The report highlights five interconnected risks impacting countries across the continent.
1. Unemployment and underemployment
Unemployment in sub-Saharan Africa stands at around 6%, according to the International Labour Organization. But most of the work available is unskilled or low-skilled, in part because the region has the world’s lowest levels of access to higher education.
So, although many Africans are employed, 70% of sub-Saharan Africa’s workforce is vulnerable. The global average for vulnerable occupations is 46%.
Business leaders in 22 out of 34 sub-Saharan African countries told the World Economic Forum’s 2018 Executive Opinion Survey that unemployment and underemployment were their most pressing concerns.
What is the World Economic Forum on Africa?
With elections taking place in more than 20 African countries in 2019, the world’s youngest continent is facing a new era.
Held under the theme 'Shaping Inclusive Growth and Shared Futures in the Fourth Industrial Revolution' the 28th World Economic Forum on Africa will convene more than 1,000 regional and global leaders from government, business, civil society and academia.
The event (held 4-6 September 2019) will explore new regional partnerships and entrepreneurial and agile leadership to create pathways for shared prosperity and drive a sustainable future.
Participants will discuss ways to accelerate progress on five transformative pan-African agendas in the context of the Fourth Industrial Revolution, addressing the African Union’s Agenda 2063 priorities.
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2. Underinvestment in infrastructure
Physical infrastructure across much of the continent is a challenge to productivity, according to the African Development Bank. It calculates an estimated $130- to $170 billion needs to be invested each year on Africa’s infrastructure, despite a financing gap of as much as $108 billion.
A lack of funding for roads, telecommunications, water, electricity and more are impeding the continent’s productivity by around 40%, according to World Bank estimates. This “failure of critical infrastructure” is a major risk to business in the region, respondents to the World Economic Forum’s survey said last year.
3. Fiscal crises
Nearly 40% of sub-Saharan African countries are at risk of slipping into a major debt crisis, according to the Brookings Institution. And the "number of African countries at high risk [of] or in debt distress has more than doubled from eight in 2013 to 18 in 2018."
The region’s aggregate debt-to-GDP ratio rose to 46% in 2017, up from from 23% in 2008. As debt levels increase, so does the pressure of servicing the debt; money that could be invested in society goes to repaying loans. This could make it less likely that the region can achieve the African Union’s Agenda 2063 development targets.
4. Political change
"Failure of national governance" is a leading risk to business, according to executives in sub-Saharan Africa.
“Since the beginning of 2015, Africa has experienced more than 27 leadership changes, highlighting the continent-wide push for greater accountability and democracy," according to the Brooking Institution.
Sub-Saharan Africa’s two largest economies both recently held presidential elections.
In May, Cyril Ramaphosa was elected president of South Africa with a commitment to promote economic growth and fight corruption. At the start of the year, Muhammadu Buhari was re-elected president of Nigeria on a similar pledge to fight corruption, while strengthening national security and the economy.
"The political changes taking place offer an opportunity to address citizens’ concerns and priorities. However, leaders – and economies – will face considerable risk should policy agendas fail to deliver results," the Forum report cautions.
5. Climate change
Nine out of the ten countries in the world most vulnerable to climate change are in sub-Saharan Africa. The region has at least 10 vulnerable coastal cities with a population of more than 1 million people, including Accra, Dakar, Durban and Lagos, according to the Forum report.
Africa is expected to be one of the continents hardest hit by climate change, with increasing extreme weather events threatening the health of its people and economies. At the same time, mass-migration as a result of flooding or droughts could put resources such as food, water and housing under pressure in areas less affected.
What’s the methodology?
The sub-Saharan Africa Risks Landscape report is based on data and analysis taken from two key sources:
The Global Risks Perception Survey
This is the World Economic Forum’s source of original risks data, harnessing the expertise of the Forum’s network of business, government, civil society and thought leaders.
The Executive Opinion Survey
This is the survey that feeds into the Forum’s annual Global Competitiveness Report. Each year it canvasses the views of business leaders from around the world on the state of the business environment where they are based.