Aid and employment
Creating good jobs in Africa
The prevailing narrative about growth and development in Africa has shifted dramatically. During the1980s and 90s pessimism abounded. Today, a more optimistic narrative of development in the region largely reigns. However challenges still remain. In particular structural transformation has been slow in much of Africa, and while jobs have been created many of them are insecure and underpaid. It is important then to ask, given this new landscape, how foreign aid can now be best directed to create secure, well-paying, good jobs.
A lack of positive structural change
The manufacturing sector remains weak across Africa. Indeed, whilst there has been a relative shift of workers out of the lowest productivity sector (agriculture), employment has grown fastest in the services sector where much of the activity is informal in nature and low productivity. Some question whether Africa’s recent growth can be sustained.
There is also a direct connection between relatively slow rates of poverty reduction in the region and the absence of positive structural change. The elasticity of poverty reduction with respect to the overall rate of per capita income growth has been low in Africa. This is because the overwhelming source of falls in poverty has been within-sector income growth in agriculture. In some countries growth-reducing structural change even worked to increase poverty, as households moved from higher to lower productivity sectors. Consequently donors must focus attention on raising agricultural productivity, closing the (rural) infrastructure gap, and raising skills and capabilities of firms.