HOW PANDEMIC MAY SLOW YOUTH PROGRESS
UNTIL Covid-19 hit, the quality of life of youth (age 15 to 24) in subSaharan Africa had been steadily improving. According to the World Bank, by 2019 the youth literacy rate stood at 73%. Gross secondary school enrolment rates increased from 13% in 1971 to 43% by 2018. Youth unemployment rates have remained at around 9%, even below the world average of 13.6%.
Across sub-Saharan Africa, extreme poverty among young workers declined from 60% in 1999 to 42% in 2019. Moreover, the youth literacy gender parity index, measuring the ratio of females to males ages 15 to 24 who can read and write, has improved significantly, reaching 93% in 2019. And for this first time, the unemployment rate of young women is similar to that of young men (9.4%).
As an economist interested in entrepreneurship and technological innovation, I recently contributed to the UN’s 2020 World Youth Report. In particular, chapter 4 of the report concerns how the youth can leverage new digital technologies for social entrepreneurship to advance sustainable development.
Though written before the Covid19 pandemic, the message may have become even more urgent. This, because Covid-19 may slow down or even reverse the positive.
There are fears that the pandemic will result in a lockdown generation, characterised by structurally higher youth poverty and unemployment.
Lockdowns, by slowing the spread of the disease, generate benefits that “accrue disproportionately to older households”.
But the costs of reduced economic activity are disproportionately born by younger households. They bear the “brunt of lower employment”.
Younger people, especially young women, are more intensively employed in sectors such as hospitality and entertainment. About 80% of youth jobs in sub-Saharan Africa are in the informal sector. The sectors – hospitality, entertainment and informal – have been among the worst affected.
Lockdowns also interrupt schooling and education. In one calculation, this could generate global future “learning losses with a present value of $10 trillion (about R145 trillion)”.
The closure of schools will reinforce social and economic inequalities and exclusion. Youth from more well-off households may be less affected, for instance in having access to private internet and laptops.
While the impacts are troubling everywhere, in Africa they are magnified due to the high rate (21%) of youths who were not in employment, education or training before the pandemic struck. The 8th sustainable development goal requires of all countries that, by 2020, they substantially reduce the rate.
Given the complications introduced by the pandemic, how can this development goal be best achieved?
With formal employment growth sluggish at the best, countries are pinning their hopes on entrepreneurship. But, entrepreneurship support policy remains a notoriously complex topic.
Younger entrepreneurs are, on average, more likely to fail, and older entrepreneurs’ firms, on average, perform better. This is often due to market failures.
Banks do not have information about the quality of younger entrepreneurs (who often lack collateral). In education, meanwhile, the market will undersupply in the absence of subsidies.
Where the market failures are prevalent, the youth may fail to obtain finance for their ventures or accumulate enough skills.
Supporting youth entrepreneurship would, therefore, require not policies to focus exclusively on entrepreneurship per se, but to fix market failures elsewhere in the system.
The benefits of catalysing youth entrepreneurship could be huge in Africa. With the world’s youngest population at a time of unprecedented innovations in digital technologies across the world, the continent has a unique opportunity. It has two key advantages: digital savvy and a willingness to take risks.
Naudé is a professor of economics at the University College Cork