Saturday, 30th September 2023

Services sector may boost Africa’s economy with $1.4tr, 225m jobs by 2030

By Victor Gbonegun, Abidjan, Cote d’ Ivoire 
06 June 2023   |   4:01 am
A new research from McKinsey and McKinsey Global Institute, yesterday, revealed a significant room for growth in Nigeria’s services sector and African economy.


A new research from McKinsey and McKinsey Global Institute, yesterday, revealed a significant room for growth in Nigeria’s services sector and African economy.

Unveiled on the sidelines of the Africa CEO Forum in Abidjan, Cote d’ Ivoire, the study found that if the continent could match the productivity the sector experienced from 2000 to 2010, it would increase Gross value added (GVA) by $400 billion in 2030.

The research stated that if the sector could match the productivity growth of Asia’s services hubs, it could add $1.4 trillion to African economy, almost doubling the GVA from services today, and create 225 million jobs by 2030 – a crucial consideration in the light of Africa’s rapidly growing workforce.

To boost productivity, the report highlighted that adoption of digital technologies and development of skills and talent could be key.

Setting targets and tracking not only economic growth but also productivity, the report noted could also help African leaders implement concrete plans to drive broad-based productivity-led growth across all sectors of the economy.

The flagship report, entitled: Reimagining economic growth in Africa: Turning diversity into opportunity, reviewed the continent’s economic performance across countries, sectors and companies to highlight successes and identify ways the Africa can harness its diversity to reignite growth after a decade of slowdowns.

It noted that the continent has an opportunity to leverage its unique assets and rich human capital to boost productivity and secure a return to broad-based growth.

The research observed: “As the fastest urbanising continent on Earth, home to a young and rapidly growing workforce and growing consumer class, Africa is an exciting new market poised for economic growth and greater prosperity. While in the aggregate, the continent’s long-term economic growth has lagged behind global peers since 1990, its Gross Domestic Party (GDP) per capita has grown just one per cent yearly, compared to five per cent in India and eight per cent in China – nearly half its people live in countries, where economies have grown consistently over the past 20 years. Economic growth in these primarily midsized economies in East and West Africa has averaged more than four per cent yearly GDP growth.

In contrast, the continent’s three largest economies –Egypt, Nigeria and South Africa – are experiencing slower growth, effectively weighing down Africa’s overall performance.”

The authors argued that by drawing insights from existing successes, obstacles to growth and homing in on specific opportunities, more African countries can put themselves back on a growth trajectory in the decade ahead. The need to boost productivity across all sectors is a key theme of the report.

Senior Partner at McKinsey’s Johannesburg office and Chairman of McKinsey’s Africa Region, Acha Leke, submitted: “This report is a clarion call for sustainable and inclusive growth on the continent. Africa’s decision-makers in the public and private sectors are faced with an unprecedented opportunity to rekindle growth and set the continent back on a path of strong, sustainable and inclusive development. Reimagining Africa’s growth is achievable. Additionally, given that Africa has a significant role to play in helping the world transition to net zero and as a potential resource of future talent, now, more than ever, its success is also vital for the welfare of the world.”