Why Africa is different
The worst-case scenario in dependency is Japan, where already there are less than three working age people to support every pensioner of 65 or older, and where by 2020, there will be fewer than two workers to support each pensioner.
Even in fast growing China, a problem of old-age dependency is beginning to emerge. The ratio of workers to pensioners in China will have fallen from eight-to-one in 2010 to five-to-one in 2020.
Most of the rest of the world is beginning to follow where Japan has led, towards an economy dominated by relatively unproductive old people. According to Renaissance Capital, an investment bank, the number of 15- to 24-year-olds is expected to be constant between 2010 and 2020 in North America but in Western Europe that younger age group will decline by 6%, and Latin America and the Caribbean will see only marginal growth of 2% before declining over the next 30 years.
Eastern Europe is expected to see a dramatic 32% fall in the absolute number of 15- to 24-year-olds, and among the non-African emerging economies, only South Asia will see some growth in the younger age group, with a 6% rise in 15- to 24-year-olds.
Africa is quite different – it is the only part of the world expected to see rapid growth in the working age population. Most of the growth will be in sub-Saharan Africa, where the cohort of 15- to 24-year-olds will rise by 15-20% every decade from now until 2040.
There is one exception, and that is South Africa. Richer than any other economy in the region – except for Nigeria, South Africa’s demographic profile is closer to that of India, but even South Africa will still have more than five workers for every pensioner by 2050, a far more favourable ratio than in Western Europe or Japan.
In other words, on demographic figures alone, Africa is set for growth for the next 40 years. But is that growth assured? A lot will depend on how the economies of sub-Saharan Africa handle the challenge of rising expectations among their young populations.
The challenge will be to meet the costs associated with those expectations, costs that will probably have to be met some time before the economic benefits of higher growth are fully felt.
That means that Africa will have to find some way to bridge the gap between expectation and performance – effectively, Africa’s economies will have to borrow from the future, or risk disappointment and unrest.