Five Business Trends Influenced by Africa’s Growing Youth Population

If the current trends are anything to go by, Africa’s population is expected to double up to 2.5 billion by 2050. As much as 60% of Africa will be under the age of 25, making it the world’s biggest source of talent. In fact, about half of all people under the age of 18, will be of African origin.

It’s both an exciting and worrying trend, the resultant effects will largely depend on how much we prepare for the population bulge. Notably, this demographic is one of the reasons why the infamous publication, the Economist changed its stance on Africa's future from being a ‘dark continent’ in 2007 to a ‘hopeful one’ in 2013.

There’s more to gain than lose. Let’s discuss five of the many business trends to be continuously influenced by the growing youth population.

1. Increasing importance of a strong digital footprint

Africa’s spending power is rising. As per the African Development Bank, there are at least 350 million middle-class people in Africa. By 2030, Africa will have at least 1.7 billion consumers with a total spending power of over $2.5 trillion. 

The increasing spending power, mobile phone and broadband usage mean businesses need to strongly invest in digital. Google states that Africa will have 623 million mobile phone users by 2025 of which as many as 87% will have access to mobile broadband. African businesses will no longer afford to treat investment in digital business channels as nice to haves. 

The millennial and Gen Z generations who are at the forefront of this trend aren’t only digital savvy when it comes to following brands and loyalty, they’re also more socially aware. We’ve already seen incidents where brands are cancelled on social media for being socially irresponsible in the developed world. 

The same will apply for Africa and now’s the time to lay foundations for a strong and ethical digital footprint. Remember to pay particular attention to mobile responsiveness if your business is to seize the opportunities presented by Africa’s growing youth population.

2. A diverse labor pool

Because access to tertiary education remains quite low at only about 9% according to the world bank, Africa will provide access to a very large pool of both unskilled and skilled labor. The obvious benefit will be the world accessing more affordable labor resources due to increased migration.

For Africa, if careful investments are made into strategic industries such as manufacturing that can accommodate the unskilled, we would’ve an opportunity to control the global supply chain in the next few decades. Otherwise the increasing unemployment rate is a ticking time bomb which will explode into a myriad of socio-economic challenges for the continent.

3. Informal economy: The holy grail

Some of the adverse effects of unemployment benefit the informal sector. Despite not having formal jobs and incomes that aren’t accounted for, Africa’s young people remain economically active in the informal sector. Now worth billions of dollars and expected to continue increasing, the most successful enterprises will create solutions that solve for consumers operating in the shadow economy.

One sure way to gain access into the lucrative informal economy accounting for an average of about 83% of total employment is to invest in mobile technology as outlined in the previous trend.

4. The age of the entrepreneur

According to the Boston Consulting Group, 22% of working-age Africans start businesses in comparison to 18% and 13% in Latin America and Asia respectively.

More people are innovating and starting businesses in Africa. For the tech industry in particular, 2021 was another record-breaking year which saw 564 start-ups secure over $2 billion in investment. The big chunk fell to Nigeria, Egypt, South Africa and Kenya. 

If you’re an investor, there’s a scramble and partition 2.0 ongoing in Africa’s hugely unsaturated markets and entrepreneurship is championing transformative change. The agriculture sector alone is expected to grow to as much as $320 billion annual revenues by 2030 as a result of innovations in the sector.

5. A new form of real estate

Rapid urbanization predictably punctuates the growing population. In the year 2025, almost half of Africa’s population, 45%, will live in cities. In the case of Nigeria, Ghana and Angola, urban residents are expected to increase to over 80% of the total population by 2050. Densely populated cities with 10 million or more people are also expected to increase from 3 to 14.

Overcrowding and excessive pressure on infrastructure such as power and transport are the obvious effects of this rapid urbanization. Equally as true, it presents new opportunities for the real estate industry. Business as usual in the form of building large and single unit properties isn’t going to cut it. 

Apart from being many, Africa’s millennials and Gen Z are also mobile. Due to increased globalization, hopping from country to country in search for economic opportunities is at an all-time high. Shared and smaller property units are likely to be more lucrative as are business complexes and co-working spaces. If you’re a real estate developer who built large for a few, you’d probably want to build smaller and modern cluster architecture for many. Design and build for mobility as opposed to permanent settlements.

Parting word 

Africa’s growing youth population is no longer a ‘he or she said’ narrative. It’s a reality fast approaching that presents many opportunities for the business world and a fair share of challenges.

Studying the trends, knowledge sharing and co-creating solutions together as African people will be key in effectively seizing the opportunities and ensuring the next few decades belong to the continent pregnant with potential.

REFERENCES

A hopeful continent. (2013, March 2). The Economist. https://www.economist.com/special-report/2013/03/02/a-hopeful-continent

Dupuox, P., Dhanani, Q., Rafiq, S., Oyekan, T., & Hassoun, M. (2022, August 19). Six Megatrends That Are Changing Africa—and How to Navigate Them. BCG Global. https://www.bcg.com/publications/2022/six-megatrends-that-are-changing-africa

Gajria, N. (2021, June 1). 5 key trends in Africa’s digital economy. Think with Google. https://www.thinkwithgoogle.com/intl/en-ssa/consumer-insights/consumer-trends/5-trends-africa-digital-economy/

Informal Economy in Africa: Which Way Forward? | United Nations Development Programme. (2022, April 17). UNDP. https://www.undp.org/africa/events/informal-economy-africa-which-way-forward

Jackson, T. (2022, February 4). African tech startup funding in 2021 - more and more for the “big four.” Disrupt Africa. https://disrupt-africa.com/2022/02/04/african-tech-startup-funding-in-2021-more-and-more-for-the-big-four/

The dark continent. (2007, August 16). The Economist. https://www.economist.com/middle-east-and-africa/2007/08/16/the-dark-continent

The World Bank. (2021, October 22). Tertiary Education. World Bank. https://www.worldbank.org/en/topic/tertiaryeducation