Structural Transformation and Employment Creation: The Role of Growth Facilitation Policies in West

Franklyn Lisk, University of Warwick, UK, and CREPOL, Dakar

Africa’s economic growth momentum is undeniable.Last year’s continental GDP growth was estimated at 5.8 per cent, the third year it averaged more than 5 per cent. In contrast with the dismal 1980s and 1990s when Africa’s growth averaged about 2 per cent, several African countries in the past decade have had growth figures closer to 7 per cent and the continent has accounted for most of the ten fastest growing economies in the world. West Africa, according to African Development Bank data, is the fastest growing region in Africa with rapid growth rates of 6.7 per cent in 2013 and 7.4 per cent expected in 2014. Nigeria, following the reclassification of the base year of its national accounts data from 1990 to 2010, is now the largest economy in the continent and the 26th largest in the world with an estimated GDP of US $510 billion in 2013.

Although the West African economies are  growing and the region is increasing its appeal to foreign investors from the industrialised and emerging economies, indications are that countries are not adopting ‘growth facilitation’ strategies and policies that create sustainable jobs for the millions of young West Africans joining the labour market each year. Recent research on and analysis of accelerated economic growth in Africa (e.g. AfDB, UNECA, Commission on Growth and Development, UNCTAD, ACET, etc.) have shown that growth is driven  by largely by private (foreign) investment inflows targeted at the extractive industries sector (mining, oil and gas)  and a rising urban consumer base with insatiable appetite for imported goods including ICT products. Evidence suggests that growth in the region is not, to any significant extent, linked to employment-intensive production activities (e.g. manufacturing including agro-based industries) for both domestic consumption and export markets, nor supported by continuous improvements in labour quality and productivity. The obvious lesson from this trend is that while growth is necessary for employment, not all growth benefits employment.  The virtual absence of employment-based growth policies for increasing economic activity in West African countries represents a major constraint at facilitating structural transformation and job creation within the development process.

This paper looks at how and the extent to which appropriate growth policies will address the twin challenges of structural transformation and employment creation. It explores strategies and an array of growth policies (and related supporting institutions at country and regional levels) to ensure that economic growth is ‘pro-employment’  and emphasize the role of structural change in fostering rapid economic growth simultaneously with employment. It argues, in conclusion, that the adoption of employment-based development policies is vital to ensure that accelerated economic growth in West Africa can be sustained in the long term. In terms of an economic growth model, this implies the inclusion of growth facilitation policies that have a net positive impact on employment as well as foster structural transformation. As regards prospect for adopting such a model, there seems to be increasing awareness among policy-makers in the region of the need for employment-oriented growth facilitation policies: at the recent meeting of African finance ministers in Abuja (March 2014), Nigeria’s Finance Minister, Ngozi Okonjo-Iweala, observed that, “If [economic] growth is not firmly anchored on really transforming sectors that can create jobs, we will have a youth [employment] problem on our hands.....we already have it”.    
Recent Publications - View all