The road to recovery for Africa: The potential of DFIs to halt the spiraling unemployment rate

DFIs directly or indirectly support over 6 million African jobs in the private sector

New report published today by the ONE Campaign and the African Centre for Economic Transformation (ACET) reveals that the 10 largest global bilateral development finance institutions (DFIs) could substantially reduce Africa’s spiraling unemployment rate by 2025.

The report titled Shifting and Accelerating DFI investments for more decent jobs in Africa estimates that  nearly 6 million African jobs have been supported by DFIs to date, which if sustained may make a significant difference in the continent’s unemployment crisis. As Africa struggles to recover from the economic aftershocks of the covid-19 pandemic, which wiped out 20 million formal and informal jobs, and now with the huge impact of the on-going conflict in Ukraine, more must be done to prioritize the creation of new jobs.

Investing in transformative industries such as food systems, digitalization, manufacturing, and green jobs could be a win for everyone following the commitment by the largest DFIs at last year’s G7 Summit to invest an unprecedented $80 billion in Africa over five years. These are the areas where billions of dollars’ worth of investment may yield huge returns for investors, but they are also the ones where Africa’s unemployed youth could benefit the most.

Edwin Ikhuoria, Executive Director for Africa at the ONE Campaign, said: “African economies could build back stronger from the impact of the pandemic and the war in Ukraine, but only if job creation is given the attention it deserves. Disillusioned youths are suffering the burden of the ongoing unemployment crisis. Solutions that have the greatest potential for impact should not be left unaddressed. For these global development finance institutions, the $80 billion investment commitment at last year’s G7 provides a real opportunity here. A win-win situation for everyone is possible, but only if investments are made right away. This may result in meaningful returns for DFIs and a considerable reduction in the continent’s unemployment crisis.

Dr. John Asafu-Adjaye, Senior Fellow at the African Center for Economic Transformation, said: “DFIs can be what is needed to build a stronger and more inclusive continent, but they need to take on greater risks. The post-pandemic world and the Fourth Industrial Revolution presents an exciting moment for DFIs as their role becomes more critical for the successful recovery and transformation of African economies. There is a huge potential for the Fourth Industrial Revolution to transform African economies by increasing the participation of youth, women and people with disabilities. The key is to ensure that they are equipped with the appropriate skills for future work and have access to technologies.”

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