Opportunities and dangers of Sub-Saharan Africa's fast-growing population

Food may become Sub-Saharan Africa’s new gold, in a few years. A UNDP 2012 publication about food production and consumption in the region highlighted that since 1960 up to 2010, on average, meat production increased by about 233 per cent, while for primary crops, the increment was 200 per cent. In the midst of this rising food production, food consumption per capita has been declining and registered a drop of about 5 per cent. Food consumption rate is a result of the difference between food production and food exports. As such, there is a deepening need for increasing food production to meet the domestic consumption needs of a fast growing population, or else the region will have to cut down food exports in order to feed their own. As a further complication, scientists have projected that by the 2080s, agricultural production from the region may have declined by an approximate 9 per cent to 21 per cent on account of climate change.

Currently, it is estimated that Sub-Saharan Africa is home to about 1.1 billion people. This population has been growing by an average 3 per cent every five years, since the early 1970s. It is projected to hit 2.2 billion people by 2050 and put the region at a population density of about 91 people per square kilometre. The opportunity in the need to feed this population is huge. Those who invest in controlled and commercial food production, not dependent on nature, will reap good dividends. Such investors may benefit from available and affordable labour from the large population.

A growing population is always predominantly young and imposes an escalation of human needs around essentials of life beyond food such as shelter, health and clothing as well as other requirements like education. For Africa, where those aged 15 years and below account for 41 per cent of the population, there are business opportunities, in big numbers, in addressing needs of children.

UNESCO has published statistics on literacy levels for the age bracket of 15-24 years and reveals that in 1985, the average literacy rate for this age bracket was 64.7 per cent for Sub-Saharan Africa. By 2015, it was 75% per cent. Since the population is growing fast and the literacy rate is increasing, it implies that the number of children entering the literate category over time, by head count, is impressive. This means that citizens and governments are spending significantly towards education of children. Investments targeting the education sector are therefore lucrative on the continent. Such investments need not be the provision of education itself, but extend to all support services that keep the education sector running such as supply of scholastic materials. Government education programmes targeting children are prioritised on the continent.

In the last decade, African governments’ expenditure on public education was growing by an annual 6 per cent and on average 46 per cent of it was towards primary education.
The above applies to all children’s needs such as health, apparel, entertainment and all goods and services which parents would want to procure for their children. These will continue to present strategic advantages for investment. Thinking young is therefore a key competitive tool for an African investor.

It should however be noted that GDP per capita is lowest in Africa. Most of the people cannot spend large sums. Investors are better off adopting a “sachet packaging” model for both services and goods. Packaging small, affordable offers and selling huge volumes, is an important driver for sustainable revenue growth.
On the opposite side of the above opportunities however, Africans may fail to tap into the potential of the growing population and end up being unable to increase agricultural output. They might thus fail to transform their huge numbers into a skilled workforce that would ably transform their conditions.

African countries will face difficulties in providing important services such as housing, transportation, sanitation and security. Unemployment will continue to rise and there will be need to create new jobs in several millions every year. Health and education will continue to demand ever increasing funding from governments and parents. Food supply will not only be stretched in terms of quantities, but the need to improve nutritional levels will also continually evolve.

Whereas investment minds on the continent may utilise the demographics beneficially, there is also potential of failure to manage the associated challenges. The end result of this failure would be disastrous, manifesting in mass starvation, increased poverty and heightened social strife. We would then have to face scourges that may afflict the continent to levels of misery previously unknown to the population.
Raymond is a Chartered Risk Analyst and risk management consultant
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