSA and also of the Pacific while the Caribbean will slow down rapidly n In SSA: from 860 million people today, to 1. 3 billion in 2030 and 1. 8 billion in 2050 = + 103% = the last demographic transition in the world n In the Pacific: from around 10 million in 2010 and 17 million in 2050 = + 73% with sub-regional differences n In the Caribbean: from 40 million to 47 million in 2050 = +18% (but 80% of the population in Cuba, Haiti, Dominican Rep. ) 3

Basics 1: Demographic Transition p A rapidly changing demographic structure n n Activity ratio has remained extremely low throughout the past decades in SSA This structure weighted heavily on growth p Growth of the economically active population presents a significant opportunity… “the demographic dividend” p … but also a source of significant tensions if economies do not generate sufficient jobs 4

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Basics 1: Demographic Transition p The present tensions on the labor market might intensify with the arrival of growing new cohorts: n n n p A “big push” in SSA: approximately 17 million / year at present, 24 million in 2025, 31 million in 2050 From 200, 000 to 300, 000 people between today and 2050 in the Pacific But 700, 000 new entrants / year in the Caribbean and already decreasing The ability of African economies to absorb this additional workforce is a crucial question 6

the World Bank 7

The example of Mali Evolution of Population 1960 -2025 (in Millions) p The yearly cohort of new entrants in the labor market is 300, 000 people today and will be 520, 000 in 15 years (240, 000 for rural EAP) n p Evolution of Active Population. 1960 -2025 (in Thds) The Malian economy will have to create 6, 2 millions “new jobs” These new entrants have already been born 8

Basics 2: Economic Transition p Developing countries are at different stages in the structural transformation process characterized by a progressive shift from agriculture to industries and services p Within this process, the role of agriculture in GDP and in employment decreases p The major vehicles of transformation are: n n The development of the rural non-farm economy Rural depopulation and migrations to cities (or abroad). The viability of this process implicates employment opportunities. 9

The Three Worlds of Agriculture (WDR 08 ) 10

The Evolutionary Path

Basics 2: Economic Transition p For most of the ACP countries the economic transition has been very slow p The population remains broadly rural and will remain rural till the 2030 s Agriculture has often a central role in GDP, trade, and particularly in employment p n p 60 -80% of the active population live from agriculture in SSA It means that most of the youth are rural and many are involved in agriculture 12

SSA’s Economic Transition: a Major Challenge p African economies are characterized by a low level of diversification n n p Rapid urbanization with a low level of industrialization Increased difficulties to develop a sufficient industrial sector in a context of strong international competition Consequences: n n n Manufacturing % GDP Limited creation of formal employment vs. absorption by the informal sector Economic and geopolitical constraints to international migration For a long time to come agriculture will remain the main employer Agriculture % GDP 14

Agriculture, Transition & Employment p The role of agriculture: n n Þ n p The lessons learnt from past transitions remind: n n p Contributes directly to food security, income creation and poverty reduction Is the major source of employment so far: this is too often forgotten in the existing debates It plays a central role in the economic transition the decisive role of farm income increase in the development of a rural demand Rural demand is the necessary step for the emergence of the rural non-farm economy (RNFE) Both agriculture and RNFE are critical for youth employment: their development will automatically facilitate the inclusion of young people 15

Prioritization, Targeting and Sequencing p Many targeted programs can be efficient for youth employment. However, there is a need for reengaging in development strategies based on long term vision, identification of opportunities and constraints , shared diagnostics and prioritization Þ the size of the yearly cohorts of young people entering the labor market is a strong reminder p Every country, region has its own development trajectory, comparative advantages and binding constraints, and heterogeneity is the rule: it means tailor-made policies instead of one-size-fits -all 16

Prioritization, Targeting and Sequencing p Two main issues can be raised: n n p A recurring binding constraints in many rural areas is risk: risk encourages self-consumption and prevents diversification. Addressing risks is critical. Many instruments can be finely designed and efficient but have a limited impact in terms of numbers: the objective is to address the big numbers through inclusive policies and programs, selecting options which are employment intensive. The future of youth is part of this general approach 17