Sub-Saharan Africa will grow to 25% of the world’s workforce. Here’s what it could mean for the economy

Earlier today, asset management firm Bridgewater released a new research report on population growth in Sub-Saharan Africa and what that could mean for global economic growth.

In the coming decades, the working-age population in Sub-Saharan Africa is expected to grow significantly, from about 10% to 25% of the world’s working-age population.

This could mean one of two things in this region, the report said. Through productivity growth, the region can be transformed into a driver of global economic growth. But it may also result in a lack of economic development if the region remains on its current path—one of “deficit” economic development, which has a negative impact both regionally and globally.

“To reverse this trend, advanced economies need to significantly increase financial support in the region and the private sector needs to increase its share, which will require action by policymakers in the region and in advanced economies,” wrote Bridgewater CEO Nir Bar Dea. introduction to the report.

Constraints to growth and the need for “quality investment”

The report, written by Devon Long and Eka Zhao, estimates that if the region could increase productivity growth by 3% to 4% over the next 25 years, it could go from 3% of global output to 10% of global output. around the world. .

To achieve this goal, however, investors will need to “address infrastructure and human gaps,” the authors write. This can be achieved by doing two things: closing the investment gap and increasing the level of investment.

In other words, investments need to generate profits and social benefits that exceed the cost of servicing them. This will allow the region to develop necessary services including health care and education without fear of going into debt.

International private finance may be the key to closing the investment gap, the report said, but there are obstacles, including “high perceived risk,” underdeveloped infrastructure, “immature capital markets,” and fragmentation across the region.

The full report, commissioned by South Africa-based Harith General Partners, is available on Bridgewater’s website.