2014-african-transformation-report

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31few and far between. Reportedunemployment rates are very low,mainly below 5%—lower than inindustrialized countries. The lowreported unemployment rates,however, belie the much worse situationon the ground. Many peopleclassified as employed are engagedin low-productivity agriculture orservices and are severely underemployed,barely eking out a living.Informal employment (in the informalsector or in the formal sectorbut without a contract and socialprotection) makes up more than80% of employment, and vulnerableemployment (own-account andcontributing family work) is around80% of employment (table 1.2).Both informal employment andvulnerable employment tend tolack formal work arrangements andsocial benefits. 16Despite the severe problems withthe availability and quality ofemployment data in Sub- SaharanAfrica, it is important to highlightand track employment as a centralpart of the discussion on economictransformation. Since there areno consistent data on the share offormal employment in Sub- Saharancountries, we use an estimatethat modifies the overall employmentrate by the rate of vulnerableemployment as estimated by theInternational Labour Organization. 17Even so, consistent time series dataare not available for many countries.The share of formal employmentin the labor force in Mauritiusand South Africa, two Sub- Saharancountries that regularly producedata, is around 70%. For the rest ofthe ACET 15, data are sparse, butthe share is seldom above 25%. InZambia it fell from 31% in 1990 to16% in 2005. In Kenya it was around33% in 1999. In contrast, the shareof formal employment in the laborforce is more than 50% in the comparatorcountries.Youth unemployment. Unemploymentis especially serious for youthTable 1.2CountrySome features of employment in selected Sub- Saharan countriesInformal employment(% of total employment)(ages 15–24) in Africa, with a formalunemployment rate much higherthan for adults (ages 25–64). Theirvulnerable unemployment rate isalso high. The 2012 African EconomicOutlook calculates that 75% of theworking young are in vulnerableemployment in low- income Africancountries, 57% in lower middleincomecountries, and 26% inupper middle- income countries. 18In today’s Africa a rising share ofthe youth are being educated atconsiderable national expense, buton leaving school a majority eitherremain unemployed or cannot findjobs, threatening social and politicalstability.Given the continent’s demographics,youth unemployment is likelyto increase if Africa’s jobless growthcontinues. In 2010 the share ofyouth in the working-age population(ages 15–64) in Sub- SaharanAfrica (and Africa) was 20%, comparedwith the world average of18%. By 2050 the world averageis expected to have fallen to 14%,but in Sub- Saharan Africa the sharewould still be around 19%. In 2050Sub- Saharan Africa’s youth populationof 362 million will be almostthree times China’s 124 million(figure 1.3). With economic transformationstrategies that createVulnerable employment(% of total employment)Benin (2010) 92.9 89.9 aEthiopia (2005) na 83.9Ghana (2010) 86.1 71.5Kenya (2009) na 63.4 bMozambique (2005) 92.8 84.8Rwanda (2006) 93.9 76.6Uganda (2009) 85.5 82.7 cna is not available.a. Data are for 2003.b. Data are for 1999.c. Data are for 2005.Source: Baah-Boateng, Ansu, and Amoako-Tuffour 2013.demand for employment andprovide education and the rightskills, this bulging youth populationcan be turned into an asset.Comparing Africancountries on transformationThe African Transformation Index(ATI) provides a quantitativemeasure for comparing Africancountries on the various aspects ofeconomic transformation reviewedabove. It is a composite of the fiveelements of depth—Diversification,Export competitiveness, Productivity,Technological upgrading, andHuman economic well-being. Here,we show country rankings on theATI and on the five subindexes fortwo three-year periods centered on2000 and 2010 (averages of 1999–2001 and of 2009–2011). We takeaverages because the volatility ofthe commodity- dependent Africaneconomies can skew the values ofthe relevant variables for any particularyear, giving misleading results.We show results for the 21 Sub-Saharan countries that have therequired data. Note that the resultsreflect economic outcomes ratherthan policy inputs and institutionalenvironments (see annex 1 on theATI’s outcome-based approach).The AfricanTransformationIndex providesa quantitativemeasure forcomparing Africancountries on thevarious aspectsof economictransformationAfrican Transformation Report 2014 | Tracking economic transformation
32African Transformation Report 2014 | Tracking economic transformationMauritius, SouthAfrica, Côted’Ivoire, Senegal,Uganda, Kenya,and Gabon are thetop seven countrieson economictransformationFigure 1.3Sub- Saharan Africa’s youth population to outstrip China’sand India’sYouth (ages 15–24), billions1.501.251.000.750.500.250.002010Source: UN 2010.201520202025Putting together all of the elementsof DEPTH, the ATI shows Mauritius,South Africa, Côte d’Ivoire, Senegal,Uganda, Kenya, and Gabon as thetop seven countries on economictransformation in 2010 (figure 1.4a).The middle seven are Cameroon,Madagascar, Botswana, Mozambique,Tanzania, Zambia, andMalawi. The least transformed areBenin, Ghana, Ethiopia, Rwanda,Nigeria, Burundi, and Burkina Faso.The main surprises are Botswana,Ghana, and Nigeria. Botswana hada stellar record on GDP growth over1970 to 2010, raising its per capitaGDP to the second highest in Sub-Saharan Africa (after Gabon). Butits economy is based primarily onthe production and exports of rawdiamonds—extractives—whichwe do not include in the measuresof diversification and export competitiveness.The country has madeefforts in recent years to diversifyaway from raw diamonds by movinginto cutting and polishing, but theresults have yet to register in thedata. Meanwhile, the economyremains very weak in some of thekey indicators of transformation. Forexample, the share of manufacturingin GDP is around 4% (11% in Burkina2030Sub-Saharan Africa20352040Faso, at the bottom of the transformationrankings), and cereal yieldsare about 375 kilograms per hectare(900 kilograms per hectare in BurkinaFaso). 19 Ghana’s poor showing in 2010results mainly from a steady declinein manufacturing production, exportdiversification, and export competitivenessover the decade. It alsorelies considerably on unprocessedmineral exports (gold and bauxite).Nigeria’s poor showing also reflectsits extreme dependence on producingand exporting extractives.Uganda, Mozambique, and Rwandamade the most progress on transformation,each improving its rankby three places or more. Kenya,Madagascar, Malawi, Côte d’Ivoire,Tanzania, and Ethiopia improvedtheir rankings by one or two positions.The worst deteriorations werein Ghana and Botswana. Ghana fellseven places, and Botswana fiveplaces, between 2000 and 2010.Burkina Faso, Cameroon, Senegal,and Zambia also dropped inrankings.DiversificationAfrica2045WorldChinaIndia2050Mauritius, South Africa, Madagascar,Cameroon, Senegal, Kenya, andCôte d’Ivoire occupy the top tier ofthe diversification ranking. Ethiopia,Zambia, Ghana, Burkina Faso,Gabon, Botswana, and Nigeria arein the bottom third (figure 1.4b).Rwanda and Benin improved dramatically(five and four placesrespectively). A big part of thechange in Rwanda was the expansionof nontraditional exports,particularly vegetables and beverages.Uganda, Burundi, and Ethiopiaalso made good progress ondiversification, with Ethiopia addinghorticultural and leather exports.Regional integration agreements,such as the Southern African DevelopmentCommunity and the EastAfrican Community, have benefitedKenya, Uganda, and Tanzania. Theremoval of requirements for exportregistration, licensing, and surrenderof proceeds—and the eliminationof most commodity exporttaxes—facilitated their exportdiversification.Three of the bottom five countrieson diversification are from the EconomicCommunity of West AfricanStates—Ghana, Burkina Faso,and Nigeria. Ghana had the worstdecline on diversification, reflectingthe dramatic decline in the sharesof manufactures and services inexports, from 49% in 2000 to 23%in 2010. Revenues from the newcrude oil exports could dampen theurgency to diversify production andexports as the growth of agricultureand industry threaten declines.Export competitivenessWhen it comes to export competitiveness(the share of exports ofgoods and services in a country’sGDP relative to the correspondingshare for the world), 20 Mauritius,Côte d’Ivoire, Malawi, Kenya,Mozambique, Tanzania, and Ghanaare in the top third, while Cameroon,Benin, Botswana, Nigeria,Rwanda, Burkina Faso, and Burundiare in the bottom third. Mozambique,Tanzania, Uganda, and Kenya
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Page 14 and 15: OVERVIEWTransforming Africaneconomi
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CHAPTER 5Leveraging abundantlabor f
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Box 5.2Riding African designs into
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105Experience and Possible Lessons
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CHAPTER 7Managing oil, gas,and mine
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Figure 7.1Examples of Africa’s na
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Box 7.1Botswana’s political leade
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Box 7.2 Executive control and parli
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Table 7.1CountryInstitutions for co
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141created. One certified firm supp
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143iron ore is about one-tenth of t
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145• Get help. In industry expert
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ANNEX 1Technical note on theconstru
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169includes many other factors). GD
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171well-being index, which includes
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173Table A1.1IndicatorAfrican Trans
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