Trade and Employment From Myths to Facts - International Labour ...

Chapter 2: New evidence on trade and employment: An overview
2.4.2 FDI inflows and development: The case of Africa
Unemployment and underemployment are a serious problem in most African countries,
and not only in the poorest. For example, in Botswana, the so-called superstar
of Africa, poverty, unemployment and inequality remain extremely high. Recent
work by McCaig and McMillan (forthcoming) indicates that in 2002–03 (the latest
year for which the Household Income and Expenditure Survey is available), the
headcount poverty rate was 30.2 per cent, the Gini coefficient was 64.7 – making
it the third most unequal society in the world – the overall unemployment rate was
24 per cent and the youth unemployment rate was closer to 50 per cent. 22 These
facts should make any economist convinced that good governance and institutions
are the key to economic success take pause. Botswana has experienced rapid economic
growth and is well known for its efficient and practically corruption-free bureaucracy.
But this growth has been largely based on the diamond industry which employs
only around 7,000 people or 2.3 per cent of the labour force. The Government of
Botswana is well aware of these problems and has implemented numerous schemes
dedicated to creating employment in an effort to alleviate poverty and reduce inequality.
Botswana has an official Institute for Development Policy Analysis (BIDPA)
which is generally oriented towards employment creation and diversification of the
economy. Yet, to date, industrialization has been elusive. The reasons for this are
unclear and warrant further investigation. For now, the point is that even in the socalled
superstar of Africa, efforts to industrialize and generate employment have not
met with much success.
Like Botswana, Nigeria has a serious unemployment problem. The World Bank
(2009) notes the following:
“Public debate in Nigeria on the country’s progress has been dominated
by two seemingly opposed themes. The first is the strong growth performance
of the non-oil economy since the return to democracy in
1999, and especially since 2003, which ushered in a period during
which the Federal Government of Nigeria undertook debt restructuring
and fiscal, financial, infrastructure, and institutional reforms. Strong
growth during this period has been manifested in sharp increases in
agricultural production, wholesale and retail trade, and construction,
and in the emergence of new industries, particularly in the financial,
telecommunications, and entertainment sectors. The second, opposing
theme is that Nigeria’s much improved economic performance seems
to have done little to reduce unemployment, especially among the
young. The consensus in society is that youth unemployment is on
the rise, with an associated negative impact on public order and an
increase in militancy.”
22 McCaig and McMillan’s calculations based on Botswana’s 2002–03 Household Income and
Expenditure Survey.
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