Thematic view: Do demographics matter?

A few weeks ago, we participated in the Franschhoek Literary Festival and I was on a panel discussion titled "Generation Africa". The discussion focused on the demographic dividend that Africa is likely to enjoy over the coming decade and this article draws on the discussion to explore the opportunity for Africa.

According to forecasts by the International Monetary Fund (IMF), African GDP growth will exceed Asian GDP growth this year. This has historically been a rare occurrence, but the IMF expects it to recur regularly over the next five years. African growth has picked up relative to the rest of the world and this is thanks to both higher commodity prices and supportive demographic trends. 

Africa’s demographic advantages are likely to support production and consumption in the future, but the key to achieving this lies in Africa’s ability to broaden its industrial capacity. While the Chinese working-age population has already begun to decline, the African working-age population is set to continue increasing for decades to come. This sets the stage for a sizeable increase in demand across the continent.

Chart 1: Global working age population by select regions

There are a few things to consider when assessing the opportunities for Africa in the context of a young, growing population. The first is how the continent's young population can be equipped to participate in the future economy and whether opportunities will exist for broader economic participation. It’s not enough that the young population is skills-ready for the future economy. Africa also needs to build a strong industrial base to participate meaningfully and create Africa-centred opportunities. A skilled workforce without the opportunities that industrial capacity brings creates the risk of an ongoing exodus of skills to other industrial-ready parts of the world.

Can Africa create this industrial capacity in the coming years? The current positive commodity cycle creates, thanks to the resultant fiscal windfalls, a three-fold opportunity to:

• Build fiscal buffers for future macroeconomic shocks
• Accelerate infrastructure development, and 
• Diversify Africa's industrial base to further cushion macroeconomic shocks.

Chart 2: IMF projections for Africa and Asian GDP growth over the next five years

_{Source: IMF, January 2026}

The African Continental Free Trade Agreement (AfCFTA) comes at an important time. According to Secretary General Wamkele Mene, AfCFTA has the potential, if fully implemented, to raise African-wide GDP growth to over 7%, which is above the growth rate expected by the IMF. 

Growth of this magnitude would be beneficial to South Africa. Africa ex-South Africa is South Africa's second-largest vehicle market, behind Europe. The opportunity therefore is large, but hinges on reducing waiting times at border posts and on continent-wide (and South African-specific) logistics improvements. Increasing trade with the rest of Africa should be a key goal to increase growth and reduce unemployment in South Africa.

Gross fixed capital formation (GFCF) in Africa has been rising in the post-pandemic environment and is at its highest level in about 15 years. But GFCF still needs to rise to at least 20%-30% of GDP, from its current level of 14%, to translate into meaningful economic growth across the continent. 

Chart 3: Africa gross fixed capital formation 

Infrastructure investment also needs to be more broad-based. The 2024 Africa Economic Development report by the United Nations Conference on Trade and Development (UNCTAD) shows that infrastructure development in Africa has been biased toward information and communications technology (ICT), with stagnation in logistics infrastructure development and uninspiring investment in energy. 

Chart 4: Africa infrastructure development

In a nutshell: Africa's developmental path

• Africa's demographic growth is a major economic opportunity, but only if it is matched by industrial capacity. A young and growing population can support higher production, consumption and entrepreneurship, but skills development must be accompanied by local economic opportunity. Otherwise, the continent risks exporting talent rather than building African firms, industries and employment. 
• AfCFTA is necessary but not sufficient. Lower trade barriers will help, but Africa's constraints are also physical and productive: weak logistics, inadequate energy supply, inefficient borders and limited manufacturing capacity. Trade liberalisation must therefore be matched by investment in rail, roads, ports, energy generation, transmission and distribution. 
• South Africa should treat the continent as a core growth market. Africa is already an important destination for South African exports, including vehicles. Improving border efficiency, regional logistics and cross-border trade infrastructure would support South African industrial growth and employment while contributing to broader regional development. 
• Commodity windfalls should be used to build resilience. Periods of elevated commodity prices should be used to strengthen fiscal buffers, fund infrastructure and diversify production. This reduces vulnerability to future commodity downturns and supports more durable growth. 
• Regional integration should begin with practical execution. A focused regional case study could identify where harmonised infrastructure planning, border management, trade facilitation and more coherent fiscal and monetary frameworks can support deeper regional integration and provide a model for broader continental adoption. 

Demographic changes – why Africa is the future