1. Forever young? Socio- economic implications of the demographic transition in Southern Africa Sara Troiano Social Protection Global Practice The World Bank Group stroiano@worldbank.org

2. About this study ‒ Multi-sectoral study to nurture policy dialogue in Botswana, Lesotho, Namibia, South Africa, Swaziland ‒ A team-effort ‒ Lucilla Bruni, Jamele Rigolini, Sara Troiano (WB Social Protection) ‒ Michele Gragnolati (WB Health/Population) ‒ Amer Ahmed, Marcio Cruz (WB Development Prospects) ‒ Tom Moultrie, Morne Oosthuzein (University of Cape Town) ‒ David Margolis, Chaimaa Yassine (Sorbonne University) ‒ Servaas Van der Berg (University of Stellenbosch) ‒ Hannah Santos (Johns Hopkins University)

3. Outline 1.What is the demographic dividend (DD)? 2.The demographic transition offers opportunities for countries in Southern Africa 3.What would this mean for growth, poverty and inequality ? 4.The labor market is central for success or failure in harnessing the demographic dividend 5.The need (and room) to rebalancing spending in social sectors to meet new priorities

4. What is the Demographic Dividend? ▪ More people in working age ▪ More workers ▪ More production ▪ More disposable income to save First dividend Second dividend ▪ Accumula tion of human and physical capital ▪ Permanent increase in capital – worker ratio and output per capita Total dependency ratio Importance of policies Southern Africa Time

5. The demographic transition offers opportunities for countries in Southern Africa

6. The window of demographic opportunity has just opened for South Africa, and is estimated to open between 2025 and 2040 for Botswana, Lesotho, Namibia and Swaziland

7. Under current policies, apart from Lesotho and Swaziland, the impact of the change in the population age structure on growth will be modest Real GDP per capita growth rates, 2015-50 (average annual, %)

8. A lower child dependency will be directly translated into poverty reduction Potential contribution of demographic change on poverty headcount in 2050 (%)

9. Inequality will have different patterns across countries, partly because of a differential demographic transition between low- and high- income households Change in Gini 2015-2050 (Gini points)

10. To harness the demographic dividend good policies will be necessary GDP per capita as of 2050 (Index, 2015= 100)

11. Given the larger cohorts of working-age population to come, Southern Africa could face severe jobs shortages in the future Projected Job Shortfall (difference between the number of jobs needed to keep unemployment stable at today’s levels and the projected number of jobs available if job creation continues at the same rate as seen in the recent past)

12. The job problem can not be solved without addressing youth unemployment

13. The fertility transition offers an opportunity to increase female labor force participation

14. The young and the elderly receive significantly larger per capita benefits from the state than adult cohorts do Per capita social spending by age, as a % of GDP per capita (around 2010)

15. Population ageing will exert downward pressure on public spending on education

16. Opportunity to rebalance education spending towards quality of services, without increasing spending Country performance in international educational evaluations in PISA metrics by per capita GDP (PPP$), around 2011

17. Health spending is projected to rise moderately as the population ages

18. The organization of the health system has to adjust to a new epidemiological profile Years of Life Lost DevelopedSSABotswanaLesothoNamibiaSouth AfricaSwaziland 1 st Cause of YLLs Ischaemic Heart DiseaseHIV/AIDS 2 nd Cause of YLLsStrokeMalariaTB LRIs 3 rd Cause of YLLs Lung, tracheal, and bronchus cancersLRILRIs Diarrheal DiseasesLRIsTB Diarrheal Diseases 4 th Cause of YLLsSelf-Harm Diarrheal Diseases LRIs Diarrheal Diseases TB 5 th Cause of YLLsAlzeheimer's Pre-term birth Road Injuries Pre-term BirthStrokeViolence Road Injuries 6 th Cause of YLLsCirrhosis Neonatal Enceph.Self-HarmViolenceSelf-HarmStroke Pre-term Birth 7 th Cause of YLLsCOPD Protein energy malnutrition Pre-term Birth Neonatal enceph. Road InjuriesRoad InuriesSelf-Harm 8 th Cause of YLLs Colorectal Cancers Congenital defects Neonatal enceph.Self-Harm Pre-term Birth Ischaemic Heart DiseaseViolence 9 th Cause of YLLsLRIs Neonatal Sepsis Maternal DeathStroke Ischeamic Heart DiseaseDiabetesStroke 10 th Cause of YLLsRoad InjuriesTBViolence Road InjuriesViolence Pre-term Birth Neonatal enceph.

19. Spending in social transfers is not projected to boom (yet)

20. Room to rebalance social protection to improve employability of current and future workforce Social transfer generosity (= Aggregate spending as % of GDP /Age-specific dependency ratio) Social transfers promoting tertiary and vocational education, and employment (% of GDP), around 2012

21. Thank you!

22. Back up slides

23. Four groups of countries can be identified based on the opportunities that demographic change presents Total Fertility Rate

24. The demographic transition starts offering opportunities for countries in Southern Africa

25. The youthful structures of the populations in each country mean that, in aggregate, spending is directed primarily to the young

26. Job creation and employment policies should take into account current differences by age, sex, education (ILO)

27. HIV/AIDS-related mortality: high levels, but decreasing trends Botswana – 2015 Predicted population age structure (as of 2004) Botswana – 2015 Actual population age structure What about effects at household level?

28. Some questions for you The role of HIV/AIDS Employment vs. income –support programs? Inequality dimension Migration