Africa could start attracting more global manufacturing companies, says economist

In an emailed note this morning, Charles Robertson, global chief economist at Renaissance Capital, shared a video of a TED presentation he gave earlier this year.

In the presentation, Robertson says sub-Saharan Africa could start attracting more investment due to its favourable demographics.

He notes that when deciding on a location to set up a factory, companies tend to look at the number of young people in a country that can work at its plant. A decade ago, China had numerous employable young people demanding comparatively low wages, which is why the country has become the factory of the world.

However, this trend is changing and Africa, which will see a significant growth in the number of 15-24 year olds until 2050, could start to attract some of this investment. “This decade, we are going to see a 20%-30% fall in the number of 15-24 year olds in China… So where do you set up your new factory? You look at Southeast Asia, and people are… looking at Pakistan and Bangladesh, and they are also looking at Africa,” says Robertson.

But a large number of young people doesn’t help if they are not educated. According to Robertson, education levels in Africa are currently where they were in Mexico and Turkey in the mid-1970s. This means that the continent could start to attract manufacturing companies that require lower-skilled labour, such as those in the textiles industry.

Watch the video below for Robertson’s full presentation: