"Towards full employment in Africa?" by Chukwu-Emeka Chikezie
In October 2007, the UN General Assembly adopted a new target for the first Millennium Development Goal (MDG) that aims to halve the number of people living in poverty by 2015: To “achieve full and productive employment and decent work for all, including women and young people”. This belated recognition of the link between employment and poverty is better late than never. In 1999, the UK’s Treasury published a study, “Tackling Poverty and Extending Opportunity” which concluded that “work and access to work is the key driver in Britain today and lack of work is the primary cause of poverty.” Furthermore, “work is the best route out of poverty - 8 out of 10 people who moved into work moved out of the poorest fifth.”
Given that it is business – broadly defined – that generates jobs, it follows that business has a key role as development actors in tackling poverty. But “business” or the private sector is an ecosystem that incorporates different types and sizes of business. Large multinational corporations (MNCs), and the foreign direct investment they bring, typically do not generate that many jobs directly, although the few they do generate are often at the top end of the spectrum. However, many MNCs generate many more jobs in the value chain linkages they establish with smaller enterprises. Unilever in South Africa employs 4,000 people but generates roughly 100,000 more jobs through such linkages.
However, the bulk of Africa’s private sector is weak, fragmented, and operates largely informally. While a mark of the resilience of entrepreneurs to battle against the odds, the informality is a brake on growth. Significantly, though, as surveys conducted by the International Finance Corporation in post-war Liberia and Sierra Leone show, many informal enterprises are keen to formalise, perceive benefits in doing so, but have tried and failed either because the process is too costly or complex.
The onus, therefore, lies with governments to create an enabling environment for businesses to operate. In addition, specific policies to support small and medium sized enterprises are vital. Provision of targeted business development support, access to finance, and proactive efforts to build better linkages between financial inflows – whether FDI, diaspora direct investment, or remittances – are all vital steps to ensure business plays its full role in tackling poverty and advancing progress toward achievement of the MDGs.
The challenge of job-creation in Africa is huge – estimates suggest a need to create between 8 million and 10 million jobs a year, every year. But the MDGs shall remain elusive if – together – we do not tackle this scourge of massive unemployment. Indeed, it is time to assert a belief that full employment in Africa is our goal and to allocate the time and resources to achieve it in the decades ahead.
Chukwu-Emeka Chikezie is Executive Director at the African Foundation for Development (AFFORD)
Given that it is business – broadly defined – that generates jobs, it follows that business has a key role as development actors in tackling poverty. But “business” or the private sector is an ecosystem that incorporates different types and sizes of business. Large multinational corporations (MNCs), and the foreign direct investment they bring, typically do not generate that many jobs directly, although the few they do generate are often at the top end of the spectrum. However, many MNCs generate many more jobs in the value chain linkages they establish with smaller enterprises. Unilever in South Africa employs 4,000 people but generates roughly 100,000 more jobs through such linkages.
However, the bulk of Africa’s private sector is weak, fragmented, and operates largely informally. While a mark of the resilience of entrepreneurs to battle against the odds, the informality is a brake on growth. Significantly, though, as surveys conducted by the International Finance Corporation in post-war Liberia and Sierra Leone show, many informal enterprises are keen to formalise, perceive benefits in doing so, but have tried and failed either because the process is too costly or complex.
The onus, therefore, lies with governments to create an enabling environment for businesses to operate. In addition, specific policies to support small and medium sized enterprises are vital. Provision of targeted business development support, access to finance, and proactive efforts to build better linkages between financial inflows – whether FDI, diaspora direct investment, or remittances – are all vital steps to ensure business plays its full role in tackling poverty and advancing progress toward achievement of the MDGs.
The challenge of job-creation in Africa is huge – estimates suggest a need to create between 8 million and 10 million jobs a year, every year. But the MDGs shall remain elusive if – together – we do not tackle this scourge of massive unemployment. Indeed, it is time to assert a belief that full employment in Africa is our goal and to allocate the time and resources to achieve it in the decades ahead.
Chukwu-Emeka Chikezie is Executive Director at the African Foundation for Development (AFFORD)
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