1. Africa at work: Job creation and inclusive growth
McKinsey Global Institute
November 2012
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2. We have published previously on Africa’s accelerating growth— in this report, we assess the impact of this growth on employment
Previous work
June 2010
May 2011
Key findings
One of the fastest-growing regions
Growth is sustainable, not due to a resource boom
Rise of the African consumer will be a major driver of growth
Today
August 2012
Key questions
What is the employment situation in Africa now and in 2020?
What can be done to create more wage-paying jobs?

3. Key messages
Africa has been the second-fastest-growing region in the world over the past decade and has a young and growing workforce that is set to become the world’s largest by 2035
Today only 28 percent of Africans have stable, wage-paying jobs. While 9 percent of the labour force is unemployed, the majority engage in subsistence agriculture and informal self-employment— or vulnerable employment
Africa can accelerate stable job creation. We see a potential for 72 million new wage-paying jobs by 2020, and around half will come from manufacturing, retail and hospitality, and agriculture
Across Africa, businesses report that poor macroeconomic conditions, access to finance, and infrastructure are their top barriers to growing and hiring
A job creation strategy requires countries to target reforms at sub-sectors that have the potential to create jobs, invest in them end-to-end (e.g., finance, infrastructure, skills), and create a business environment conducive to growth
The number of vulnerable employed in Africa will continue to grow for at least the next two decades, and more effective policies to improve the lives of these people are critical

4. Africa’s jobs challenge

5. Africa has been the second-fastest-growing region over the past decade
JOH-ZZJ CS-P2
Africa has been the second-fastest-growing region over the past decade
African annual real GDP
$ billion
Real GDP compound annual growth, 2000–10 %
Compound annual growth rate, %
4.7
Asia
8.6
6.0
Africa
5.1
Middle East
4.5
4.6
2.3
1.9
America
3.7
Europe
3.1
World
2.8
Is the % symbol needed in each CAGR? Couldn’t they be just 4.2 etc.?
economies
1.5
1980 90
2000 01 02 03 04 05 06 07 08 09
2010
SOURCE: Global Insight; McKinsey Global Institute analysis

6. Africa’s labour force will grow by 122 million over the next ten years, and will be the largest in the world by 2035
Million people
Growth of the labour force, 2010–20
Size of the working-age population (15–64 years)
Labour force, 2020
1,200
Africa
India
1,000
Africa
122
504
China
India 78
534
800
America 45
316
600
Southeast Asia
Asia 40
331
Latin America
400
Europe
China 12
792
North America
America
200 8
178
Japan
Europe -4
354
1970 80 90
2000 10 20 30
2040
SOURCE: International Labour Organization; United Nations World Population Prospects; McKinsey Global Institute analysis

7. JOH-ZZJ CS-P2
Africa’s consuming class has grown to 90 million, and is projected to add ~40 million more households by 2020
Share of households in each income bracket
%, millions of households
Household income brackets
USD PPP1, 2005 per annum
100% =
163
209
244 6 9 12
Globals (>$20,000)
Discretionary income
Consuming middle class
($10,000–20,000)
Emerging consumers ($5,000–10,000)
Basic consumer needs
($2,000–5,000)
Basic needs
Destitute (<$2,000)
2000
2011
2020F
Households with income >$5,000 p.a.
Million 59 90
128
1 Purchasing power parity adjusts for price differences in identical goods across countries to reflect differences in purchasing power in each country.
NOTE: Numbers may not sum due to rounding.
SOURCE: C-GIDD; McKinsey Global Institute

8. African economies have added 37 million wage-paying jobs over the past decade—but the labour force grew by 91 million
African labour force by employment status
Million people
Agriculture
Retail and hospitality
Resources
Manufacturing
Utilities
Construction
Transport and communications
Finance and business services
Unemployed
Vulnerable employment in each sector
Government and social services
Stable employment
122
+91
382 +2
2020
291
Unemployed
Stable jobs are being created too slowly to absorb the 122 million new workers by 2020
Vulnerable employment includes subsistence farming, informal self-employment, and work for a family member
+52
241
jobs
189
Stable employment includes wage and salary employees and business owners
+37
107
Stable jobs 70
2000
2010
SOURCE: International Labour Organization; McKinsey Global Institute analysis

9. African educational levels are improving
Tertiary
Education attainment levels1 across African nations and other countries
% of population
Secondary
Primary or less
Africa2
Other countries, 2010 5 7 8 8 6
2000
2010
2020
India
China
1 Percent of population with at least some of the given level of education.
2 Weighted average of 32 African countries with data available.
NOTE: Numbers may not sum due to rounding.
SOURCE: IIASA-VID; McKinsey Global Institute analysis

10. The opportunity: 72 million new jobs

11. Africa with targeted job growth strategy
The experience of other emerging economies shows that Africa can accelerate its stable job creation
2027
South Korea job growth, 1980s
1.26
2029
Thailand job growth, 1990s
1.16
2046
Brazil job growth, 1970–88
0.60
2066
Africa on current trends
0.39
Gain in the share of stable jobs per annum %
Year when Africa reaches East Asian stable jobs levels (~50%)
2033
Africa with targeted job growth strategy
0.93%
Today
33 years
SOURCE: Global trends in employment 2012, International Labour Organization; McKinsey Global Institute analysis

12. Apart from employment in government and social services, most jobs in Africa are in agriculture, retail and hospitality, and manufacturing
% of labour force, 2010
100% = 382 million
Unemployed
Unemployed 
Agriculture
Agriculture 
49.3
Retail/hospitality
Manufacturing
Retail/hospitality 
Construction
communications
Manufacturing 
business services
Construction 
Resources
Transport and communications 
Utilities
Government
Finance and business services 
Resources 
Utilities 
Government 
SOURCE: McKinsey Global Institute analysis

13. DATA CHART! Do not delete!
Half of the potential job growth by 2020 is in agriculture, manufacturing, and retail and hospitality
Additional wage-paying, stable jobs by 2020
Total = 72 million
Agriculture
13.5 million new jobs
Start shifting Africa’s uncultivated farmland (60 percent of the world’s supply) into production
Shift to labour-intensive crops (horticulture, biofuels)
Other
Manufacturing
14.8 million new jobs
Light manufacturing and agro-processing in pre-transition, transition countries
High-skill manufacturing in diversified economies
Govern-ment
Retail and hospitality
13.4 million new jobs
Accelerate the shift to modern format retail
Accelerate growth of African tourism, especially beyond the diversified country tourist destinations
SOURCE: McKinsey Global Institute analysis
DATA CHART!
Do not delete!

14. A job creation strategy

15. Countries need to focus on job growth, not only GDP growth
GDP and stable job growth in ten African countries, 2002–101
Number of
stable jobs, 2010
GDP growth
$ billion (2005 $)
Retail and hospitality
Resources
Agriculture
Finance and business services
Transport and communication
Manufacturing
social services
Construction
Utilities
-0.5
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Stable jobs added Million
1 Countries included are Algeria, Angola, Egypt, Ethiopia, Kenya, Morocco, Nigeria, Senegal, South Africa, and Uganda. These countries account for 70 percent of Africa’s GDP in 2010.
SOURCE: Global Insight; McKinsey Global Institute analysis

16. Across Africa, the top three perceived obstacles to growth are macroeconomic conditions, access to finance, and infrastructure
% of enterprises citing factor in their top three obstacles for growth (n = 1,373 employers)
South Africa
Nigeria
and instability
Limited access to financing
and instability
Limited access to financing
(excluding wages)
Lack of electricity
Senegal
Egypt
and instability
Political instability
and instability
Lack of electricity
Limited access to financing
Limited space to expand
Kenya
and instability
Political instability
Limited access to financing
SOURCE: McKinsey Survey of African Businesses, 2011

17. Companies cite lack of work experience and technical skills, rather than poor basic education, as obstacles to hiring
% of enterprises citing factor in their top 3 obstacles to further hiring (n = 1,373 employers)
Overall
South Africa
too expensive
Lack technical skills
Lack work experience
too expensive
Lack job readiness1
Lack work experience 
Nigeria
Senegal
too expensive
too expensive
Lack job readiness1
Lack technical skills
Lack work experience 
Lack work experience 
Egypt
Kenya
too expensive
too expensive
Lack job readiness1
Lack work experience 
Lack work experience 
Lack job readiness1
1 For example, punctuality and dependability.
2 Reduces employer willingness to invest in hiring/training new employees.
SOURCE: McKinsey Survey of African Businesses, 2011

18. Employment in each sector (%)
South Africa’s challenge is the 25 percent of workers who are unemployed—less than 11 percent of workers are in vulnerable employment 3 3 25 97 17 11 4 7 10 1 21
Unemployed
Vulnerable employment in each sector
Stable employment Ag
Agriculture
Ret
Retail and hospitality
Res
Resources
Man
Manufacturing Ut
Utilities
Con
Construction TC
Transport and communications
Fin
Finance and business services
Gov
Government and social services 7 8 8 6 19 26
Vulnerable
Employment in each sector (%) 93 92 92 94 81 74
Stable Ag
Ret
Man TC
Con
Fin
Res
Gov
Sector employment (% of total labour force)
SOURCE: International Labour Organization; McKinsey Global Institute analysis

19. A job-creation strategy should target subsectors with the greatest job creation potential and remove barriers along the value chain
Target subsectors
Select labour-intensive sectors in which the country could build a competitive advantage
Access to finance
Create incentives for financing companies in the target sector; open to foreign investors
Infrastructure
Build the required infrastructure along the entire value chain
Business environment
Remove impediments to investment and job creation, streamline regulations, and ensure competition
Skills
Ensure workers acquire the skills, training, and job experience that match employer needs
SOURCE: McKinsey Global Institute analysis

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