Pathways to Job Creation in Africa

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Policy Recommendations

Large-scale job creation in the region will occur when reductions in the cost of doing business enable existing enterprises to scale and attract new high-growth firms to enter the market. Achieving this requires addressing foundational constraints to private sector development through the following policies:

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Foundational infrastructure—from transport networks to general-purpose technologies like energy and digital systems—is indispensable for unlocking growth across productive sectors. Limited access to electricity and frequent power outages remain the top barrier to business operations in Africa, consistently highlighted by firms as a major contributor to high operating costs. Upgrading electricity infrastructure, expanding generation capacity, and improving the financial viability of utilities is critical. Policies should focus on reducing the cost barriers to the widespread adoption and use of digital technologies, which have been shown to increase foreign direct investment, enhance firm productivity and employment, and contribute to poverty reduction. Improving road and rail networks and integrating infrastructure planning are also critical to connecting production centers, lowering costs, and increasing productivity and job creation.

This includes not only primary and secondary education but also early childhood development, soft skills, trade-specific proficiencies, as well as advanced technical skills taught at the tertiary level. The skills and training ecosystem must adapt to the needs of key growth sectors, such as the digital economy and manufacturing (for example, agro-processing, pharmaceuticals, construction materials, and renewable energy equipment), and ensure relevance through close collaboration with industry.

The current organization of production limits firm expansion, resulting in too few high-growth firms capable of driving innovation, productivity, and job quality. Lowering the cost of capital, especially for young and high-growth firms, calls for deeper capital markets that offer equity financing. Stable and predictable tax regimes allow businesses to plan long-term, make investments, expand operations, and create jobs. To realize these benefits, governments must invest in tax administration, improve bureaucratic quality, and strengthen regulatory frameworks. Regionally and globally, deeper integration and improved trade facilitation are critical to grow markets. Fully leveraging the African Continental Free Trade Area offers a unique opportunity to create a single, integrated market and reshape the region’s economic landscape.

Strong, inclusive institutions are essential for job creation and a healthy business environment. They ensure peace and stability, curb corruption, and deliver key services. Political inclusion aligns incentives for broad-based growth, while exclusion and elite capture distort markets and limit competition.

Removing constraints to private sector development will unlock growth in productive sectors with high potential for job creation at scale. Sectors that offer scalable employment opportunities include agribusiness, tourism and hospitality, health care, housing and construction, digital services, and manufacturing (particularly, mineral value chains). Countries must act decisively to leverage their comparative advantages in these sectors.

Key Findings

Sub-Saharan Africa’s growth remains resilient despite global uncertainty. Economic activity in the region is poised to grow at 3.8% in 2025, up from 3.5% in 2024, and further accelerate to an annual average rate of 4.4% in 2026–27. This is supported by lower inflation and improved trade, though fiscal consolidation and high debt service remain key risks. External debt service has more than doubled over the past 10 years, reaching 2% of GDP in 2024.

 

Sub-Saharan Africa is undergoing the largest and fastest demographic shift in the world and in recent history. Between 2025 and 2050, the region’s working-age population is projected to expand more rapidly than in any other developing region, adding more than 620 million people to its labor force—representing more than three-quarters of the net increase across all emerging markets and developing economies.

 

The region’s twin jobs challenge is to accelerate the creation of jobs for its fast-growing working-age population and ensure that those jobs offer better pay, stability, and opportunities.

 

Sub-Saharan Africa requires a new growth model anchored in medium-sized and large enterprises, which are critical drivers of productivity and job creation. Current growth patterns are not translating into sufficient wage employment: a 1 percentage point increase in GDP yields only a 0.04 percentage point rise in wage employment. This underscores the urgency of shifting toward a more inclusive and productivity-driven growth strategy that generates better jobs across all sectors.

 

The region needs more organized and efficient production systems, which depend on a greater share of medium-sized and large firms to unlock economies of scale and generate specialized, higher-quality employment. Yet, most businesses remain small and informal, limiting their ability to create productive jobs. With 73 percent of employment concentrated in own-account and family-run enterprises, the region lacks the firm size and efficiency needed to drive productivity and expand formal job creation at scale. This calls for a structural shift in Africa’s growth model.

Data

Source: World Bank staff estimates based on data from the Global Monitoring Database.

Note: AFE = Eastern and Southern Africa; AFW = Western and Central Africa; SSA = Sub-Saharan Africa.