MEFMI Region Challenged To Find Appropriate Solution To The Unemployment Gap

The Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) held its annual Combined Forum at the Washington Plaza Hotel in Washington DC, United States of America on Monday 7 October 2013.  The Forum was officially opened by Honourable Maria Kiwanuka, the Minister of Finance, Planning and Economic Development in Uganda.

The MEFMI Combined Forum Series is an annual executive event specifically targeting Ministers and Permanent Secretaries of the ministries of Finance and Planning as well as Central Bank Governors in the 13 MEFMI countries.  The event has been held since inception of MEFMI in 1994. MEFMI is a regionally owned Institute currently with the following 13 member countries: Angola, Botswana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.

In her opening address, Hon. Kiwanuka said the MEFMI region should continue working towards finding appropriate solutions to economic and financial management problems that bedevil it and the rest of  Africa. She said the MEFMI Executive Forum, which provides the policy makers from the MEFMI region the unique opportunity to converge at one location to share information and ideas, should be used as a platform to craft pertinent solutions to regional challenges while sharing information on global macroeconomic challenges and opportunities.  The theme for the 2013 MEFMI Combined Forum was “The Role of Governments in Spurring African Economic Take-off”.

Said Hon. Kiwanuka, “I find the theme most pertinent for our region considering that since the on-set of the global financial crisis our economies are still struggling to recover.

Many of our governments today are faced with enormous tasks of consolidating fiscal deficits but quite frankly more challenging issues are placed squarely on our shoulders as policy makers. As policy makers, we are faced with the daunting task of reviving the private sector led growth and creating jobs in the short-term while at the same time working towards longer term sustainability and inclusive growth. Amid this puzzle, however, is a fact that governments’ efforts in stimulating private sector-led growth and job creation require clear and visible efforts of the private sector.”

Hon. Kiwanuka said the biggest challenge that the MFMI region is also facing currently is the large number of young people joining the labour force annually.  She said there is need to create a commensurate number of jobs to absorb the new entrants to the labour market. “It is my belief that governments world-wide need to provide clear, pragmatic national employment strategies and institutional frameworks that support sustainable private sector led growth as a key source of job creation.”

She said Uganda had developed such partnerships with the private sector in such areas as energy, education, transport and tourism. However most of these have taken the form of concessions in the development and management of existing government assets.

In his presentation at the Combined Forum, Mr Rohan Malik of Ernst & Young said job creation has become a topical issue as the global employment rate slowed dramatically in the last decade.  He said in the recent past a few countries have managed to reengineer and re-engage with the private sector in order to create employment.  He said one such country is India, which attracted investment worth $86 million which in return resulted in the creation of two million jobs in the country.

Mr Malik said globally economic growth had slowed down dramatically which has resulted in an average growth rate of 3.6 % against global unemployment of 6.4% or 200 million people. “What makes the issue of global unemployment scary is the issue of the standard of living of many people who are currently employed but can be classified as the ‘working poor’. These people make up about 800 million people – many of whom are in Africa – which brings the unemployment figure to about one billion people,” said Mr Malik.

He said the current youth unemployment rate in Europe is about 55%, a figure which is not far removed from the 50% youth unemployment rate in the Africa region.  Mr Malik said only 33% of economies in Africa have a GDP in excess of 6%.  He said the youth picture in Africa requires that more jobs be created in the Africa region to ensure that new graduates are absorbed into the job market. He said the biggest challenge is the projection that in 2020 there will be 60 million new job market entrants, in an environment where 200 million people are unemployed and close to 800 million people are termed the ‘working poor’ as their standard of living is not commensurate with the working class.

The Permanent Secretary in the Zimbabwe Ministry of Finance and Economic Development, Mr Willard Manungo, said employment creation efforts should link well with infrastructure financing through Public Private Partnerships (PPP). He said the PPPs entail a high amount of trust between government and business sector. He said the more governments open their planned investments to the private joint business ventures, the more likely they are to address the job creation problem. 

On another score, the officials at the Combined Forum confirmed that the fact that portfolio managers are now in search for extra yield in central banks through purchases of stocks in record amounts is evidence that trust is slowly being built as PPPs are taking root in the MEFMI region.