The Economic Lifecycle and Africa's Demographic Dividend

Abstract

Declining fertility rates across Africa have launched heightened interest in the prospect of the demographic dividend, which arises as countries proceed through the demographic transition and relatively large cohorts enter the working ages. This has been compounded by the urgent need for all African countries to achieve the sustained high economic growth rates required to improve living standards, reduce poverty, and invest for future growth. The National Transfer Accounts (NTA) approach provides a useful way of analysing intergenerational resource flows and can be used to estimate the demographic dividends. This chapter explores the NTA evidence on the demographic dividend in Africa, drawing from the African NTA literature and available data to describe and analyse the first demographic dividend. Based on NTA estimates, Africa’s first dividend began in 1993, highlighting the urgency of required policy actions. The chapter further reveals the degree of heterogeneity amongst African countries in terms of both the timing of the first demographic dividend and its expected magnitude. While the NTA approach provides a useful tool for analysing how policy-induced changes may impact the magnitude of the dividend, an important area for future research on the continent relates to the interactions between inequality and the demographic dividend.