On Tuesday, I contrasted Africa’s falling dependency ratio with that of other world regions and concluded that the 21st century belongs to Africa.
But Africa is not a country. It is 55 countries – each with its own unique history, demographics, and economy. So, as informed investors, it behooves us to examine their population trends individually.
We know that, on average, African nations are nearing a demographic sweet spot – where the size of the labor force is twice that of the child and elderly population. In other words, a dependency ratio of 50 or below.
But which ones are closest? And when will they get there? UN statistics on the US Census Bureau’s website give us an idea.
Here are five African economies that will hit the demographic sweet spot within the next 30 years, ordered from soonest to latest.
Mauritius is in the midst of a golden age. It entered the demographic sweet spot about 15 years ago. Since then, it has blossomed into an African success story. Its citizens are among the healthiest, best educated, and wealthiest on the continent – and probably among the happiest considering the fact that they inhabit a tropical paradise.
But the clock is ticking for Mauritius. Birth rates have actually dropped well below replacement level. So, not only will the country likely exit the sweet spot in 15 years (marked by the letter “B” on the chart below), its labor force will actually shrink by the year 2050 unless the birth rate rises or the government attracts immigrants to its sandy shores.
The southern African nation famous for its giant sand dunes may have quite a lot of other things to brag about in coming decades. After a steady drop in fertility rates, Namibia’s dependency ratio will likely drop below 50 sometime before 2020.
This positive develop happens to coincide with massive discoveries of offshore oil and gas, and a huge aquifer that could slake the thirst of 40% of the population for hundreds of years.
Fifteen years ago, 112 out of every 1000 babies born in Kenya would die before their fifth birthday. Today, that figure has been reduced to 59. This dramatic improvement prompted in equally dramatic drop in the number of births per woman.
Now, if trends persist, Kenyans between the ages of 15 and 64 will account for two-thirds of the population about 15 years from now. The size of the labor force will more than double by 2050, and low dependency ratios will likely be sustained late into the century.
A tough fight against HIV has helped this Kalahari desert nation reduce infant mortality which set it on a course toward its demographic bonus.
Its labor force has also been bolstered by migrants from neighboring Zimbabwe. The CIA estimates roughly 10,000 migrants entered Botswana in 2011, giving it one of the highest net migration rates in the world.
5. South Africa
The growth of South Africa’s labor force has been retarded by a combination of factors, including AIDS and one of the highest net emigration rates in the world. So, the populace of the region’s largest economy remains a young one. Dependency ratios will likely hover in the mid-50s for many years to come.
The Late Bloomers
Most African nations won’t hit the demographic sweet spot until the second half of the century. But as the chart below illustrates, their dependency ratios are clearly on a downward trajectory.
Moving In the Right Direction
The demographic sweet spot is rather arbitrary, of course. African economies will receive an incremental benefit for every drop in the dependency ratio. The important thing to take from this analysis is the overall trend.
While the rest of the world grays – Africa grows.