The recent statistics from the World Bank indicate unemployment rate in Sub-Sahara Africa was about 6.6% in 2020 (ILOSTAT database). This was an overall figure, which then varied by country. South Africa had a high estimated rate of 28.7%, which was mainly due to the economic stagnation in 2020. On the other hand, were countries such as Rwanda and Tanzania with low rates of about 1.4% and 2.2% respectively.
However, these are indicative numbers, as considering the underemployed, openly unemployed, and discouraged worker, the unemployment ranges could be higher than the above figures.
Why the high unemployment rate in Africa?
The quality of education in many African countries is more concerned with imparting knowledge to students rather than providing them with the skills required in the jobs market. Hence, a majority of lack the skills required by potential employers.
Also, population explosion depicted by the large birth rates that makes the number of those willing to work be greater than the number of jobs available.
Weak structures in governance set ups leave many out of work in case of economic shocks, whose impact takes a long time to recover. For instance, Nigeria is yet to recover from economic recession experienced in 2016 that saw a lot of retrenchment taking place. Such job losses have a spiral effect, in absence of government support to its citizens.
Is there really a high rate of unemployment?
Lack of clear data in most countries in the continent continue to linger.
However, the informal sector in most countries is growing faster than the formal. While formal sector employment (wage backed by a contract) form key part of the data, most countries have a bulk of informal and blue-collar jobs like farming, carpentry which in most cases is a gateway for self-employment and sustainability.
This implies there is a growing portion of the population (with an income) mainly from the informal sector. Understanding this dynamic is an important dimension in any market entry and/or growth strategy.
At Episodes Research, we work with partners and clients across the continent to help navigate such nuances. We invite you to share your comments. We are glad to partner with you in this conversation.
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