Sub-Saharan Africa is urbanizing with large rural-urban migration. But unlike the urbanization of the Western world, Sub-Saharan Africa lacks a critical component: industrialized urban cities. As a result, these urban areas are filled with substandard housing and a severe lack of infrastructure to cope with unplanned population growth.
Fortunately, a new development playbook to solve this problem is emerging, and it is anchored in young people with advanced digital skills in Sub-Saharan Africa. These young workers are digitally savvy, creative, and can lead a big change – if they are equipped and supported to unlock their potential. They can export digital skills to Western Europe, the United States, and Asia through the unlimited and unrestricted opportunities provided by the internet through “digital jobs” from music to software development to induce engineering. But to measure it and make it a success, changes must be considered at the policy level and in the implementation areas of quality digital education, tax treaties and harmonization, and startups focused on outsourcing.
Sub-Saharan Africa is urbanizing with large rural-urban migration. But unlike the urbanization of the Western world decades and centuries ago, Sub-Saharan Africa lacks a critical component: industrialized urban cities. In other words, unlike the Western world where industrialization precedes urbanization, Sub-Saharan Africa urban cities increases with marginal manufacturing output and industrial capacity.
The implications are huge, as these urban areas are filled with substandard housing and inadequate infrastructure to cope with unplanned population growth. With limited taxes, urbanization in Sub-Saharan African cities is underfunded and could face serious challenges in health care delivery and general welfare of society. And with climate change affecting major cities such as Lagos and Nairobithe continent needs urgent solutions.
According to Statista, on average, the rate of urbanization in Sub-Saharan Africa stands at approx 41.83% in 2021, although the continent has a reason 2% of global manufacturing production. The implication is that those who move to urban areas in search of economic opportunity do not find it, and that results in high unemployment rates, especially among young people. The Brookings Institution estimates the youth unemployment rate in Africa about 60%while the United Nations Conference on Trade and Development (UNCTAD) put the poverty rate above 50% in most countries.
The challenges posed by this rapid “urbanization before industrialization” were exacerbated by several factors, including an industrialization policy that looked more backward than forward. For years, Sub-Saharan African leaders have been architecting a strategy to replicate what has worked for China, relying on an expectation that the Western world will outsource low-level factory jobs to Sub-Saharan Africa to stimulate a dynamic manufacturing sector once wages become more expensive in China.
However, as I noted before, it will be a big mistake if Africa tries to continue China’s strategy. Working for China has expired with advances in AI and robotics, making it nearly impossible for Western Europe and the United States to send some of these low-level jobs off their shores; Robots will do the housework. Instead, policy makers in Sub-Saharan Africa need to create a new development playbook that takes into account the realities of the current situation in the area.
Fortunately, that new playbook of development is already evolving, and it has anchored many young people in Sub-Saharan Africa. In the last few years, in the process of running Tekedia Capital, an early stage venture fund, and Tekedia Institute, a business school with thousands of students, I have collected a lot of data on sectors, main economic indicators, freelancing, offshore jobs, and other factors. Based on the datasets, the path I see for the development of the continent goes through young people equipped with advanced digital skills. The youth of sub-Saharan Africa are digitally savvy, creative, and can lead a big change if they are equipped and supported to unlock their potential, not only in the region but globally. These young people can export digital skills to Western Europe, the United States, and Asia through the limitless and unrestricted opportunities provided by the internet. In other words, as the West outsources factory jobs to China, soon, they will outsource “digital jobs” in many ways in Sub-Saharan Africa. These digital jobs are diverse, from music to software development to fast engineering. For countries like Japan and South Korea where birth rates remain low, Sub-Saharan Africa provides an easily accessible talent base, to support their economies from afar.
Some enabling infrastructure exists as the Sub-Saharan African region experiences deeper broadband penetration. Along with a growing terrestrial broadband expansion, the Abot SpaceX’s Starlink satellite broadband brings many promises of urban and rural connectivity. And with renewable energy startups, which use solar to provide energy services, young techies are overcoming infrastructure challenges, making it easier for them to participate in the global digital economy.
These transfers allow young Sub-Saharan workers to earn income where they are, and once that income is imported, they have the capacity to contribute and transform their local economies of scale. In fact, some digital experts, after they earn money working for international organizations, decide to start their own companies and, in the process, nurture other young talents. The continent has sa at least seven unicorns — startups worth at least $1 billion — and while they are listed on public stock exchanges, acquired by large multinational companies, or grow to have the ability to pay good dividends, the wealth generated will be used to accelerate development. In addition, due to the digital nature of their jobs, there is no need to stay even in urban areas; Andela, a digital skills outsourcing startup, for example, hires workers from anywhere in Sub-Saharan Africa, as long as there is good internet service.
But in order to measure it and make it successful, the following should be considered at the policy and implementation level:
Quality digital education: The Covid-19 pandemic has shown that many countries in Sub-Saharan Africa are still far below digital readiness. While many universities in China, the US, and Europe have been able to transition to remote learning, many universities in Sub-Saharan Africa have not. Building the infrastructure to support the future knowledge economy is essential for Sub-Saharan Africa to unlock the great potential of its youth.
Tax treaties and harmonization: In the leading economies of Sub-Saharan Africa such as Nigeria, Ghana, and Kenya, most of the youth work in some of the leading companies in Europe, the US, and Canada. Policy makers in Sub-Saharan Africa must ensure that these workers are paid fairly, and that they pay local taxes as required by law. A clear policy that facilitates global companies to hire and develop these talents should be part of the development priorities of the region. It is also important to ensure that heavy taxes do not dampen the motivations of young workers. That calls for effective implementation and integration of tax treaties.
Startups focused on outsourcing: Regional and national policies should be developed to deepen the capacities of digital companies focused on outsourcing. These companies, like Andela, are valued at more than $1.5 billion, train young people and then export their digital skills to the world, while they stay on the continent. African embassies and missions in Europe, Asia, and North America can support them in connecting with large clients, providing pipelines to hire services for African youth.
Sub-Saharan Africa has the youth to drive the knowledge economy. ACCORDING to the United Nations, “Africa has the youngest population in the world, with 70% of sub-Saharan Africa under the age of 30.” If the continent educates and trains them with higher levels of digital skills, Sub-Saharan Africa will thrive for decades, and experience a unique version of industrialization.