* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
When the G20 finance ministries convene in Baden-Baden on Friday they would do well to triple check the demographic and economic data coming out of Africa that has their host, German finance minister Wolfgang Schauble both excited and alarmed - so much so he's placed it high on the agenda.
Just as Europe is demographically ageing, Africa is undergoing an astonishing population boom. The continent’s populace will double from 1.2 billion to 2.5 billion by 2050 and account for 37% of the world’s youth.
This presents both an opportunity and a threat. The opportunity is a demographic dividend the potential boon that appears when the working age population disproportionately outnumbers dependents - children and those too old to work.
Some African nation as are set to do well out of this if they make the proper investments in their burgeoning youth population.
Others, however, are at grave risk of a generational destabilisation and mass displacement which could undermine potentially successful neighbours, as well as pose risks to partners further afield in Europe, Asia and the Americas.
This is why Germany has invited five African finance ministers to join them and agree on the investments and policies that can shift an economy from relative poverty to stable middle-income status, and away from conflict and fragility of the kind which is now threatening 2017 with three African famines.
According to groups as diverse as the African Union, the World Economic Forum and ONE there are three strategically interlinked areas that will determine whether the demographic dividend is reaped: - education, employment and empowerment (or as they say in German “bildung, beschafitigung und beteiligung”) and this is where the Financiers must focus.
Chancellor Merkel recently - and correctly - argued that education, especially for girls is foundational. Globally 130 million girls who should be in school are out of it – 51 million of these in Africa.
It costs less than a loaf of bread to educate a girl for a day and the returns on this modest investment are exceptional: If girls were educated to the same levels as boys, developing economies could grow by $112 billion, with over $30 billion of that economic growth contained in Africa alone.
Millions of young women woud focus more on their own careers and resist traditional pressure to produce large families, millions of children would not die of preventable diseases and malnutrition and the next generation will be less inclined to join jihadist groups. That is a good return on investment but education is currently underfunded.
The G20 must command the Word Bank and UN to propose a financing facility ambitious enough to get all girls into school and graduating prepared for an increasingly digital world of work.
Education must be followed by employment. Africa needs to generate 18 million new jobs a year to absorb the demand from an ambitious, energised and hopefully educated young. This is what troubles Schauble’s ministry and explains why he is proposing so-called “compacts with Africa” - a series of enhanced job-producing investment partnerships between the G20 and specific African countries that commit to fighting corruption and poverty.
It is essential these compacts increase so called “project preparation finance” - to grow the pipeline of Africas missing major infrastructure projects, as well as support local currency schemes, underwrite risks and credit facilities and improve the quality of data about Africas developing and fragile economies; all these elements are needed to nudge more global capital in Africa’s direction, both to those economies that are often touted as the “African lions” – such as Senegal, Rwanda, Cote D’Ivoire and Ghana, as well as countries which are less predictable but whose success is essential to the regional economy and security – such as the regional giant Nigeria, as well as neighbouring smaller Sahelian countries like Niger and Mali.
The good news is the World Bank, the African Development Bank and EU external investment plan all aim to increase and encourage more public-private investment to these fragile states; the less good news is that Finance Minister Mnuchin is turning up representing an administration that proposes cutting funding for the first two of these – though leaders in the US congress who have the final say this short-sighted proposal is “dead on arrival” and “against Americas interests”.
It is mission critical that all ministers in Baden-Baden underline the increased importance of such effective multilateral development banks in these tough times.
Ultimately more job-creating investment will flow to where there is the rule of law, where contracts are respected, and where both citizens and the private sector can access justice.
So the compacts must be conditional on African governments transparently delivering essential services such as healthcare, promoting open government and empowering citizens to hold the corrupt accountable. “Youth ground truth” networks like CODE and Twaweza are forming across the region, and these must be supported by the compacts so they can help fill gaps in data and check on where corruption is causing leakage.
Any anti-corruption compact must also be mutual: sometimes the biggest cases of corruption happen through weak anti-corruption laws or enforcement not in remote rural Nigeria but in financial centres like the City of London. The UK and the City have now taken some good steps and can lead the G20 in implementing legislation that exposes those “getaway care of the corrupt” – the ownership structures of currently anonymous shell companies and trusts – as well as defending the global community from the Trump Administrations attempt to dilute signature anti-corruption agreements like the “publish what you pay” legislation that covers the oil and gas sector.
It is in all our long terms interests to ensure Africa’s demographic dividend pays off handsomely for the continent’s rising youth boom - both so they harness their potential and energy, and also to help increase mutually beneficial trade in goods, talent and ideas. But if Chancellor Hammond and his colleagues fail to address the challenge of a better partnership with Africa, parts of the continent risk producing a powder keg of problems. Together we can defuse that threat by investing ambitiously now in the Africa's youth with education, employment and empowerment.
