How Automation Is Changing The Landscape Of The African Labor Market

Technological innovation across Africa continues to thrive. There are over 600 tech hubs across Africa, according to a report by Briter Bridges and AfriLabs. However, as the continent embraces technological changes and progress, there is also rising concern about the impact on Africa’s labor force. In the past, African countries have faced difficult challenges in their labor market including the exporting of valuable human resources abroad. Now, with automation driving further disruption and a dramatic reshaping of the African labor market, the future of the labor market remains yet to be determined.

The Education/Skill Gap Is Set To Widen Without Urgent Retraining Protocols

Africa one of the highest rates of education exclusion across the globe. In Sub-Saharan Africa, approximately 60 percent of children aged 15 and 17 do not go to school. In Ethiopia, less than 20 percent of children finish primary schools, according to estimates from the Worldbank. Meanwhile, a significant percentage of African millennials cite financial roadblocks and lack of capacity in tertiary education for their lack of secondary or further training. Thanks to these formidable barriers to higher education, a large percentage of the African workforce end up turning to low skilled or customer-facing jobs.

However, with automation primed to replace many of these repetitive and low skills roles such as those in customer call centers, many workers will be left unemployed unless they can access the right retraining to successfully integrate into the automation age. A past survey by IBM estimated that 120 million workers worldwide would need to be retrained for automation and AI by 2022. The question remains whether companies, both local and international, will be willing to invest in Africa’s labor market and provide them amply opportunities to retrain and upskill.

Key Employment Sectors Of African Economies Remain Vulnerable

The African continent has become renowned for its contribution to certain industries such as agriculture, trade, and most recently logistics and supply. The agriculture sector is the largest economic sector across Africa- the top 10 countries account for 75 percent of the total agricultural output. McKinsey’s Winning in Africa’s Agricultural Market revealed that up to 60 percent of the sub-Saharan African population are smallholder farmers. They contribute to the 23 percent of GDP the continent enjoys from the agricultural output. However, such industries are also incredibly labor-intensive and community-oriented. While automation has helped to connect small farmers with more credit options, other industries like logistics are eradicating the need for human capital drastically. For instance, robo-lorries are redesigning the logistics industry by reducing the need for drivers, saving companies money but leaving many African employees in the shipping industry vulnerable for redundancies.

There is also the gap between the continent’s population growth and job availability thanks to automation. A diminishing need for human capital and a rapidly growing population can mean a labor market surplus like never before. Countries like Nigeria are ranked in the top 10 countries with the highest population, and set to grow exponentially in the next decade. For instance, the pan-African Ecobank Transnational has over 11,000 employees across 30 African countries. Automation of key bank functions such as anti-money laundering analysis and claims processing will leave key personnel out of work—and contribute to a rising unemployment rate across the economy.

Diminishing Bargaining Power Of The African Labor Market

Two of the most mentioned benefits of automation has been the improved productivity and reduced cost it can provide industries such as manufacturing and customer service. However, while this provides measurable benefits to investors and companies, automation is also reducing the bargaining power African workers and labor unions bring to the table. African economies such as Nigeria already face challenges in providing a livable wage for their workers. Recently, the government raised the minimum wage to $998.6 but 40 percent of Nigerians still live below the poverty line.

Increasing automation rates provide competitive labor costs to manufacturers and companies, in an already competitive labor market. With a clear skills gap and a large population of low skill workers in the African labor market, workers may find themselves facing wage reductions or lower factory wage offers as they fight to remain employed. It also places pressure on African workers to upskill or risk falling behind. While entrepreneurship is a bright light in Africa, a recent report by Accenture Nigeria found that over half of African consumers with choose products and services bases on a business’ AI capabilities instead of branding. With a rising preference for technologically driven products and services, both the employed and self-employed will be in a weakened position for business and professional success without the appropriate training.

However, it is not all bad news for the African labor market. The introduction of automation into African economies presents multiple opportunities for African companies to enter new markets, improve their competitiveness, and boosting labor productivity in key industries like manufacturing- if done right. To do so, the market must begin to prepare itself now by investing in the technical skills of workers, improving its internet access, and accelerating its technological agenda amongst all African workers, young and old.