Africa's Demographic Transition

Africa is poised on the edge of a potential takeoff to sustained economic growth. This takeoff can be abetted by a demographic dividend from the changes in population  age  structure.  Declines  in  child  mortality,  followed  by  declines in fertility, produce a 'bulge' generation and a large number of working age people, giving a boost to the economy. In the short run lower fertility leads to lower youth dependency rates and greater female labor force participation outside the home. Smaller family sizes also mean more resources to invest in the health and education per child boosting worker productivity. In the long run  increased  life  spans  from  health  improvements  mean  that  this  large, high-earning  cohort  will  also  want  to  save  for  retirement,  creating  higher savings  and  investments,  leading  to  further  productivity  gains.  Two  things are required for the demographic dividend to generate an African economic takeoff. The first is to speed up the fertility decline that is currently slow or stalled in many countries. The second is economic policies that take advantage of  the  opportunity  offered  by  demography.  While  demographic  change  can produce more, and high quality, workers, this potential workforce needs to be productively employed if Africa is to reap the dividend. However, once underway, the  relationship  between  demographic  change  and  human  development works in both directions, creating a virtuous cycle that can accelerate fertility decline, social development, and economic growth. Empirical evidence points to three key factors for speeding the fertility transition: child health, female education, and women’s empowerment, particularly through access to family planning. Harnessing the dividend requires job creation for the large youth cohorts  entering  working  age,  and  encouraging  foreign  investment  until domestic savings and investment increase. The appropriate mix of policies in each country depends on their stage of the demographic transition.