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Enterprising Africa: What role can financial inclusion play in driving employment-led growth?

Publication by Josephine Osikena and Deniz Ugur

With a foreword provided by the Executive Secretary of the United Nations Economic Commission for Africa (ECA), Dr Carlos Lopes, the FPC publication focuses on how responsible financial sector development might be linked to employment creation objectives and targets across the real economy including productive sectors such as agriculture, food production and rural manufacturing. The FPC report argues that such developments would be timely given the today’s global population rise which is driving a global surge in the demand for food.

By 2055, Africa South of the Sahara will boast the largest and youngest global workforce with the number of 15 to 24 year olds rising to 452 million – more than doubling its current size. This presents huge employment opportunities for young people and women already disproportionately disadvantaged by unemployment, underemployment and a lack of financial access. Yet, African food production is failing to keep up with rising local and global demand. There is an absence of the access to finance needed to acquire land and secure the appropriate technology and develop innovation needed to make agriculture more productive, commercially viable and create employment.

Given the complexity of the employment challenge facing African countries, improving access to financial products, services and education has the potential to support job creation. Characterised by significantly large informal private sectors, the structural nature of economies across the continent requires much greater economic diversity. Well integrated and effectively regulated financial sector development can play an enabling and accelerating role to achieve this by ensuring financial sector development is diverse, agile, responsible and adequately regulated to serve employment creating sectors of the real economy (across both the informal and formal sectors). Nonetheless, exclusively focusing on expanding the access and distribution of financial services and products is insufficient for the structural transformation needed to drive economic development and jobs growth across Africa. Appropriate education, skills development and training (including addressing financial literacy) focused on productive economic sectors also needs to be addressed.

The FPC report was preceding by a series of associated roundtable discussions which were organised with the kind support of Barclays. This collection of events, analysis and publications is an emerging body of FPC work entitled, ‘Africa Rising? Building Africa’s Productive Capacity for Inclusive Growth.’ The project seeks to understand how to deliver broad-based structural transformation through the development of well-integrated economic sectors which promote inclusive growth across the continent. Complementary roundtable discussions and the first report in the series have focused on the economic sectors considered most likely to expand employment as well as how best to build women’s resilience to improve their economic and social wellbeing, particularly across agriculture and the rural economy. Other project supporters have included CDC Group (the UK’s development finance institution) and Nestlé.

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