Forum on Youth Unemployment Sets the Stage for 2012 Launch of the African Economic Outlook in Cairo

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“‛Bread, freedom and social justice’ is what Egyptian revolutionaries called for in the January 25 revolution; the one issue that touches on all of this is unemployment,” Egypt’s Prime Minister Hisham Kandil said in a speech during the official opening of the “Youth Employment: Building the Future of Egypt” forum co-organized by the African Development Bank (AfDB) and the Social Fund for Development (SFD) in Cairo on December 5.

The high-level dialogue included stakeholders from the AfDB, SFD, the Egyptian Government, NGOs and representatives from the private sector, as well as development partners seeking to find innovative ways of promoting employment initiatives that target Egyptian youth who are struggling to find good jobs during challenging economic times. The four-session forum also marked the launch of the 2012 edition of the African Economic Outlook, a joint publication prepared by the African Development Bank in partnership with the United Nations Development Programme (UNDP), the UN Economic Commission for Africa (UNECA) and the Development Centre of the Organisation for Economic Cooperation and Development (OECD).

In his speech, Kandil thanked the AfDB for its role in fostering economic growth in Egypt. He referred to AfDB’s budget support of half a billion US dollars that is expected to be approved by the end of the year, followed by another tranche of half a billion US dollars in the next fiscal year.

Youth Employment Challenges

With more than 750,000 new entrants to the labour market every year, the unemployment rate in Egypt has been on the rise, going from 8.7 per cent in 2008 to what will likely be over 13 per cent by the end of 2012.

Jan Rieländer, economist at the Africa and Middle East Desk, OECD Development Centre, explained that the high rate of unemployment among youth in Egypt and the region is due to a large youth population and low quality jobs which lead youth to stay in poverty despite employment. Also, the economic growth achieved in some countries of the region has not been translated into sufficient jobs. Finally, women in the region face more difficulties in accessing the job market, which is considered a loss of human resource potential, Rieländer noted.

Education is another major challenge in Egypt, experts agreed, as it does not provide youth with the skills needed to help them function in the job market. Nada El-Ahwal, Business Development Coordinator at CID Consulting, explained that there is a clear mismatch between the jobs offered and the youth ready to work. “The entrepreneurship spirit in Egypt is so high. Egypt is not short of small and medium enterprises; however, they are fragmented. We need to capitalize on the existing entrepreneurship and formalize it,” El-Ahwal said.

On the private sector front, which is a great contributor to Egypt’s economy and labour, the challenges are also high. “Political stability is central for the development of internal and external investment, which is currently stifled because of Egypt’s political turbulence,” Ahmed Bahgat, President of Benchmark Group, observed. He further explained that infrastructure is another major problem facing the private sector. “We are short of road networks, human capital, and other support functions necessary for the private sector.”

Suggested Solutions

Experts from the different fields speaking at the forum presented suggestions to address the problem of unemployment. Omar El-Kheshen, Partner at Bareeq Capital, explained that the roadmap of counterattacking unemployment is twofold: increasing demand for employment and improving supply of labour. To increase the employment demand, the government should invest in infrastructure and support the development of MSMEs.

Also venturing outside the capital is very essential. “Strategies should be developed to address the different geographical needs among youth in Egypt and making use of the different resources of Egypt’s governorates,” added Omneia Helmy, Director of the Egyptian Centerfor Economic Studies.Improving supply of labour can be achieved by promoting vocational education and investing in education, which should be reformed to meet the needs of the job market’s needed skills, El-Kheshen noted.

The Government should also work on increasing its exports, Heba Handoussa, Managing Director of Egyptian Network for Integrated Development, said, explaining that Egypt imports all sort of machines, for instance, while it should focus on developing labour-intense industries that could absorb labour.

Finally, John Page, Senior Fellow at the Global Economy and Development Program, Brookings Institution, noted that empowering the private sector is key to lessening unemployment rates, which could be done through improvements to infrastructure and transformation of the private sector into an openly competitive and transparent system that attracts foreign investment.

2012 African Economic Outlook

During the forum, Prof. Mthuli Ncube, AfDB Vice-President and Chief Economist, announced the launch of the 2012 African Economic Outlook.

The report revealed that: Africa’s growth is expected to increase from 3.4 per cent in 2011 to 4.5 per cent in 2012 and to 4.8 per cent in 2013; Sub-Saharan Africa’s growth is expected to increase from 5.1 per cent in 2011 to 5.3 per cent in 2012 and 5.4 per cent in 2013; excluding South Africa, the rest of Sub-Saharan Africa grew at 5.9 per cent in 2011 and is expected to grow at 6.3 per cent in both 2012 and 2013.

However, in North Africa, growth fell to 0.5 per cent in 2011 owing to political changes in the region. Also, the continued recession in Europe is a major threat to recovery in North Africa in the medium term.

Despite some positive developments in regional integration, challenges remain, Prof. Ncube noted. Regional infrastructure development in Africa is crucial for economic growth and sustainable development, he said.

Also, despite efforts to implement a coherent program of activities in the areas of energy, transport and communications, Africa remains one of the continents with weak infrastructure networks, which contribute significantly to higher production and transaction costs, and undermines the competitiveness of businesses, Prof. Ncube explained. Domestic resource mobilization helps to boost growth and to make Africa less dependent on foreign aid. To this end, tax systems must be improved and capital markets need to be deepened.

Given the importance of agriculture in Africa, the continent also suffers more than other regions from the effects of climate change. Finally, Prof. Ncube noted that youth unemployment has become a major problem in many African countries as not enough jobs were created to absorb the growing supply of young people, which has been a main cause for the revolutions in North Africa.

At the end of the forum, Prof. Ncube stressed his faith in Egypt’s recovery and highlighted the AfDB’s commitment to support Egypt’s economic growth through this critical time.

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