Youth and Rural Development in ACP countries

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

2. General Positioning • 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 • 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 • Answering the youth employment challenge is critical for poverty reduction and the future of DCs • While targeted solutions are useful, they must be part of broad development strategies addressing the structural transformation of economies and societies

3. Basics 1: Demographic Transition • 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 • 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 • In the Pacific: from around 10 million in 2010 and 17 million in 2050 = + 73% with sub-regional differences • In the Caribbean: from 40 million to 47 million in 2050 = +18% (but 80% of the population in Cuba, Haiti, Dominican Rep.)

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

6. Basics 1: Demographic Transition • The present tensions on the labor market might intensify with the arrival of growing new cohorts: • 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

7. the World Bank the World Bank

8. The example of Mali Evolution of Population 1960-2025 (in Millions) Evolution of Active Population. 1960-2025 (in Thds) • 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) • The Malian economy will have to create 6,2 millions “new jobs” • These new entrants have already been born

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

10. The Three Worlds of Agriculture (WDR08 )

11. The Evolutionary Path

12. Basics 2: Economic Transition • For most of the ACP countries the economic transition has been very slow • The population remains broadly rural and will remain rural till the 2030s • Agriculture has often a central role in GDP, trade, and particularly in employment • 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

14. SSA’s Economic Transition: a Major Challenge Manufacturing % GDP • African economies are characterized by a low level of diversification • Rapid urbanization with a low level of industrialization • Increased difficulties to develop a sufficient industrial sector in a context of strong international competition • Consequences: • 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

15. Agriculture, Transition & Employment • The role of agriculture: • 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 lessons learnt from past transitions remind: • 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

16. Prioritization, Targeting and Sequencing • 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 • the size of the yearly cohorts of young people entering the labor market is a strong reminder • 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

17. Prioritization, Targeting and Sequencing • Two main issues can be raised: • 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