WASHINGTON DC, Aug 16 (IPS) – Every year in West and Central Africa6 million young people are entering the labour force, while only about half a million new jobs are being created. This huge job shortage means that most new entrants to the labour market are working in the informal sector, with uncertain income, low-quality employment and little hope of escaping poverty.
The consequences of this unemployment epidemic are far-reaching: the breakdown of the social contract, social and political unrest, a waste of human potential and increasing poverty.
What is stopping West and Central Africa from creating the same dynamic employment opportunities as other developing regions?
Highly resource-dependent economies that rely on export revenues but do not create jobs. Low levels of trade due to high trade barriers. Challenging presence of state-owned enterprises that crowd out the private sector. And declining foreign investment, preventing countries in the region from reaping the benefits of technology transfer, access to global markets and job creation.
The Catalyst: Private Sector Development
Tackling the unemployment challenge is no easy task. But developing and nurturing a vibrant private sector must be central. The private sector is an engine of economic growth, innovation and job creation. And the tax revenues generated by thriving businesses allow governments to invest in essential public services such as health, education and infrastructure, further improving the overall quality of life for citizens.
Yet in many countries in West and Central Africa, the private sector is suppressed and its role in job creation is woefully inadequate.
What can we do about this?
To harness the power of the private sector to invest, create jobs, catalyse a green transition and drive economic transformation, the following must change:
- Improving the business environment to enable private investment and promote market competition. For example, the World Bank is supporting countries such as Ghana, Liberia, Togo, Senegal, Côte d’Ivoire, Burkina Faso and Sierra Leone to simplify and shorten the process of starting and closing a business, reform laws and regulations governing foreign direct investment (FDI), speed up the resolution of commercial disputes and bring security and clarity to land and property titles. And the foundation of many of these reforms is the digitalization of government-to-business services.
- Enabling market access, investment and trade: More predictable trade and investment policies aligned with the African Continental Free Trade Area (AfCFTA) would improve conditions for domestic production of higher-value goods, economic diversification and regional integration. The pact connects 1.3 billion people in 55 countries with a combined gross domestic product (GDP) of $3.4 trillion. Yet its potential remains unrealized due to a lack of progress in implementing the AfCFTA in West and Central Africa.
For example, countries in the Economic and Monetary Community of Central Africa (CEMAC) have very low levels of intraregional trade, with widespread global and sectoral trade barriers that raise costs and reduce export potential. Governments should and should adopt policies that facilitate market access, increase competition and attract private investors, and avoid excessive state involvement in productive sectors.
All these actions will help mobilize private capital, expand market networks, reduce trade transaction costs and uncertainty, strengthen compliance, and enable digital trade. The World Bank is supporting the implementation of the AfCFTA through Trade Facilitation West Africa (TFWA), a $25 million technical assistance program over 6 years. This includes support for 6 trade corridors between seaports and non-landlocked countries in the region, covering 9 countries.
- Improving sector and company performance
Building a stronger private sector requires sector- and firm-level policy interventions to improve competitiveness and performance. Firm-level interventions should include incubator/accelerator programmes, expanding access to finance for micro, small and medium-sized enterprises (MSMEs) and start-ups, and supporting technology adoption.
In the Republic of Congo, under our Support for the Enterprise Development and Competitiveness ProjectThis series of interventions at the company level has resulted in almost all SMEs that received support becoming formal, registered businesses. And our Jobs and economic transformation in Senegal has already created or protected more than 21,000 jobs and supported more than 4,000 businesses, more than half of which are run by women.
Sector-level interventions are even more promising in economies with high-potential sectors, such as manufacturing (automotive, textile and clothing), tourism, wood and construction.
- • Climate awareness is smart business: Countries in West and Central Africa have an abundance of natural resources that can help create jobs, increase exports, and build climate resilience for local and global communities. Timber, ecotourism, fisheries, critical minerals are all examples where job creation and resource conservation can be empowering.
In Sierra Leone the Economic Diversification Project not only creates local, formal sector jobs through tourism sites, but also empowers local communities to protect beaches from erosion, slow deforestation, and protect chimpanzees from poaching. While this agenda goes beyond job creation, it is also about making businesses the solution to climate resilience.
New decarbonisation technologies for production, sustainable sourcing of local materials, renewable energy for production are crucial and require financing. That is why we are testing a ‘green window’ in an existing credit guarantee programme in Burkina Faso and Ghana to increase commercial credit for green investments. This also helps to raise awareness among SMEs about green solutions to strengthen resilience and adapt production to a changing climate.
Governments in West and Central Africa can no longer rely on a narrow band of extractives and exports to keep their economies strong. To create the jobs they need, the private sector must be allowed to flourish, creating a virtuous circle of job creation, competition, productivity and exports. There is simply no other option.
Abebe Adugnathe Regional Director for Prosperity in the West and Central Africa Region at the IMF, was the former Practice Manager for the Global Macroeconomics, Trade and Investment Practice in Africa, particularly in the East Africa region.
IPS UN Office
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