Africa’s oil, gas sectors can consume Africa’s unemployed youth

Lazarus Sauti

Young people aged between 15 and 25 represent more than 60 percent of Africa’s total population and account for 45 percent of the total labour force, says the African Economic Outlook.

It adds that unlike other developing regions, Africa’s population is becoming more youthful, with youth as a proportion of the total population projected at over 75 percent by 2015, due to the high fertility rate underlying the demographic momentum.

Further, notes the African Economic Outlook, it is expected that this increase in the number of young people will not decline before 20 years or more.

The challenge, therefore, is for African governments to provide labour for this booming population. This means governments, private and public sector players as well as development partners in the continent must look for ways to consume unemployed youths.

One ways, according to the United Nations Conference on Trade and Development (UNCTAD), is to exploit oil, gas and mining sectors.

“The oil, gas and mining industries – currently employing around 1 percent of Africa’s workforce – can do more to create more stable, direct and indirect wage-paying jobs that not only promote economic growth, but also protect the environment and foster social inclusion,” said the UNCTAD.

In Africa, only around 5 million new jobs are created for more than 12 million young women and men joining the labour force every year, but an International Finance Corporation study in Ghana found, for example, that the creation of one direct job in the mining sector could generate 27 additional jobs in the wider economy.

Africa holds 8 percent of world oil reserves and gas reserves, and the United States Geological Society ranks the continent first or second in its share of world reserves of a long list of metals and minerals, such as bauxite, chromite, cobalt, ilmenite, industrial diamond, manganese, phosphate rock, platinum-group metals, rutile, soda ash, vermiculite and zirconium.

The UNCTAD also said that the benefits that the extractive industries could bring to developing countries include revenues for host countries through production sharing arrangements, royalties and income taxes.

“The development of the extractive industries could also generate wider economic benefits and promote inclusive growth and sustainable development.

“The extractive industries, given their capital intensive nature, may not create many direct jobs, but their linkages with the broader economy may help generate additional jobs.

“Through these linkages the sector is connected with the suppliers of inputs; outputs are processed into added-value products; demand is generated for locally produced goods and services; and an enabling environment is created for new industries using skills and capabilities acquired from the extractive industries,” added the UNCTAD.

To compare Africa’s potential with developed country experience, a recent survey of the United States’ oil and gas industry revealed that the industry as a whole generated over 9.3 million permanent jobs across the nation, among which are 3.1 million jobs in retail trade, and half a million jobs in health services.

Such jobs are not created automatically.

Targeted policies such as developing linkages, removing entry barriers to specific industry value chains, building the necessary infrastructure to attract investment, improving access to finance and developing workforce skills needed, are crucial to expanding job opportunities and increasing employment.

Artisanal mining, as a labour intensive mining process, is, for example, well known to generate more direct and indirect jobs than large-scale mining.

In Africa artisanal mining is estimated to create about 8 million direct jobs which support over 45 million people.