The demographic bonus: how prepared is Africa for the gains ? 1

This paper examines the prospects of Africa’s changing age structure in favor of a temporary surge in the proportion of the working age population and the possibil-ity of benefitting from the implied human endowment via appropriate development strategies a la South-East Asia. An attempt to gauge the preparedness of sub-Saharan African countries in order to take advantage of the incipient demographic bonus, using South-East Asia as the platform of best practices, shows that sub-Saharan Africa must, on the average, grow the GDP to a higher level, reduce both public and private consumption expenditure in order to save and deepen more her investments in education at all levels and also enhance private spending on health. Besides, intra-African com-parisons on the development efforts towards the attainment of the MDGs shows that a lot of sub-Saharan African countries are too slow to adapt to the changing age structure with appropriate social and human capital development policies and programs.


Introduction
As most of the African countries, like South Asia, are approaching the peak of their youth dependency and gradually transiting into the second stage of a temporary surge in the working age population, a situation that is almost terminating in the East Asian countries before the onset of ageing, the following inquiries appear to be timely and pertinent: a.What is the state of Africa's demographic transition at this point in the millennium?b.What are the a priori socio-economic implications of the changes in the youth dependency burden and the temporary bulge in the proportion of the prime working ages?c.How prepared is Africa to take advantage of the demographic bonus in term of her human capital invest-ments vis-à-vis those of South East Asian countries at comparable stages of demographic development?d.What are the possible outcomes of inappropriate development policies for human capital development in the context of Africa's demographic transition?
The state of Africa's demographic transition While the question raised by Livi Bacci (1999) about when a demographic transition begins is relevant to our discussion of the state of Africa's demographic transition, recently available data and their diagnosis suggest that the region as a whole is experiencing the beginning of a fertility decline (Dudley Kirk & Bernard Pillel, 1998; J. Cleland, I. Timaeus and N. Onuoha,1991).The Demographic and Health Sur-veys conducted between 1986 and 1992 indicated that although fertility levels in the mid-1980s were still high and contraceptive prevalence low in most countries, successive surveys conducted till 1995 showed the evidence of an initial fertility decline in two-thirds of the countries of sub-Saharan Africa.In most of these countries, the magnitude of the decline is modest.The fertility transition has not begun everywhere at  1999) also opined that the HIV/AIDS epidemic could contribute to the decline in fertility because of the effect of the epidemic on increased foetal wastage and higher incidence of mis-carriage among HIV-positive women.
With the diagnosis of the onset of a fertility decline and its possible diffusion to the other countries, it is predictable that this phenomenon, if sustained, would lead to a change in the age structure of the population and eventually make it less youthful as the proportion of the population in their prime working ages increases. 2 2. The future course of the onset of decline in fertility could be modified.For example, it was observed that fertility stalled in mid-transition in some countries in Asia, Latin America, Southern Europe, and in Ghana and Kenya in Africa in the 1990s, and in some cases declined less rapidly than the levels projected earlier due to the levelling off in a number of fertility determinants including contraceptive use, the demand for contraception and the number of wanted births (John Bongaarts, 2006).It is also speculated that the incipient fertility decline being experienced could suffer from a "backlash" in terms of fertility increase that could be brought about by the HIV/AIDS epidemic and the related high levels of mortality (May, 1999 op.cit).Finally, the onset of a fertility decline observed from the 1980s does not tell us whether it will spread to the whole continent or whether it will be restricted to a few countries for sometimes yet.Besides, it is too early to know the pace of this decline (J.For sub-Saharan Africa, as a whole, the proportion of dependent children under 15 years of age did not show any consistent decline until the 1990s when there was adequate statistical evidence that fertility rates had begun a downward trend.This trend was accompanied by slight increases in the proportion of young entrants into the labor force (15-24 years old) and major increases, from 30.4 to 34.8 percent, in the proportion of the prime working age population (25-59 years old).This pattern of age distribution is shared by the East and Western African countries while the South and Northern patterns reflect more substantial changes, depicting more rapid changes in fertility declines.
In contrast, the South East Asian region reflects a much earlier transition in family size behavior as the proportion of dependent children below 15 years of age started a downward decline twenty years or more earlier than sub-Saharan Africa did.Besides, the proportion of young entrants into the labor force increased from 1970 to 1990 and it is expected to decline substantially till 2020 while the proportion of the prime working age population experienced an accelerated increase from 1970 and it is expected to maintain the momentum of growth till 2020 (from over 35 to 51 percent.).(1971).The latter emphasized the adverse effects of rapid population growth on capital formation, improvement in social services, and the dangers of growing unemployment resulting from the accompanying rapid growth of the labor force.
In the 1980s, a widely held view that contrasted strongly with the earlier one, that rapid population growth is anti-development in the developing countries, emerged (Kelley 1988; National Research Council 1986; Julian Simon 1981).The view held was that population growth was not anti-development but that it could either be neutral or positive to economic growth.In recent times, the experience of the South East Asian countries in the 1980s and 1990s with respect to the influence of demographic factors on economic growth has brought to the fore the potential economic consequences of the changes in age structure of the population as the society transits from a dominant youth population to a working age population; a process which is temporary along the demographic transition continuum and eventually terminates with ageing of the population (Birdsall and Sinding, 2001).
One of the most important findings from this demographic process is that it creates, but for a limited period of time, a demographic "window of opportunity", at times referred to as "bonus" or "dividend" in terms of a larger ratio of potential workers to non-workers, meaning that more workers are responsible for fewer children.Theoretically, this phenomenon has many potential economic advantages.For example, the reduction in the ratio of youthful dependents to working-age adults should enable countries to increase their stock of physical and human capital in terms of schools and well-trained teachers, health care facilities and well-trained health workers, and modern communication networks and well-trained workers to staff them (Merrick, 2002).This is predicated on the expectation that societies with a high proportion of prime-age workers will enjoy higher per capita incomes, save more than those with higher proportions of young or old people, and increase investments to further boost economic growth.This is because the young and the old tend to consume more output than they generate, unlike working-age individuals whose contribution to output and to savings tends to be more than commensurate with their consumption.In addition, a fall in youth dependency ratio permits greater investment in schooling per child and a substantial increase in female labor force participation, rising levels of women's education and increased demand for labor by a growing formal sector.

How prepared is sub-Saharan Africa
for the demographic bonus?
1. Comparing sub-Saharan Africa and South East Asia On the basis of Table 1 depicting the trends in age distribution of the population in sub-Saharan Africa (SSA) and South East Asia (EA), the latter is much ahead of the former in terms of the onset of fertility decline, as a precursor to the evolution of the prime working age population by at least 2 decades.In other words, most of the SSA countries seem to have arrived at SEA state of demographic transition of the 1960s in the 1980s.For the purpose of illustration therefore, it appears ex-pedient to juxtapose the socio-economic indicators of development of the SEA countries from the 1960s with those of the SSA from the 1980s in order to gauge the distance between the two regions in terms of the socio-economic variables associated with the former's demographic bonus.The growth in the gross domestic product in sub-Saharan Africa declined substantially in the 1980s and began to rise from around 1995 till 2005.On the other hand, while South East Asia experienced a gradual decline in its GDP growth from the 1960 till 2005, the rate at which the GDP was growing is considerably higher than that of SSA countries.
In SSA, the percentage of the GDP allocated to household consumption increased gradually from the 1980s till present but virtually remains at twothirds of the annual GDP while the gov-ernment consumption expenditure varied between 15 to 17 percentage of GDP from the 1980s.In SEA, household consumption as a percentage of GDP from the 1970s averaged about 55 percent, a magnitude slightly lower than that of SSA.Similarly, government consumption expenditure varied between 10 to 17 percentage of GDP but was generally lower than that of SSA.
In reverse, the percentage of the GDP saved domestically in SSA declined consistently from 25 percent in 1980 to 16 percent recently.In SEA, on the other hand, the percentage of the GDP saved domestically declined slightly from 34 percent in 1970 to 27 percent presently, but was at a much higher level than that of SSA.
Tables 4-6 depict the various forms of major human capital investments into which savings can be channeled.As shown in Table 4, the percentage of the gross national product (GNP) devoted to education varied between 4.5 to 5.1 from 1980 to 1997 in sub-Saharan Africa.This is much higher than that of South East Asian countries, and also that of South Asia, whose level of development is not too dissimilar to that of sub-Saharan Africa.In contrast, the gross enrolment ratios at primary, secondary and tertiary levels are much lower in sub-Saharan Africa in comparison with South-East Asia and South Asian countries (see Table 5).This contrast can possibly be explained in terms of either the higher child dependency ratio in sub-Saharan Africa or the human capital "deepening" 3 in South-East Asia and South Asia or a much better efficiency in the management of education resources in the Asian countries in general.

An examination and a comparison of budgetary allocation to health between
African and South-East Asia regions show that Africa spends more of its resources on health in comparison with South-East Asia (see, table 6).This is likely to be due to more government outlay on health in Africa as South-East Asia records a much higher private spending on health.
From the South East Asian example, the changes in the age structure favoring the prime working age population have been found to account for as much as a third to one half of the sustained high rates of income growth that came to be known as the "East Asian Miracle" (Bloom, Canning and Malaney, 2000).Of course, age structural change is not the only important variable in economic development.It will not necessarily be converted to economic improvement unless other important non-demographic factors are in place (Cincotta & Engelman, 1997).
According to the World Bank detailed inquiry into the economic success of the Asian Tigers in the 1980s and 1990s (World Bank, 1993), the non-demographic factors of the explained growth include, high rates of investment exceeding 20 percent. of GDP on average between 1960 and 1990, including in particular unusually high rates of private investment, combined with high and rising endowments  In this paper, available evidence shows that the GDP and its rate of growth were much higher in SEA than in SSA at a comparable stage of their demographic transition.Besides, the percentage of GDP devoted to household and government consumption is higher in SSA than SEA.Expectedly, the percentage of GDP saved is a lot more in SEA than in SSA.While the percentage of GDP spent on education is higher in SSA, the gross enrolment ratio at all levels of education is higher in SEA.In Africa as a whole, there is proportionally more government outlay on health than in SEA while the latter records a much higher private spending on health.

Comparing countries in Africa
If most of a nation's population falls within the working ages, the added productivity of this group can produce a "demographic dividend" 4 of economic growth, assuming that policies to take advantage of this opportunity are in place.According to Boom, et al (2001), a combination of a large working age population with development policies encompassing public health, family planning, education and the economy can create virtuous cycles of wealth creation.Given the ongoing demographic transition of African countries and the incipient changes in the population age structure, it is expedient to gauge the likely impact of the relative position of each country on the ladder of social and economic progress on the evolving demographic dividend.This is captured with reference to the relative performance of African countries on the attainment of the Millennium Development Goals (MDGs) and targets set from 1990-2015 to free humanity from extreme poverty, illiteracy and diseases (The Millennium Development Goals Report, 2011) 5 .
In spite of the current financial crisis, Africa has had a high record of economic growth since the beginning of the century.It has recorded a faster growth than most other world regions, with more than 40 percent of its countries enjoying an average annual GDP 4. Bloom et al. (2001) identified labor supply, human capital and savings as the most important mechanisms of the impact of the "demographic dividend".It is expected that labor supply would gain from a higher proportion of working age population and an increase in the level of women participation in the labor force as they are gradually weaned from large childbearing due to family size decline.With respect to human capital, as life expectancy increases, parents are more likely to choose to educate their children and invest more on their health because of the high expected private and social returns to education in developing countries generally.For example, the result of educational investments on fewer children is that the labor force as a whole becomes more productive, thus promoting higher wages and a better standard of living.Also, the demographic dividend encourages the growth of savings (unlike the growth of the young and the aged, who are mostly consumers), thus improving the country's prospects for investment and growth.5.According to Africa Progress Report 2011, tracking progress on the MDG achievement is an immense challenge due to a lack of sufficient reliable and updated data.There are also inconsistencies between national and global tracking efforts that make it difficult to compare progress across countries and regions (Africa Progress Panel, The Transformation Power of Partnerships, Africa Progress Report, 2011).
http://aps.journals.ac.za growth rate of 5 percent or more during the last decade.Based on IMF forecasts, sub-Saharan Africa's GDP is expected to grow by 5.5 percent in 2011 and 5.8 percent in 2012 with substantial differences between countries.Countries such as, the Republic of Congo (DRC), Ethiopia, Ghana, Mozambique, Nigeria, Tanzania and Zambia are all expected to be among the World's ten fastest growing economies.The Central African Republic, Chad, Cote D'ivoire, Equatorial Guinea and Eritrea are projected to grow at rates far below the average (Africa Progress Report op.cit).
Despite the progress made, the current economic growth is not all positive as it is not accompanied by struc-tural transformation and diversification.In most countries, it relies on exportled policies depending on extraction of natural resources and raw materials rather than value addition and diversification.With the notable exception of Egypt, Tunisia and South Africa where manufacturing and services dominate the GDP, non-extractive sectors and competitive industries remain heavily under-developed in most African countries (Africa Progress Report op.cit).
The social and economic advancement that is expected to accompany the modest economic growth attained is indicated in the score-card of each African country on the 7 main millennium goals in Tables 7a-g.

FIG 7a
Distribution of African Countries by MDG Score-Card on the Main Development Goals.Most countries record a mixed progress in the achievement of all the 7 goals.Nevertheless, countries that are at the vanguard of social and human capital development in Africa constitute about a third of the total. 6Most of them are from North Africa viz; Tunisia, Libya, Morocco, Egypt, and Algeria.The others, located in sub-Saharan Africa (SSA) are, Ethiopia, Uganda, Benin, Rwanda, Namibia, Mauritius, Malawi, Djibouti, Gambia, Kenya, Guinea, and Liberia.
The promising countries, that still have a long way to go before 2015 set for the achievement of the MDGs, constitute another third of the total.They are, Mali, Mauritania, Mozambique, Sao Tome, Senegal, Sierra Leone, South Africa, Togo, Botswana, Burkina Faso, Burundi, Cape Verde, Comoros, Republic of Congo, Eritrea, Gabon, Ghana, Lesotho and Madagascar.The remaining, about a third of the total, are the non-performing countries for which the 2015 time-line remains a mirage.
The implications and import of this analysis is that, among African countries, only about 2/3 of them are putting in place appropriate programs of social and human capital development that are complimentary to the changing age structure.
Therefore, if we were to gauge the preparedness of SSA, using SEA as the platform of "best practices", in order to take advantage of the incipient demographic bonus in Africa for a higher level of human capital as well as social and economic development, SSA is expected to grow the GDP to a higher level, reduce both public and private consumption expenditure in order to generate that level of savings needed to deepen her investments in education at all levels, at least to increase her enrolment ratios; and to enhance private spending on health.
Other important variables that should be put in place a la SEA are investments in physical infrastructures, services and industrial production which are essential for employment generation in the economy.For example, a rising and well endowed human capital would require jobs of higher skills and productivity in order to grow the economy.Within Africa, we have also identified about 2/3 of the countries that are showing signs of adapting to their changing age structure with the right social and human capital development programs.
Possible outcomes of inappropriate policies for human capital development in SSA.According to World Bank (2000), SSA entered the 21st century with many of the world's poorest countries.Many development problems are being faced in Africa, especially human development issues, including lagging primary school enrolments, high child mortality and endemic diseases that impose costs on Africa at least twice those in any other developing region.Africa is the only major region to see investment and savings per capita decline after 1970.Averaging about 13 percent of GDP in the 1990s, the savings rate of the typical African country has been the lowest in the world.
In this paper, I have highlighted, from the SEA experience, some of what it will take to benefit from the incipient shift in the age structure in favor of a working age population in SSA.It is conceivable that the latter will advance economically if appropriate policies are in place to redress the ugly situation of the last decade, for example, by growing the economy to a higher level, accompanied by increased savings and investment in human capital development and employment generating activities.Besides, a lot of countries in the continent should be progressing faster towards the attainment of the millennium development goals set for 2015; a social and human capital development compact needed in order to derive benefits from the demographic dividend.
Without such appropriate policies and programs like the MDGs, the window of economic opportunity engendered by an increase in the proportion of the working age population in SSA will be missed.African countries will be too slow to adapt to their changing age structure and will miss the demographic window of opportunity to secure higher productivity and economic growth.For example, the ongoing burgeoning of the labor force will continue to push young graduates from secondary and tertiary institutions into the urban labor force without appropriate skills, thus resulting in open unemployment, an overcrowded informal sector with varying degrees of underemployment.Already, in most of the large cities in Africa, a larger proportion of the working age population is visible " ekeing out" a living on the streets.
Other possible outcomes of inappropriate policies for human capital development in Africa are increases in the magnitude of social ills like armed conflicts, political instability, irregular emigration, human trafficking etc which are attractive to unskilled and unemployed youths in the region.

6.
Countries considered to be in the vanguard of social and human capital development in the continent are those who have achieved or are on the track of achieving 4 or more of the 7 main development goals.Those countries that are promising are the ones who have achieved or are on the track of achieving 3 of the development goals.The rest are non-performing countries who have achieved or are on the track of achieving 2 or less of the development goals.

TABLE 1
Trends in age distribution in Africa subregions and South East Asia NotesSSA-Sub-Saharan Africa; EAST-Eastern Africa; SOUTH-Southern Africa; WEST-Western Africa; NORTH-Northern Africa; SEA-South-East Asia; Source: United Nations Population Division, Population Estimates, The 2001 Revision.http://aps.journals.ac.za

Table 1
Cleland et al., op.cit.)0-14 years Figure 1 Trends in age distribution in Africa subregions and South East Asia (1970-2020) in graph

Table 2
Trends in age distribution in selected African countries, representing the sub-regions http://aps.journals.ac.za

Table 3
compares the trends in available socio-economic variables of development from1980-2009 and 1960-2009for SSA and SEA regions respectively.

Table 5
Gross enrolment ratios in sub-Saharan Africa, South-east Asia and SouthAsia, 1990  and 1997 3. One of the findings from the Asian demographic transition, investments and savings supply, is that higher youth dependency depresses savings more than investment while households tend to substitute quality for quantity as their incomes rise with respect to the number of children and expenditures per child (Matthew Higgins & Jeffrey G.Williamson, 1997)

Table 6
Health expenditure ratios for Africa and Southeastern Asia region, 2000 and 2008 http://aps.journals.ac.za

Goal 1: Eradicate Extreme Poverty& Hunger (53*)
Distribution of African Countries by MDG Score-Card on the Main Development Goals.