The African continent is large. The US, China and India would fit within its borders with space to share for a few European countries too! Africa is, however, not a homogeneous collection of countries.

Similar to Europe, for instance, the 52 countries in Africa differ from each other regarding languages (more than 2,000) cultures, stages of economic development, risk profiles and, very importantly, the sizes and quality of human capital.

For decades Africa’s deterioration or lack of economic growth was caused by weak governance, autocratic corrupt leaders, ethnic conflict, widespread nationalisation, as well as the slump in food and commodity prices in the 70s and 80s. [1] One could add to that the negative legacy of colonisation, independence and liberation wars and, for South Africa, apartheid.

As new political democracies are established, and political and investor risk is decreasing, investors are on the look-out for resources as well as new fast growing middle-class consumers.

The changing environment was confirmed further by The Economist – The World in 2014:

Not long ago, slow-growing economies with high inflation were the norm in sub-Sahara Africa. Average GDP growth across the continent during the 1990’s was only 2.2%, dismal for such a poor region. Average inflation was 27%. Now this has changed. Since 2001 Africa’s GDP has expanded more quickly each year than the global average. In the past decade, only the developing Asian economies, led by China, has grown faster than Africa. Even as China slows there is enough momentum for Africa’s GDP (adjusted for the purchasing power of its currencies) to grow around 5.5% in 2014, the average rate over the past decade – faster than any other region in the world. [2]

No wonder that the cover articles in The Economist over the last 13 years tell a vastly different story:

  • May 13th, 2000 edition: The hopeless continent.
  • December 3rd, 2011 edition: Africa rising.
  • March 2nd, 2013 edition: Aspiring Africa.

International companies such as Vodacom, Siemens, Unilever, GE, Walmart, and TATA have all increased their presence. In addition, home-grown brands such as MTN, Shoprite, Woolworths, Sasol, Econet, FNB and Dangote Cement have all expanded across Africa. This trend will probably continue and even increase in future. In 2012, The Economist Intelligence Unit interviewed 158 large investment managers about their planned African investments over the next five years. It found that fewer than one in ten money managers are investing more than 3% of assets under management in Africa today, while nearly eight of the ten will be doing so in five years. [3]

However, as the commodities supercycle has come to an end some of Africa’s oil-producing and metal-rich giants are facing a difficult time ahead [4]. Countries relying on export of commodities and especially oil has been adversely affected by the low oil price and the drop-off in the demand from China of virtually every commodity. Countries such as Nigeria, Angola, Ghana, Zambia and South Africa are seeing a dramatic slowdown in economic growth. According to Amadou Sy, the director and senior fellow at the Brookings Institution’s Africa Growth Initiative, African countries will need to achieve “quality economic growth” and rely more on “engines of growth such as agriculture and manufacturing, than exports of oil and other commodities”. [5]

De-industrialisation is also hitting Africa hard. According to The Economist (7 November 2015) this is caused mainly due to the following:[6]

  • Weak infrastructure drives up the costs of producing and transporting things
  • Africa’s rich natural resources brought about the “Dutch disease” where increased exports of oil and other natural resources tend to drive exchange rates up making it cheaper to import goods and harder to produce and export locally.
  • Africa’s geography is problematic. Manufacturing is moving from China to neighbouring countries such as Bangladesh and Vietnam instead of ‘distant’ Africa.


Nonetheless there are some African countries breaking the mould. Ethiopia’s manufacturing industry has seen an average growth of over 10% a year from 2006–2014. Tanzania and Rwanda are another two countries following suit. Again it is imperative that African countries will need to shift workers into more productive industries if they want to grow fast. Infrastructure and incentives for manufacturing firms need to be set up to harness the wealth of human capital available in Africa.[7]

Fortunately the continent’s growth is not only commodity driven. The Financial Times (11 January 2014) reported that Africa is becoming the new battleground for global domination amongst hotel groups.[8] This is driven by the fact that in 2012 international arrivals surpassed the USD 50 million mark for the first time,generating USD 33 billion in revenue.The UN World Tourism Organisation forecasts arrivals will top USD 85 million by 2020. No wonder Marriott took over Protea Hotels for USD 186 million.

Political reforms, urbanisation and,specifically,the mobile phone revolution is also driving economic growth. Devarajan and Fengler make the point that“in many African countries,the calling rates are among the lowest in the world.The explosion in mobile technology has spurred innovations such as M-Pesa, the mobile-money system widely embraced in Kenya and Tanzania,which allows users to make purchases and send cash transfers by using their cellphones.In many countries,the spread of mobile devices has also allowed the information and communication sector to become important parts of the economy.” [9]

This business boom is not just an isolated development limited to a few outlier countries. If these dynamics accelerate and attain critical mass in several major African economies, as I believe they will, the regional and global effects could be consequential. [10]

Mohamed A. El-Erian, former CEO of PIMCO.
Chief Economic Advisor at Allianz and member of its International Executive Committee,
Chair of President Obama’s Global Development Council and author of the NYT/WSJ bestseller When Markets Collide.

According to the Economist in their “The World in 2016” edition, the ‘Africa rising’ narrative still prevails. Even though the growth rate is slowing because of the commodity cycle coming to an end African economies will still outperform most of the rest of the world and investors will still “keenly sniff around”.[11]

A Different Perspective

Although Africa is experiencing fast economic growth, the quality and inclusiveness of this growth are of increasing concern. The African Development Bank maintains that good economic growth has failed in creating the number of quality jobs necessary to absorb the 10-12 million young people entering the labour market each year. Africa is also the second most inequitable region in the world.

In 2010, six of the 10 most unequal countries worldwide were in sub-Saharan Africa, particularly Southern Africa. The most striking increase in inequality is found in South Africa and the Central African Republic with Gini coefficients rising from .58 to .67 in 6 years (2000-2006) and .43 to .56 in 5 years (2003-2008) respectively. [12]

Most African countries also lack a significant middle class. The Pew Research Centre states that only 6% of Africans qualify as middle class – defined as those earning USD10 – USD20 per day.[13] The growth of the middle class has also been very slow over the last decade growing only from 4.4% to 6.2% between 2004 and 2014.[14] One of the reasons for the small middle class, despite an economic growth of more than 5% a year, is that wealth is distributed very unequally. Another reason could be that poverty was so extreme that people who earn more are now just poor instead of extremely poor. Investors need to be aware of the overestimated number of upwardly mobile people and that growth might not take place at the rate they expected. Instead products/ services need to be altered to match the demographics of the specific country.

Two leading economists of the World Bank, Shantayanan Devarajan and Wolfgang Fengler, make the following arguments for being optimistic in an authoritative article: Africa’s Economic Boom: Why the Pessimists and the Optimists Are Both Right: [15]

  • Sub-Sahara’s GDP growth averaged over 5% since 2000 – even countries which are not rich in resources boomed.
  • The region attracts private capital of about USD 50 billion a year.
  • Poverty is declining and great strides are being made in education and healthcare.
  • Between 2000 and 2008, secondary school entries increased by 50%, and over the last 10 years life expectancy has increased by about 10%.

However, there is also a pessimistic view: [16]

  • Africa is currently riding a commodities wave and will suffer severely if there is an inevitable downturn.
  • The manufacturing sector has currently the same share of overall GDP that it had in the 1960s.
  • Political instability and country-wide violence is still widespread, for example Guinea-Bissau, Mali, South Sudan, Democratic Republic of Congo (DRC) and Central African Republic (CAR).
  • Infrastructure is inadequate or in poor condition, corruption is rampant and many governments struggle to provide basic services.
  • In many countries, a small but politically powerful elite capture the bulk of the wealth creation at the cost of the population.

Devarajan and Fengler conclude that both opinions are correct. However, the optimists are closer to the mark. This optimism exists despite obstacles, especially when it comes to improving human capital in the following sectors: Education, skills development and health of the population. [16]

The Demographic and Labour Dividend

While most of the developed world is growing older, Africa will have a young workforce for decades to come. Shortly after 2030, more than 60% of Africans will be of working age. By 2040, Africa will have a larger working population than China and India. Africa will reap the benefits of this so-called demographic dividend about 10 years after Asia does. Africa’s workforce is not only young and growing, but also better educated than ever before. [17]

Count me among the growing number of people excited and hopeful about what’s happening on the ground in Africa. Markets are booming, and this time it’s not just gold mines and oil rigs; it’s a new generation of workers and entrepreneurs. [18]

Mohamed A. El-Erian
former CEO/co-CIO of PIMCO.

Human Capital

Africa’s richness and potential are not only locked-up in minerals and commodities, but even more so in the opportunity and challenges that diversity and human capital offer: In fact, it is human capital that makes the difference. Brian Keeley from the OECD (2007) indicates that “Economic success crucially relies on Human Capital – the knowledge, skills, competencies and attributes that allow people to contribute to their personal and social well-being, as well as that of their countries”. [19] Raising human capital does not only refer to education and training, but also to the improvement of health levels, community involvement and employment prospects.

Of the 12 pillars which make up the Global Competiveness Index compiled by the World Economic Forum, four pillars are directly related to human capital, namely, health; primary and higher education and training; labour market efficiency; and innovation. This reveals that a nation should focus very clearly on the consistent development and upgrading of human capital at national level.

Keeley states that the link between human capital and economic growth is real and significant. [20] This has been confirmed by evidence from the OECD which shows that if the average time spent in education by a population rises by one year, then economic output per head of population should grow by between 4% and 6% in the long run. [21]

However, this is where Africa is at a disadvantage. There is a tremendous lack of high level skills, despite the vast potential pool of talent which exists on the continent.

For example, a major weakness of Africa as a whole is the low level and complete lack of adequate managers. A lack of managerial skills lies at the heart of Africa’s low productivity and service delivery inadequacies. According to Pfeffermann, the lack of management skills and knowledge are the reasons why aid and investment money disappear, and service programmes fail. [22] Pfeffermann is of the opinion that:

Local management education institutions that combine international best practice with local relevance are the key to building the pool of management talent that Africa needs to generate prosperity. They provide companies, NGOs, government and small business with quality managers that have cultural understanding no expatriate armed with a foreign MBA program can match. Just as importantly, they lessen the devastating effects of ‘Brain drain’ of a community’s best and brightest to institutions and jobs in more prosperous nations. Right now the high-quality business schools serving Africa are far too small. They do what they can to grow the talent pool, but Africa’s rapid economic growth has vastly outstripped the supply of relevant local managers. [23]

The fact is that despite some catch-up over the last decade, the countries of sub-Saharan Africa still have the lowest levels of human capital in the world. [24]

Shantayanan Devarajan (Chief Economist of the World Bank’s Africa Region)
and Wolfgang Fengler (the World Bank’s Lead Economist for Eritrea, Kenya and Rwanda)

About The Human Capital and Labour Research Portal

A wide range of reports, research studies and various analyses exist that refer to the economic and political dispensation of African countries. Information about the human capital and labour force of any African country is, however, fragmented. The aim of the Human Capital and Labour Research Portal is to offer an integrated view and analysis of the quality and quantity of human capital in African countries.

The Human Capital and Labour Research Portal offer in-depth analyses of the labour forces in individual countries. The focus is on the demographics of the labour force, economically active population and, specifically, education and skills levels. The emphasis is, therefore, on the quality and quantity of human capital which are important when making human resource management decisions.

Governments and policy makers also need an integrated view. The same applies to economists and social scientists alike. Investors and donors are also required to make more informed decisions about the human capital aspects of their objectives and interventions.

Invest aggressively in talent and human resources

Some companies are starting to crack the talent and leadership code in Africa, giving them a running lead over their competitors on the continent. For example, spirits maker Diageo has reduced its share of expatriate managers in Africa from 70 percent to 30 percent through rigorous local training. [25]

Many companies have started to tap into the African diaspora, whose members are increasingly ready to return home, as a source of talent. The Unilever Future Leaders Programme, for example, encourages African business-school graduates living abroad to return to Africa. According to Jacana Partners, an African private-equity firm, 70 percent of African MBA students studying abroad would be willing to relocate to Africa. Two-thirds of all recruiting searches for African positions focus on Africans employed in the U.S. and Europe. [26]

Patrick Dupoux, Tenbite Ermias, Stéphane Heuzé, Stefano Niavas, and
Mia von Koschitzky Kimani (The Boston Consulting Group)

Note To User

In compiling this research, it was clear from the start that reliable and accurate up-to-date datasets were not always available, despite the fact that well-respected organisations such as the World Bank, World Health Organization (WHO), United Nations Educational, Scientific and Cultural Organization (UNESCO), the African Development Bank (AfDB), the World Economic Forum (WEF), the International Monetary Fund (IMF), etc. were researched for information. The data accessed from each country’s respective government departments, central banks, bureaus of statistics and other sources were sometimes questionable and dated. Our research team did their best to confirm and cross-check various datasets, but it was obvious that the quality and availability of data differ from country to country.

What is clear from the research is that the respective governments and various development agencies will have to find more resources for upgrading the capacity of the various departments and bureaus of statistics.

Our experience has been confirmed by Prof Morten Jerven in the book: Poor Numbers – How We Are Misled by African Development Statistics and What To Do About It. [27]

His opening paragraph in the book probably sketches a worst-case scenario:

How do they even come up with these numbers? That was the question I wanted to answer. It was 2007 and I went to Zambia to do fieldwork for my doctoral thesis in economic history. I wanted to examine how national income estimates were made in African countries. I was struck by the derelict state of the Central Statistical Office in Lusaka. The planned agricultural crop survey was being delayed by the need for car repairs, most of the offices were dark, and the computers were either missing or very old. The national accounts division had three employees, of whom only one was regularly in the office while I was visiting. No one at the office could account for how the income estimates had been made more than a decade ago. [28]

A major flaw in some of the datasets is the base year for analysing subsequent statistics. In many instances the base year was set decades ago, the result being that in many (or probably most) cases the actual situation was understated. A case in point is the recent rebasing of the Nigerian GDP from 1994 to 2014 – the result was a massive increase in the size of the economy from USD 285 billion to USD 510 billion. As Jerven puts it “... there is some evidence that better numbers are indeed higher numbers”. [29]

Having made the cautionary comments above, we are still confident that our research present the most comprehensive analysis of human capital and labour in the respective countries.

  • Endnotes
    1. Boston Consulting Group (BCG): Dupoux, P., Ermias, T., Heuzé, S., Niavas, S., Von Koschitzky Kimani, M. 2014. Winning in Africa: From Trading Posts to Ecosystems. [ONLINE]. Available at: [Accessed 22 May 2014]
    2. O’Sullivan, J. 2013. Digging Deeper. The Economist. November 18. Page 77. Johannesburg: South Africa. Available at: [Accessed 20 November 2013].
    3. BCG: Dupoux, P., Ermias, T., Heuzé, S., Niavas, S., Von Koschitzky Kimani, M. 2014. Winning in Africa: FromTrading Posts to Ecosystems.
    4. Chonghaile, C.N. 15-17 January 2016. ‘Commodities on a slippery slope’. Mail & Guardian. P 17. Print edition.
    5. Ibid.
    6. The Economist. 7 November 2015. ‘More a marathon than a sprint’. The Economist. P35-36. Print edition.
    7. Ibid.
    8. The Financial Times (FT): Blitz, R. & Blas, J.. 11 January 2014. ‘Hotel groups jostle for position in Africa: Economic growth is increasing demand for quality accommodation.’ P.10. Print edition.
    9. Devarajan, S. & Fengler. W. 2013. ‘Africa’s Economic Boom: Why the Pessimists and the Optimists Are Both Right’. Foreign Affairs. vol. 92, no. 3, pp 68–81. [ONLINE] Available at: [Accessed 22 May 2014].
    10. El–Erian, M. 2013. ‘Into Africa: Believe the Hype’, africainvestor. vol. 11, no. 5, pp. 56–58.
    11. Smiley, X. 2016. ‘Continental drift’. The Economist: The World in 2016. P77. Print edition.
    12. Soucat, M. & The African Development Bank (AfDB). 2013. Draft Approach Paper. AfDB’s Human Capital Development Strategy (2012–2016). One Billion Opportunities: Building Human Capital for Inclusive Growth in Africa. [ONLINE]. Available at: [Accessed 22 May 2014].
    13. The Economist. 24 October 2015. ‘Africa’s middle class: Few and far between’. The Economist. P35-36. Print edition.
    14. Ibid.
    15. Devarajan, S. & Fengler. W. 2013. ‘Africa’s Economic Boom: Why the Pessimists and the Optimists Are Both Right’.
    16. Ibid.
    17. Ibid.
    18. Soucat, M. & AfDB. AfDB’s Human Capital Development Strategy (2012–2016).
    19. El–Erian, M. 2013. ‘Into Africa: Believe the Hype’.
    20. Keeley, B. 2007. Human Capital: How what you know shapes your life. Paris: OECD Publishing. [ONLINE]. Available at: [Accessed 19 November 2013]. Page 97.
    21. Ibid. Page 34.
    22. Ibid.
    23. Pfeffermann, G. 2012. ‘Building management education capacity in Africa.’ This is Africa: A Global Perspective. October 18. [ONLINE]. Available at: [Accessed 22 May 2014].
    24. Ibid.
    25. Devarajan, S. & Fengler. W. 2013. ‘Africa’s Economic Boom: Why the Pessimists and the Optimists Are Both Right’.
    26. BCG: Dupoux, P., Ermias, T., Heuzé, S., Niavas, S., Von Koschitzky Kimani, M. 2014. Winning in Africa: From Trading Posts to Ecosystems. Page 6.
    27. Ibid. Page 6.
    28. Jerven, M. 2013. Poor Numbers: How We Are Misled by African Development Statistics and What To Do About It. New York: Cornell University Press.
    29. Ibid. Page xi.