The jobs challenge is bigger than ever in the poorest countries

Over the next decade, close to 600 million people will be looking for jobs, mostly in the world’s poorest countries.  The South Asia region alone will need to create more than 13 million jobs every year to keep pace with its demographics. In Sub-Saharan Africa, despite a smaller population, the challenge will be even greater—15 million jobs will need to be created each year.
 
Adding complexity, the jobs challenge is also a concern for today. Many people in poorer countries who do work are stuck in informal, low-paying, less productive jobs, which are often outside the formal and taxed economy.  And as the trends of urbanization continue, scores of internal migrants are searching for work, but can’t find quality, waged jobs, nor do they have the skills demanded by the markets. As a result, too many people are left on the economic sidelines and are limited in what they can contribute to their countries’ growth.  

Creating productive and meaningful jobs for this burgeoning workforce requires economic growth and transformation—moving workers from lower to higher productivity activities—led by a vibrant private sector and supported by public policy actions. To accelerate economic transformation, countries need to connect to markets through sound infrastructure and value chains, build workers’ skills and firms’ capabilities, and create an environment that facilitates private investment. This transformation also needs to be inclusive, with opportunities for all - women, youth, and the disadvantaged groups.

The International Development Association (IDA), the arm of the World Bank Group that works with the poorest countries, has been at the forefront of supporting countries’ efforts to create jobs.  In fact, we’ve made jobs and economic transformation a special focus under IDA18—our current three-year funding cycle, which runs through mid-2020. IDA18 is funding innovative jobs-focused projects, using financial instruments and enhanced analytics, and applying new tools to evaluate and measure jobs impact.

IDA18 is supporting projects that build infrastructure, global value chains, regional integration and technology.  For example, IDA’s support to the West Africa Power Pool, including solar power in the Sahel, is providing critical energy infrastructure and promoting regional power trade to supply electricity to millions of industries and households in West Africa. In Côte d’Ivoire, IDA is connecting smallholder famers to global markets, raising agricultural productivity and generating jobs. And in Kenya, IDA is helping to build workers’ and firms’ capabilities to make small and medium businesses more innovative and productive.

IDA18 interventions are also improving the enabling environment for economic transformation. IDA18’s support for regulatory reforms and infrastructure development in Ethiopia is improving the investment climate and supporting the government’s ambitious reform programs, while dedicated development policy support focused on jobs is helping Bangladesh implement reforms to improve trade and investment environment, strengthen workers protection, and improve access to jobs for women and youth.

Putting the private sector at the center of the jobs and economic transformation, IDA is linking its work with IFC and MIGA, two arms of the World Bank Group that focus on the private sector and promote foreign direct investment in emerging markets. IDA’s Private Sector Window (PSW) has committed $185 million to 13 projects, many of which are in fragile states. This funding from IDA is enabling $600 million from IFC and MIGA and mobilizing another $800 million from private investors. The PSW window is supporting small and medium size enterprises (SMEs) through innovative ways, such as a risk-sharing facility to extend bank lending to underserved SMEs, equity investment in SME funds, and local currency solutions.

Also, recognizing the potential of digital technology, IDA is supporting the World Bank Group’s ambitious “digital moonshot for Africa” initiative to digitally enable every person, business and government in Africa by 2030.  With public and private partners, we are building the foundations of the digital economy, which rest on digital infrastructure, skills, platforms, financial services and entrepreneurship.

Overall, IDA is investing in people—building countries’ human capital—by putting in place the foundations for good health, education and social protection systems, as these are fundamental to the jobs and economic transformation agenda.

Our diagnostics show common challenges across IDA countries. Investments and jobs are concentrated in narrow urban centers, leaving gaps in the overall regional development. Large segments of the population, including women, people with disabilities, and other disadvantaged groups, aren’t economically active.  IDA’s interventions are tackling these related issues—women in the labor force, regional trade and integration, climate-smart urbanization and infrastructure, better governance, and migration.

The jobs and economic transformation agenda is complex and will require a long-term, sustained commitment to deliver needed outcomes.  Even as we work to make an impact today with IDA18, we are already thinking ahead about how to best continue this work into IDA19, our forthcoming replenishment cycle from 2021–23.

This is why together with United Nations Economic Commission for Africa (UNECA), we are meeting policymakers and practitioners in Addis Ababa on March 5, 2019, to discuss countries’ efforts and emerging priorities. Strengthening our partnerships with country and regional leaders and working together on this agenda will amplify our collective impact for creating lasting economic development.

The jobs challenge over the next decade is clear and immense, and the stakes could not be higher.  Success will mean creating quality, productive jobs for hundreds of millions more people, building a better economic future for countries, and giving individuals the opportunities they seek to lift themselves out of poverty. IDA is committed to that success.