Month: July 2018

Losing Our Mind: Reversing Africa’s Brain Drain

Africa has a migration problem. Not only are thousands of the continents young men and women risking life and limb to try and make it to Europe, we are also losing some of our best minds. A 2013 report from the United Nations and the Organization for Economic Co-operation and Development found one in nine Africans with a tertiary education (2.9 million people from the continent) were living and working in developed nations in North America, Europe and elsewhere. Over the last 10 years this number has grown by 50% more than any other part of the world. Since 1990, Africa lost 20,000 academic professionals who left their countries and 10 percent of the continents highly skilled information technology professionals. The loss of Africa’s best and brightest is most keenly felt in the health sector, a study by Canadian scientists found that Sub-Saharan African countries that train doctors have lost $2 billion as the expert clinicians leave home to find work in the developed world.

The beneficiaries of this migration are the developed world. The findings of the study suggested that Britain was around $2.7 billion better off, the USA $846 million, Australia $621 million and Canada was $384 million better off. Yet in the developed world, particularly in the West a nativist, anti-immigration sentiment has taken hold. The places that have benefitted most from migration are becoming more hostile to it. This presents a perfect opportunity for Africa to tempt its doctors, engineers, artists, academics and other skilled professionals home. These people offer an unparalleled opportunity to boost our economies and enrich our societies, with the skills, capital, knowledge, networks and experience they could bring back home.

What is needed are the right pull factors to entice the diaspora to move back home. We need policies that make moving back to the continent more attractive.

 

Why the diaspora?

Development needs a skills and knowledge base. Healthcare systems need doctors and nurses to staff them. Infrastructure needs engineers to build them. The IT sector needs talented software and hardware engineers. And the private sector needs people with experience and global business networks if African business are to grow in a global economy. Africa could and should grow these capabilities, but that will take time, valuable time that we can ill afford to lose.

The diaspora offers the perfect way to jumpstart development with human capital. They could bring these much-needed skills, knowledge and networks into the economy while we continue to train more people. In addition, if they came home the diaspora would not only bring back the soft assets of skills and knowledge, they would bring back hard assets, money (in the form of savings and investment funds) that they would use to settle back at home, as well start and invest in businesses. In South Africa it is estimated for every skilled person who returns home to South Africa, nine new jobs are created in the formal and informal sectors. In China, educated skilled professionals, who left China to study and work, are returning. These “sea turtles” have come back with desirable skills, a network of international business contacts and new ideas to boost the economy. Elsevier (the publisher of scientific journals) has used its data to show that India is enjoying a brain gain of scientists returning to and moving to India (the study also shows a similar effect in China).

Thus, the question becomes, how does Africa turn its brain drain into a brain gain. What policies and measures are needed to make African professionals living in other countries want to move back home.

Making moving back easier

If the African diaspora are to be enticed to move back, then we must make it easer for them to do so. This means a smart mix of incentives that make it easier and attractive to move back to Africa.

Moving countries can be a complicated affair, not only do you have to move your stuff, but you also have to register with tax authorities, set up bank accounts and move assets, get all your documentation, insurance, get your children into school etc. Governments can do a lot to make this easier. First by making all of this tax free, the amount of money that governments would make from African migrants coming home and paying taxes on their fridge or money transfers is tiny in comparison to the value they would produce over years. Furthermore, these tax incentives should be extended to those who start new companies within a year of returning and to investments such as buying stocks, bonds and real estate. Second, allow for dual citizenship, this would allow diaspora migrants to become fully fledged citizens without facing the prospect of having to completely leave behind the lives they have built abroad. Coupled with this should be a fast track to citizenship, no one will migrate if they will be in an uncertain situation subject to the whims of an immigration officer, full citizenship will give them security. Third, making reintegration painless. Which means aiding migrants and their families settle in as painlessly as possible, such as helping parents find schools for their children, purchase health insurance and a one stop shop for getting all their official paperwork and documents. Ideally these are services governments should provide to all citizens, and trialling with diaspora migrants may be a way to pilot such a scheme before rolling it out for all. Finally, we must make it clear that we want our diaspora to come back home, that we value them beyond their jobs and financial assets. That our people are our greatest resource and the contributions they could make to our societies would help make economic, social and cultural development a reality. This can only be done by clear unequivocal statements from political leaders backed by policies which make the rhetoric reality.

Reversing Migration

Incentivising high skilled migration is something done by developed countries around the world such as the UK, Canada and Australia, now China is getting in on the game as well. All of them are seeking to attract high skilled migrants to fill gaps in their own labour markets and ensure they remain globally competitive. They all have policies aimed at attracting highly skilled, high earning migrants which fast track their migration and ease their integration into society.

Africa is not only not attracting highly skilled migrants, we are our losing our own highly skilled people, it is a situation that we should be actively looking to stop and reverse. Our hospitals lack the doctors and nurses they need to provide adequate care, our universities lack the professors and researchers they need to produce the next generation of leading minds and research, our governments lack expertise in any number of areas and our private sectors could desperately use people with high level skills, experience and networks. It will not be easy we are in a global competition for the worlds best and brightest, but we must start somewhere, and having the right policies to attract our diaspora brothers and sisters home is a good place to start.

Avoiding Demographic Doomsday: Redefining Employment in Africa

One of the central challenges facing much of Africa is unemployment, in particular youth unemployment. The African Development Bank estimates (see figure 1) that of Africa’s approximately 420 million young people (aged between 15-35) only one-sixth (16.6% or 70 million) are in formal employment. One-third are partially or vulnerably employed, and half are not employed at all. That means 140 million young African’s are at risk of losing their job at a moment’s notice and 240 million have no job and little prospect of one.

(fig.1. source African Development Bank)

This is a disaster. Half of Africa’s youth, their potential contributions to society and personal dignity and well being, is wasting away. Is it any wonder that these young men and women are risking life and limb on horrific journeys to try and get Europe for the prospect of a better life?

This though, is only half of the story. Africa’s youth population is expected to double to over 850 million by 2050. If the continent cannot find a way to harness the potential of its youth, then the continents demographic dividend could turn into a demographic doomsday. As young unemployed Africans with no stake in the economy and no prospect of a better life turn to dangerous radicalism, extremism or crime as a way out; migration will be the least of our worries.

Thus, the question becomes how do we avoid this demographic doomsday scenario? One answer is to rapidly grow the formal economy and employment via industrialisation. This is the path that much of the continent is trying to pursue. Investing in infrastructure, ease of business reforms, business incentives and trade expansion, all aimed at spurring economic growth and employment. Frankly, it has not been enough. While growth has been positive it has not been at the rate we need, and not nearly enough jobs have been created.

What is needed is a policy for the biggest non-agricultural employer on the continent, the informal sector. The majority of those in informal business (and many with jobs who have a side hustle) depend on the informal sector for their livelihoods.

Alongside agriculture, the informal sector is the foundation of the African economy and its time our policies and laws caught up to that reality. Doing so would help solidify fragile livelihoods as well help drive growth and opportunity in the economy. We can start by changing our laws to redefine employment to include the informal sector and investing in the skills, knowledge and capabilities  of those in the sector.

The Informal Sector in Africa

The informal sector can be broadly defined as activities or enterprises that produces and sells good or services but are not formally registered and do not pay taxes.

The International Labour Organisation (ILO) estimates that the informal sector represents 41% of GDP on the continent and 66% of total employment in Sub-Saharan Africa and 52% in North Africa, and that eight in ten (80%) of young workers end up in the informal sector. These figures tell us an important fact about the reality of employment in Africa, that most people earn their livelihoods through their own ingenuity and drive, hustling, and either working for or running small enterprises, they don’t have an employment contract or get a pay check. Thus, the laws, regulations, and protections of labour and employment laws are irrelevant to them. The second key thing that stands out about Africa’s informal sector is its resilience and adaptability. It has survived the ravages of one party States and dictators, near collapse of the economy in the 1990s, endemic rent-seeking and corruption, changes in weather patterns and the cycles of economic booms and busts.

It is time that government policy focused on enabling, harnessing the sector by integrating it into the wider economy, not at the exclusion of wider policy goals such as industrialisation but as part of it.

Redefining Labour and Employment

The first step to integrating the informal sector and the people in it to the wider economy is through legal definition and recognition. Just as labour and employment legislation across the continent recognises, regulates, and protects people in formal employment; similar legislation for informal sector could provide the people and businesses in it with legal protection and a foundation upon which they can build and grow.

Informal sector legislation and policy would not simply be applying the rules of the formal sector to the informal sector (which would be ignored anyway); rather it should be crafted for the needs of the informal sector and would include the following:

  • A valid legal definition of an informal sector business and job with a simple way of registering it. Registering an informal business should be as easy as getting a SIM card or a mobile money account. The goals are not to tax or regulate the sector but for registration to be a gateway to the enabling and protective elements of the laws and policy.
  • Simplified contracts and small claims courts. A constant risk in the informal sector is that you do not have the protection of the law, if you make an agreement with someone to buy or sell something it is based on their word alone. Providing a simple contract template that all can use gives buyers’ and sellers’ basic rights (such as refunds on non-delivery of goods or services). A small claims court to enforce disputes under these specific contracts quickly (rather than the expensive, laborious and slow normal court system) would engender trust and facilitate business.
  • Banking and credit access. Make it possible for informal enterprises to use their registration to open bank accounts, access credit and use their assets (e.g. a motorbike) as security for loans.
  • Provide access to national health, pension and welfare schemes. Most national health, insurance, pension and welfare schemes are based on a (formal) employee contribution model, where a portion of your salary is contributed to various schemes. On a continent where most people are not in formal employment it means that these schemes are underfunded, and many do not include everyone. Providing a way into these schemes for the informal sector like a simple subscription or yearly fee would be a way to both expand them to the wider population as well as boost their funding
  • Allow informal employees and businesses to organise. Allowing the informal sector to form co-operative societies, unions and associations would open new avenues to credit (through the pooling of savings in co-operatives), better working conditions and more powerful voice to advocate for their interests.

Legal definition and recognition opens the door to the protection and progress of the livelihoods that depend on the informal sector. Laws may be boring, but they are crucial.

Capacity Building

Legal recognition is only half the equation, for the informal sector to move from being a source of subsistence for individuals to a source of growth for the economy. Africa needs to give the people in it the tools, skills and knowledge to create, recognise and take advantage of opportunity.

The first aspect of capacity building is coupled with legal recognition. Changing laws is ineffective if the people they are aimed at are not aware of the changes and how to take advantage of them. Thus, the capacity building exercise would be a public education exercise, focused on making people within the sector aware of the changes and how to take advantage of them.

The second is around skills and knowledge training. Putting together programs that train people on key aspects of business administration, opportunity identification and marketing, crucial skills needed if they are to successfully invest and expand beyond subsistence.

The Informal Economy as an Opportunity

Most policies that African governments have come up with around the informal sector are focused on formalisation and extracting taxes and most policy around employment growth is focused on expanding formal employment. While these goals make sense, they ignore the reality of the crucial role that the informal economy plays in livelihoods and the economy of Africa.

Employment in the informal sector is not wrong or inconvenient, it is normal for Africa. And, for Africa’s development to be truly African it must not only be led by Africans but work for the majority of Africans, many of whom are employed in the informal sector.

Few if any of the development initiatives pursued by governments and institutions across the continent are aimed at furthering this sector. This approach ignores and underserves a sector which has been the foundation of the African economy, which has, since independence proven to be resilient, innovative and frankly, African.

Redefining employment in Africa to recognise and support the informal sector will not hamper or stop industrialisation or the growth of formal employment. Rather it is about understanding that the giving the hundreds of millions of Africans whose lives depend on the informal sector a stake in the economy and the opportunity to grow, is not only good for the economy it is good for people, and if that is not what development policy is about it is what it should be about.