For two decades, a quiet economic race has been unfolding across continents. Germany, the powerhouse of Europe, and Nigeria, the rising star of Africa, have locked in a steady climb in Gross Domestic Product (GDP).
While Germany’s GDP has hovered from $2 trillion to around the €4 trillion mark, Nigeria’s has steadily climbed from around $ 70 billion in 2000 to an estimated $470 billion in 2023. This near-constant upward trajectory masks a crucial difference: Germany’s population has remained largely stagnant growing by only one (1) million in 20 years, while Nigeria’s has exploded by over 100 Million, exceeding 216 million in 2023. While some may argue for a comparison based on purchasing power parity, reality is that if the trend continues, Nigeria will never catch up with Germany’s economy for generations, even at quadruple the latter’s population. By extensions, Africa may never catch up. Not in the next 100 years. To stand a chance the continent ought to engage in business unusual: implement unconventional strategies.
Figure: Comparing Germany’s and Nigeria’s nominal GDP growth between 2000 and 2023
This demographic divergence paints a stark picture of the true economic realities. Germany’s consistent GDP growth, despite static population, reflects advancements in technology, automation, and education. Its workforce, honed by rigorous training and equipped with cutting-edge skills, drives innovation and propels economic output.
In contrast, Nigeria’s GDP surge stems primarily from its sheer number of people entering the workforce – a demographic dividend. However, this advantage is quickly negated by a skills gap and a lack of investment in human capital development.
Africa’s Untapped Potential:
Africa, as a whole, faces a similar conundrum. While the continent boasts some of the world’s fastest-growing economies, its youth bulge remains largely untapped. Millions of young Africans lack access to quality education and vocational training, leaving them underemployed or trapped in informal sectors.
Figure: Percent population under 40 in Africa compared to other continents
This underutilization of human potential not only hinders individual prosperity but also stifles economic growth and innovation. To bridge the economic chasm with Europe, Africa must urgently pivot from a reliance on demographic dividends to a focus on human capital investment, with the aim of boosting the productive efficiency of each individual towards full employment. Africa has simply been leaving too many behind, in the name of age, race, ethnicity and tribalism, misappropriation and other forms of sectarian irrationality.
Closing the Economic Divide: Unleashing Africa’s Potential through Strategic Human Capital Investment
This demands a comprehensive strategy:
1. Education for All: Expanding access to quality education at all levels, from primary schools to vocational training institutes and universities, is crucial. This education must equip individuals with the skills and knowledge needed to thrive in the 21st-century economy, fostering entrepreneurship, innovation, and critical thinking.
2. Investing in Health: A healthy population is a productive population. Investing in Universal Health Coverage, including healthcare infrastructure and preventive measures, not only improves the quality of life but also reduces absenteeism, keeps the workforce productive for longer and boosts workforce participation.
3. Embracing the Digital Age: Technology offers a powerful tool for leapfrogging traditional development hurdles. Governments must work with the private sector to provide affordable access to technology and foster a culture of digital literacy.
4. Nurturing Entrepreneurship: A vibrant entrepreneurial ecosystem is vital for creating jobs, fostering innovation, and driving economic growth. Governments should streamline regulations, provide access to finance, and support small and medium-sized enterprises.
The Time to Act is Now:
The demographic advantage Africa possesses is a fleeting window of opportunity. By investing in ALL its people, nurturing their potential, and equipping them with the skills and knowledge needed to thrive in the digital age, Africa can unlock its true economic potential and bridge the gap with Europe. The time to act is now. Africa’s future prosperity hinges on its ability to turn its young population from a liability into its greatest asset.
This article was produced by Globesolute’s Research and Consultancy Department as part of the series #Globesolute Shorts, commemorating 20 years of quality, clean, consultancy.