Africa’s Job Creation Dilemma: Chasing Trends, Missing Solutions

Africa faces an urgent job creation challenge due to its rapidly growing population. By 2030, the region will account for half of the global increase in the labor force, requiring the creation of up to 18+ million jobs annually. This challenge is particularly acute in fragile and low-income countries, which bear 80% of the job creation burden—yet only about 10% of jobs in these nations are formal currently, highlighting a massive gap. Most concerning, Africa’s jobs strategy remains reactive, grasping onto global trends rather than proactively shaping its own future.

Example #1 - Late to the Party?

The IMF released their economic outlook on Africa’s job creation crisis in October 2024. They highlight modern services—IT, finance, and business services—as a top job creator to address? Africa’s massive employment gap, drawing comparisons to India’s transformative IT sector success.

The only problem? Tech jobs are experiencing an unprecedented contraction with over 260,000 layoffs globally in 2024 alone. Major players like Microsoft, Meta, and Google have prioritized cost-cutting and automation, shifting their workforce focus from traditional IT roles to AI and other emerging fields. Even regions like Europe have seen a 40% drop in tech hiring as large firms automate previously labor-intensive operations.?

The IMF highlights India as a model for Africa to aspire to be; but again these recommendations appear disconnected with the current reality. India, is also grappling with a decline in tech job growth. Hiring in the Indian IT sector continues to shrink for the first time in 25 years. This decline has sustained for seven consecutive quarters of headcount reductions across its top five IT firms. Automation and GenAI adoption are displacing traditional roles, with major firms like Infosys and Wipro slashing hiring for entry-level developers by 30–40%.?

Africa must heed the warning signs: the global tech job decline and India’s ongoing struggles reveal a volatile industry with rising skill demands and shrinking opportunities. Yet, reports like the above continue to churn out buzzword-heavy narratives, blind to these seismic shifts jeopardizing Africa’s tech job aspirations. Ignoring evidence and market realities is a recipe for failure.

Example #2 - Wishful Betting on Green Jobs?

Climate has become the hot topic in Africa, with financing quickly following suit. 1 in every 3 dollars invested into startups in Africa is towards climate-tech. Founders have noticed the development dollars; 54% of funded agri-tech ventures in Africa now promise climate adaptation or mitigation. Anchored to the recent funding inflows, there is excitement about the potential for Africa to deliver 3M+ green jobs. But for these jobs to be created - and sustained - the fundamentals of the underlying climate-focused ventures must be sound.

Yet, the track record of climate-tech investments reveals underwhelming results. By 2016, after nearly a decade and over $25 billion in global investments into climate-tech, an astonishing 90% of these investments were deemed outright failures. The recent trends do not fare much better:

• Exit activity in the climate-tech space has also been muted, dropping 50%+ from the 2021/2022 peak.
• When exits do happen, 80% of recent deals being undisclosed, reflecting weak valuations and limited investor confidence.
• Public exits are often via mergers with special purpose acquisition companies, or SPACs. Nearly all climate-tech SPACs have lost more than 70% their valuation since going public.

Climate-tech investments need strong fundamentals. Battery technology, the top recipient of climate financing globally, is vital for a green future and a massive market. News on Africa’s climate investments rarely highlights valuable intellectual property like battery technology. This gap highlights a critical risk: without aligning investments with market realities, Africa could face its own wave of Northvolt-like cautionary tales—high hopes undone by shaky fundamentals. Northvolt, once Europe’s great hope for EV battery dominance, raised an astonishing $15 billion with ambitions to rival Asia’s giants. It generate modest revenues of $128M before filing for bankruptcy recently. Banking on climate-tech to solve Africa's job crisis is a double-edged sword, fraught with risks tied to the global struggles of the sector.

Example #3 - Prioritizing Training Over Real Job Creation

Last week, Microsoft made news announcing an initiative to train 1 million Kenyans in artificial intelligence (AI) by 2027. The event focused on vanity metrics like people trained, with no mention of tangible job creation, perpetuating the cycle of surface-level impact in Africa’s job market.

Young Africans need more and better jobs, not just more training. Yet, training is often misused as a substitute for job creation, with the development sector spending $1 billion annually on largely ineffective entrepreneurial training.

Job creation is a complex challenge faced by economies worldwide. It’s critical the ecosystem recognize that jobs for young Africans won’t be created through another training session, microloan, or startup incubator—and that supply-side interventions alone won’t create jobs. 60 Minutes recently featured a segment on AI workers in Kenya, highlighting exploitative conditions where they earn less than $1 per hour—described by some as modern-day slavery. Africa needs millions of dignified jobs, and focusing solely on training risks missing the bigger picture of sustainable job creation.

Charting a New Path Forward

A recent conversation with a senior development worker from a major international agency was hard to stomach. While the USA, Europe, and Canada use tariffs to protect local jobs, this agency opposed African countries doing the same. The double standard is glaring—Africa is expected to leapfrog basic economic principles while the rest of the world safeguards its industries. It’s time to challenge these contradictions and support policies that prioritize local job creation on the continent.

Africa’s job creation challenge demands a bold pivot from reactive, trend-driven strategies to pragmatic, market-aligned solutions. Over-reliance on outdated tech sector aspirations, fragile green job projections, and superficial training initiatives risks wasting critical time and resources. Instead, Africa must chart its own path, focusing on sectors with proven scalability and aligning investments with economic fundamentals. The stakes are high, and the time for wishful thinking is over—Africa needs dignified, sustainable jobs, not just promises.