1. Eliya Msiyaphazi Zulu (PhD.)
The Demographic Dividend - Conceptual framework and Global/ Regional Experiences
Eliya Msiyaphazi Zulu (PhD.)
Presented at the Regional Public Dialogue on the Demographic Dividend Serena Hotel, Kampala, Uganda 4th July, 2014 1
HIV Project Consultative Meeting Draft Presentation 1

2. Outline of Presentation
Linkages between population change and development
Meaning and pathways for achieving the demographic dividend
Global Experiences
African Experiences
Implications for policy and action

3. Population dynamics and the “African Century”
Africa is undergoing phenomenal population changes and has immense economic opportunities
Population projected to grow from 1.2 to 2.4 billion by 2050
Majority of African to live in Urban areas by 2050
Migration likely to increase, with increasing regional integration and globalization
High child dependency burden a key barrier to development
BUT if mortality and fertility decline rapidly child dependency burden will decline and having more people of working age a can provide a valuable impetus for rapid economic growth

4. Africa on the rise – growing economic opportunities and unprecedented growth
Economies expected to continue growing at a steady rate, despite global recession
In 2014, Sub-Saharan Africa economies to grow by 6.1% (global average of 4%) – IMF, April 2013
Foreign Direct investment projected to increase from $37 in 2012 to $54 billion in 2015
Infrastructure development is improving across the continent, especially in East and Southern Africa
"It is expected that by 2020, only four or five countries in the region will not be involved in mineral exploitation of some kind” (World Bank)
Diaspora remittances playing a key role in development
Most countries have long-term development strategies to guide socioeconomic transformation
But World Bank economists cautioned that high inequality and a dependence on mining and mineral exports in many countries had actually dampened the poverty-reducing effect of income growth. Countries rich in natural resources, such as Gabon, Equatorial Guinea and Nigeria, performed less well than those lacking this apparent head start.
The World Bank said better administration of mineral wealth, development of agriculture and a careful managing of rapid urbanisation would help governments to lift more people out of poverty. "Better governance will need to underpin efforts to make growth more poverty reducing," the report said.

5. Population sizes will at least double in all EAC Member States by 2050
Past and Projected population size (Millions)
1960
2010
2050
2100
Burundi
2.8
9.2
26.7
56.3
Kenya
8.1
40.9
97.2
160.4
Rwanda
2.9
10.8
25.4
36.2
Tanzania
20.1
45.0
129.4
275.6
Uganda
6.8
34.0
104.1
204.6
TOTAL
40.7
139.9
382.8
733.1
If we look at the specific countries in the region, we see the gravity of the population growth factor that we are facing.
Population of all countries will at least double between now and 2050, almost tripling in Burkina Faso and more than tripling in Niger.
While some experts and political leaders feel uncomfortable to talk about population growth and the need to slow it down, I submit to all of you here that it would totally irresponsible for us to close our eyes and fail to recognize the implications that these numbers have and will continue to have on sustainable development in Africa.
We need to ask ourselves and answer the tough questions such as – how will these countries feed its populations, educate their people, provide health care for them, create jobs for them, and preserve their natural resources?
Furthermore, we need to understand how the escalating climate change will compound these challenges
Source: United Nations Population Division – Medium Variant UN Projections 2012 Edition

6. Population Momentum
The population of Uganda will continue growing for 6-8 decades
even after reaching replacement level fertility of 2.1
300 
250 
population  (millions) 
2080 
2060 
2040 
2020 
UN Newest 
Projection
2010 Current 
population 
200 
150 
100 
50  0 
Total fertility rate:  6.2  (2010)

7. The year in which a country reaches replacement level fertility has a major impact on its ultimate population size.
Total fertility rate: (2010)

8. The year in which a country reaches replacement level fertility has a major impact on its ultimate population size.
Total fertility rate: (2010)

9. The year in which Kenya reaches replacement level fertility
will have a major impact on its ultimate population size 
200 
180 
population  (millions) 
160 
140 
120 
100 
80 
60 
40 
20  0 
Total fertility rate:  4.6 
Population Size (2010):  40 million 
2080 
2060 
2040 
2020 
UN Medium 
Projection
2010 Current 
population 

10. Past & projected % of population living in urban areas
Urbanization is on the rise – what will this mean for socioeconomic development for East Africa?
Past & projected % of population living in urban areas
1960
2010
2050
Burundi 2 11 28
Kenya 7 24 46
Rwanda 19 39
Tanzania 5 26 50
Uganda 4 15 34
If we look at the specific countries in the region, we see the gravity of the population growth factor that we are facing.
Population of all countries will at least double between now and 2050, almost tripling in Burkina Faso and more than tripling in Niger.
While some experts and political leaders feel uncomfortable to talk about population growth and the need to slow it down, I submit to all of you here that it would totally irresponsible for us to close our eyes and fail to recognize the implications that these numbers have and will continue to have on sustainable development in Africa.
We need to ask ourselves and answer the tough questions such as – how will these countries feed its populations, educate their people, provide health care for them, create jobs for them, and preserve their natural resources?
Furthermore, we need to understand how the escalating climate change will compound these challenges
Source: United Nations Population Division – Medium Variant UN Projections 2012 Edition

11. Past and projected trends in Child dependency ratios
As fertility declines, child dependency ratios will decline and working age population will increase, creating a window of opportunity for accelerated economic growth
Past and projected trends in Child dependency ratios
1960
2010
2050
2100
Burundi 81 82 62 36
Kenya 93 78 50 31
Rwanda 97 84 45 27
Tanzania 88 86 60 30
Uganda 89
100 33
If we look at the specific countries in the region, we see the gravity of the population growth factor that we are facing.
Population of all countries will at least double between now and 2050, almost tripling in Burkina Faso and more than tripling in Niger.
While some experts and political leaders feel uncomfortable to talk about population growth and the need to slow it down, I submit to all of you here that it would totally irresponsible for us to close our eyes and fail to recognize the implications that these numbers have and will continue to have on sustainable development in Africa.
We need to ask ourselves and answer the tough questions such as – how will these countries feed its populations, educate their people, provide health care for them, create jobs for them, and preserve their natural resources?
Furthermore, we need to understand how the escalating climate change will compound these challenges
Source: United Nations Population Division – Medium Variant UN Projections 2012 Edition

12. Defining the Demographic Dividend
The Demographic Dividend is the economic benefit arising from a significant increase in the ratio of working-aged adults relative to young dependents.
When birth rates decline significantly, the age structure shifts in favor of more working-aged adults, accelerating economic growth through increased productivity, greater household savings, and lower costs for basic social services provided to a young population. 

13. Kenya and Thailand’s age structure differ remarkably due to differences in birth rates
TFR: 7.5
TFR: 6.1
TFR: 4.6
TFR: 1.6
TFR: 2.7
TFR: 1.7
Source: UN Population Division (MEDIUM VARIANT), 2011

14. Asian Tigers: Success Story
Between ¼ to 1/3 of economic growth since 1970 in East and South East Asia can be attributed to the Demographic Dividend” (Bloom and Williamson, 1998; Mason, 2001)
The economic success was made possible by sustained investments in education, health, family planning, and economic reforms
How does the demographic dividend work?
There are two

15. Ratio of working age to dependent population
Sub-Saharan Africa
Source: UN Population Division (MEDIUM VARIANT), 2011

16. Pathways for Accelerated Economic Growth through the Demographic Dividend
The first Demographic Dividend: Increased productivity from “surplus” labor supply generated through:
Rapid fertility (and mortality) decline
Greater involvement of women in the labour force
Productive employment of the extra workers
The Second Demographic Dividend: Increased savings and investment due to higher incomes and reduced child dependency burden:
Increased savings and investment capital stock
Improved human capital due to higher investments in health and education and reduced childbearing burdens for women
Growth in domestic demand and purchasing power due to higher incomes
Increase in labor supply and overall economic productivity resulting from age structure changes due to declines in fertility
To accelerate fertility decline, countries should invest in family planning, education, general empowerment of women as well as in child survival
To harness the DD the economy MUST have the capacity to absorb and productively employ the extra workers
Increase in savings resulting from reduced number of dependents, which can improve productivity when the accumulated capital stock from the savings in effectively invested
To Harness the DD, countries should create a favorable environment for domestic savings and foreign investments
Improvement in quality of human capital resulting from greater investments in children’s health and education by parents and governments and healthier and more productive women with less childbearing burdens
This will probably be Africa’s biggest benefit given the very low levels of human capital (low education, low social capital for women) – talk about education levels in West and East Africa
But for Africa, women are already involved in economic activities – In Asia, it was getting women out of the home, in Africa it will have to be mostly about getting women from the informal to the formal sector
Use Nigeria and South Korea example
Growth is the increasing domestic demand brought about by the increasing GDP per capita and the decreasing dependency ratio

17. Consumption and Labor Income by Age, Nigeria 2004
Labor income (500 trillion Naira)
Consumption (500 trillion Naira)
Labor surplus is less than 20% .
Shortfall is met by relying on:
Natural resources
Remittances
Other asset income.
Little remains for saving and investment.
Economic needs of children are enormous: about 80% of total labor income.
Source: National Transfer Accounts estimates ( - Mason 2012

18. Consumption and Labor Income by Age, S Korea 2000
Labor income (3000 trillion won)
Consumption (3000 trillion won)
Working age surplus is about 30% of total labor income.
S Korea is investing asset income.
Child deficit is very small in S Korea: about 35% of labor income.
Each box represents one-tenth of total labor income in Nigeria and South Korea, respectively.  They are just summarizing the values in the graphs for three broad age groups:  0-24, 25-59, and 60+.  In Nigeria, prime age adults have a surplus of about 20% of their labor income (two boxes) after they fund their own consumption.  The needs of children are about 80% of total labor income.  Nigeria is relying on income from assets including natural resources and remittances to fund the consumption of children with little left over for pro-growth efforts, e.g., investing in human capital or funding entrepreneurial activities.  In South Korea, however, the surplus of 30% during the working ages is almost sufficient to fund all of the needs of S Korean children.  So S Korea can use almost all of the income from non-labor sources to fund pro-growth efforts.   The key point of the two slides is that high fertility requires that an enormous share of a country's resources must be devoted to the basic needs of children.  As a consequence, too little is available for growth objectives, e.g., investing in human and physical capital.  I don't know much about Tunisia so I cannot really comment on whether or not they have realized a demographic dividend.  I did look briefly at the population and I see that the support ratio will soon reach its peak.  So I would say that its current demographic structure is quite favorable.  The important thing is to use the favorable conditions to establish a strong foundation for continued growth, what I call a second demographic dividend, by investing in children, improving the physical infrastructure, creating entrepreneurial opportunities, and so forth.  We have NTA estimates for only five African countries (Nigeria, Senegal, Kenya, South Africa, and Mozambique).  A team in Egypt is working on estimates there.  If other countries are interested in constructing NTA, we would need to field a strong research team to carry out the work and we would need to mobilize the resources needed to support the substantial work that is required. 
Source: National Transfer Accounts estimates ( - - Mason 2012

19. Demographic Dividends: contribution to growth in GDP/N1
The demographic dividend contributed significantly to GDP growth in East & South East Asia
Region
Demographic Dividends:
contribution to growth in GDP/N1
Actual growth in GDP/N1
First
Second
Total
Industrial economies
0.34
0.69
1.03
2.25
East and
Southeast Asia
0.59
1.31
1.90
4.32
South Asia
0.10
0.79
1.88
Latin America
0.62
1.08
1.70
0.94
Sub-Saharan Africa
-0.09
0.17
0.08
0.06
Middle East and North Africa
0.51
0.70
1.21
1.10
Transition economies2
0.24
0.57
0.81
0.61
Pacific Islands
0.58
1.15
1.73
0.93
Define what first and second dividends are
Source: Mason, 2005

20. Africa’s labour force surplus will peak later & at a lower level if fertility continues to decline slowly
Source: UN Population Division (Medium Variant)

21. Speeding the Demographic Transition
Reduce child mortality – replacement effect
Enhance education, particularly female school enrollment and general female empowerment
Expand access to family planning, focusing on underserved sub-groups such as youth

22. Fertility rates have declined considerably in some African countries over the past 4-4 decades

23. The demographic transition is not sufficient to harness the demographic dividend as the case in Tanzania and Tunisia has show

24. Addressing demand and supply barriers of access and use of contraception will help accelerate fertility decline
% of married women using family planning and with unmet need for family planning

25. African countries still need to do more to reduce child mortality

26. There is urgent need to address relatively early entry into marriage in West, Middle, and East Africa
% of women aged who got married by age 18

27. Many young people’s lives are wasted through early childbearing

28. The reality is that young people are or will soon be sexually active
Our findings show that it is critical for sex education to begin in primary school, both because many young adolescents are already sexually aware, because at least some adolescents do begin sexual activity before age 15 and it is important to reach them before their sexual debut, and because many adolescents (especially girls) will have left school by age 15.
It is also the case that many adolescents do not finish primary school before age 15.

29. Adolescence is a time when changes in sexual activity happen fast
% of year olds who had sex by certain ages
Adolescence is a time when changes in sexual activity happen fast. Within a five-year period, the change is tremendous.
By age 15, nearly 1 in 5 young women has had sex (top 2 bars)
By age 18, between 40 and 60% are sexually active
For males, the pace of change is also rapid, but levels are a little lower
Source: National Academies, "Growing Up Global", pp

30. Earning the Demographic Dividend
Macro-economic policies – the demand
Public health
Education
Youth and Female Employment
Unemployment and underemployment
Export orientation for labor demand
Channeling savings into investment
Address huge inequities in demographic transition and opportunities between the rich and the poor

31. In order to EARN the demographic dividend, African countries should simultaneously prioritize investment in all the five pillars or wheels of the demographic dividend

32. Governments and development partners must pledge universal secondary education, especially in West, Central and East Africa
% of secondary school age boys and girls who are enrolled in school

33. Reality Check: Africa’s economic boom is not reducing poverty & creating enough jobs
High levels of underemployment and reliance on the informal sector, especially among women and youth
Heavy reliance on mining and mineral resources, which are often mismanaged and are not labour intensive
Agricultural sector, which provides livelihood to most people, is still largely underdeveloped and vulnerable to climate change
Rapid but poorly managed urbanization not effectively used as an engine for socioeconomic development
"Better governance will need to underpin efforts to make growth more poverty reducing," (World Bank)
High child dependency burden one of the key factors undermining development if quality human capital and poverty reduction
But World Bank economists cautioned that high inequality and a dependence on mining and mineral exports in many countries had actually dampened the poverty-reducing effect of income growth. Countries rich in natural resources, such as Gabon, Equatorial Guinea and Nigeria, performed less well than those lacking this apparent head start.
The World Bank said better administration of mineral wealth, development of agriculture and a careful managing of rapid urbanisation would help governments to lift more people out of poverty. "Better governance will need to underpin efforts to make growth more poverty reducing," the report said.

34. African countries can harness the demographic dividend, but much more needs to be done…
Enhance political will and investments for strong family planning programs, education, and general empowerment of women
Enhance investments in public health for greater child survival and healthy workforce
Adopt economic policies and reforms that help develop industries of comparative advantage to ensure mass job creation and enhance savings and investments
Improve governance and accountable use of pubic resources – invest in people!

35. Thank You