The rise of the young bucks

Finweek English Edition - - INSIGHT -

IF YOU THINK the biggest is­sue fac­ing the world in 2011 is the fall­out from the global fi­nan­cial cri­sis, think again. At the re­cent GIBS Fore­sight 2011 Fo­rum, the de­mo­graphic is­sue of an age­ing pop­u­la­tion in de­vel­oped worlds ver­sus young emerg­ing mar­kets made for a keen de­bate.

As is of­ten the case, eco­nom­ics are at the core, with Dr Adrian Sav­ille, Can­non As­set Man­ager’s Chief In­vest­ment Of­fi­cer, point­ing out that the global re­ces­sion “takes the flavour of some­thing sim­i­lar to Ja­pan in the 1990s into the 2000s. The Ja­panese econ­omy has es­sen­tially been in re­ces­sion for 20 years and they’ve spent most of that time pay­ing down a moun­tain of debt. This has been com­pli­cated by the fact that Ja­pan is ‘bank­rupt’ in terms of its so­cial de­mo­graphic; they’re now a pop­u­la­tion that is over­whelm­ingly in re­tire­ment – 25% of Ja­panese are older than 65 – so you have a very small work­force try­ing to sup­port a de­pen­dent, age­ing pop­u­la­tion.”

While to­day Ja­pan is in much bet­ter bal­ance-sheet shape, the prob­lem of hu­man cap­i­tal per­sists. Con­versely, sub-Sa­ha­ran Africa – with 44% of its pop­u­la­tion un­der the age of 15 in 2006 – is the youngest re­gion in the world, out­pac­ing the likes of Asia, Latin Amer­ica and the Caribbean where some 30% of the pop­u­la­tion is un­der 15 and in Europe which boasts only 16% in this age range. In fact, Africa as a whole is pro­jected to have more work­ing-age adults per child in 2030 than the con­ti­nent did in 2006.

This pop­u­la­tion sub-sec­tion is both an eco­nomic trea­sure trove and a po­ten­tial time bomb. Ac­cord­ing to Dr Lyal White, di­rec­tor of the Cen­tre for Dy­namic Mar­kets at GIBS: “Africa’s real po­ten­tial lies in its mar­ket: 1 bil­lion peo­ple, half of which are un­der the age of 35.” But many in this num­ber have to be up­lifted out of poverty in or­der to achieve the full eco­nomic and growth po­ten­tial from this hu­man re­source.

It’s cru­cial that South Africa and the rest of Africa fol­low China, In­dia and Brazil in cou­pling eco­nomic growth and com­pet­i­tive­ness with hu­man devel­op­ment, said White. “Hu­man devel­op­ment is part of a coun­try’s com­pet­i­tive ad­van­tage and the quicker dy­namic mar­kets re­alise this, the quicker they’ll be­come more com­pet­i­tive.”

Al­ready the im­pact of the “youth agenda” on world pol­i­tics is ev­i­dent. Just take a look at the cam­paign that launched US Pres­i­dent Barack Obama into of­fice, said Shaka Sisulu, en­tre­pre­neur and found­ing mem­ber of youth-vol­un­teer group Cheesekids. “ This was on the back of a young gen­er­a­tion.” Sisulu cited an­other ex­am­ple: “In Septem­ber, there was a Pres­i­dent who is quite fa­mous for his mar­riage is­sues and he re­cently faced some crit­i­cism from his own quar­ters. He faced down some trou­ble­some youth; and if you think I’m tak­ing about our Pres­i­dent you’d be mis­taken, I’m talk­ing about the French pres­i­dent. This rest­less­ness is a global phe­nom­e­non.” Slowly it seems world lead­ers are wak­ing up to a de­ter­mined youth agenda. They have to. “We are at a point in our his­tory where we have the high­est con­cen­tra­tion of young peo­ple swarm­ing the Earth – 1.5 bil­lion – and 89% of those are here in de­vel­op­ing na­tions,” said Sisulu. “Over the past 10 years they’ve grown at a rate of 10% and jobs have grown at 0.2%, there’s noth­ing to ab­sorb all these youths. There’s a fail­ure in the rights of pas­sage and in­sti­tu­tions are over­whelmed. So while we’ve al­ways seen the youth be­ing chal­leng­ing, the sta­tus quo means there is a lot more at stake in to­day’s world – glob­ally and in South Africa.”

In South Africa, for ex­am­ple, this chang-

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