Developing tomorrow’s leaders

Dubai, UAE July 3, 2024

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A rapid expansion in the young and working age populations of many countries over the coming decades will offer considerable economic potential, but strategic investment will be needed to realize the full benefits.

Across the world, the population as a whole is getting older. The world’s median age is projected to be 36 by 2050, compared to 31 in 2020[1]. Between 2020 and 2050, the share of the world’s population aged 60 years and over will double from 1 billion in 2020 to 2.1 billion by 2050, while the number of persons aged 80 years or older is expected to triple over the same period[2].

Longer life expectancies and declining birth rates are two of the main contributory factors towards this trend. But depending on the existing demographics in the countries concerned, the effects of these trends will be very different. In particular, the number of younger people in society.

The demographic transition

In many richer countries, there is growing concern over the impact that having more older people to care for will have on healthcare systems. But in other regions, a significant growth in the number of young and working-age people, relative to those dependent on them, will lead to very different challenges and opportunities.

These differences can be explained by considering what stage a country is at in what is known as its ‘demographic transition’. Historically, most countries experienced both high birth rates and high death rates. But as societies became wealthier, with better nutrition and healthcare, death rates tend to decline. If the birth rate remains high, this leads to a rapid increase in population as more people are born but fewer people die.

Over time, as societies modernize and become wealthier, people tend to have fewer children and birth rates also decline. When the birth rate falls in line with the death rate, a country’s population stops growing rapidly and may even start to decline.

This process has already happened in countries as different as Germany, Chile, Mauritius and China^[3]. Some of these are now facing the challenges of declining populations that have larger proportions of older people. Research in 2020 forecasted that 23 countries would experience huge reductions in their populations by the end of this Century if current trends continued. Japan’s population was projected to fall from more than 128 million in 2017, to less than 53 million by 2100, while over the same period, the population in Italy was predicted to plummet from 61 million to 28 million^[4]. Countries like these, face the challenge of how to support their older generations as they grow in comparison to the working age population.

Dependency ratios

In contrast, those countries at an earlier stage in their demographic transition have the opportunity to benefit from a ‘demographic dividend’, a window of time when their youth and working age populations grow in proportion to the number of older age dependents to care for.

A 2019 report from UNICEF, predicted that in the Middle East and North Africa (MENA), “an unprecedentedly large proportion of [the region’s] population will move into their most productive years” in the coming decades[5]. The most favorable time will be the period until 2040, when the dependency ratio will be about 50 dependents (defined as children younger than 15 and older people aged 65 and over) for every 100 working age adults (those between 15 and 64 years old).

Between now and 2050, there will be large increases in the overall number of children and younger people across much of the MENA region – demographic changes that are set to have a major economic impact. By 2030, UNICEF says there will be an additional 2.4 million young people (aged between 15 and 24) across the region, and five MENA countries will see an increase of 40% or more. In Kuwait and Iraq, the number of youths will almost double in that time, adding 200,000 more young people in the former and more than 3.2 million in the latter. And the youth population in Egypt will rise by a third (33%), or 5.5 million. The highest annual increases for the region as a whole are expected in 2027 and 2028, with an addition of 2.4 million young people each year.[6]

Opportunities and risks

These countries, and others experiencing similar demographic trends, have an opportunity to leverage this ‘demographic dividend’ to help drive economic growth. A large young population entering the workforce has the potential to inject the economy with fresh energy, innovation and creativity – many African start-up founders are under 35, for example[7].

However, Geert Cappelaere, UNICEF’s MENA regional director, has warned that “a demographic dividend does not emerge automatically – it must be cultivated”. Healthy, well-nourished and well-educated young women and men, supported by inclusive policies in a climate of peace and stability, can bring unprecedented levels of growth and social progress to the region, he explained. “But if we don’t invest enough in children and young people, large numbers will continue to be excluded. Conflict and instability will prevail, and demographic changes in the region will become a burden rather than an opportunity,” he said.

Investment in young people

So, what can countries with booming youth populations do to make sure they make the most of these opportunities? This question is particularly pertinent in Africa, where 70% of people are under the age of 30 and more than 400 million young people are expected to enter working age by 2035. According to UN forecasts, more than a third of the world’s young people will live in Africa by 2050[8].

But the continent’s rapidly increasing young population faces serious challenges in finding work. While up to one million African people enter the labor market every month, fewer than one in four land a formal job[9]. According to the International Labor Organization (ILO), more than a quarter of young people in Sub-Saharan Africa are neither employed, nor in education or training (NEET)[10]. The Cities Alliance global partnership says that in the same region, informal employment as a percentage of total employment is 89% – meaning “many youths lack access to social safety nets, or any form of workers’ rights”.

At a summit in Tanzania in 2023, bringing together heads of state, heads of government and ministers from 43 African countries, Mamta Murthi, the World Bank’s vice president for human development, said in an interview that political commitment was more important than resources for addressing this challenge. “There needs to be more investment in young people,” she said. “They need to be well educated and there needs to be the kind of investment that creates jobs so that these young people with skills can be employed.”[11]

Delegates at the summit acknowledged that developing human capital in Africa requires coordinated planning and financing as well as resolute effort to strengthen the quantity, efficiency, and impact of investments in people. Their declaration made a number of commitments, including reducing learning poverty by at least a quarter by 2030 and improving literacy rates to reach 75% by 2030. To boost health, they committed to reducing the proportion of people with wasting, stunting, and underweight, and achieving 90% immunization coverage by 2030[12].

The summit also agreed a range of measures to promote job creation and economic opportunities. These included attracting domestic and foreign investment, promoting entrepreneurship, and supporting the growth of small and medium-sized enterprises. In addition, the countries will prioritize high-potential sectors such as agriculture, renewable energy, and digital technologies – and have committed to provide training to an additional 19 million people to gain digital skills for jobs by 2030.

Eyes on India

The challenges of realizing the human capital of an increasing number of young people are highly complex – as India is finding. Last year the country overtook China as the world’s most populous nation[13]. About two-thirds of its population is under 35, and its labor force is growing by millions each year[14]. India is experiencing rapid economic expansion – recently confirmed as the world’s fastest growing major economy, at a rate of 8.4%[15]. But despite this positive outlook, unemployment remains a problem for the country, particularly among the young. Last year a report from Azim Premji University in Bangalore found the unemployment rate for graduates younger than 25 reached 42% in June 2022[16]. The authors warned that over the long term, growth in GDP and employment growth were “uncorrelated”, suggesting that “policies oriented towards achieving faster GDP growth will not necessarily speed up job creation”.

A lack of skills among young people is one important concern. One survey last year found that three quarters of Indian manufacturers – in sectors including automative, engineering and electronics – were experiencing a skilled labor shortage that was hampering their profitability. More than a third of these (35%) said that the impact was severe[17]. These findings are backed up by an S&P Global analysis, which found that lower skill levels within Indian manufacturing meant in 2021 each employee was on average contributing just US$ $8,076 of value – far less than other countries such as Thailand (US$ $18,308) and Malaysia (US$ $34,402)[18]. Skills shortages are also occurring in other key parts of the economy. The country’s telecoms sector has a shortage of 2.41 million skilled workers, an industry body said in 2023 – expected to grow almost four-fold by 2030.[19] Also in 2023, the chairman of the major Indian conglomerate RPG Group posted about skills shortages on social media, saying[20]: “We want construction workers – we can’t find enough! We want truck drivers – huge shortage! We want plantation workers – they are not available! Can’t understand solution”.

To address such concerns, the Indian government has launched a range of initiatives aimed at boosting the skills of its population – particularly young people. The country’s National Education Policy[21], announced in 2020, sets out a comprehensive framework to transform the education system. It puts a key focus on foundational numeracy and literacy, with an aim to attain universal numeracy and literacy in primary schools by 2025, and 100% youth and adult literacy by 2035. Another important goal is improving participation in higher education, where it aims to increase the gross enrolment rate to 50% by 2035 (almost double its level in 2018) and propel Indian universities into the top 100 globally[22].

In addition, India’s Ministry of Skill Development and Entrepreneurship was set up in 2014, overseeing a range of funding and training opportunities for both businesses and individuals. Its flagship scheme, the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), was created in 2015 to develop industry-relevant skills in young people across the country to help them find employment[23]. To the end of 2023, it had provided training or orientation to about 14 million candidates. However, many of these have not yet found work. One analysis last year said that fewer than a quarter of candidates certified under PMKVY programs had been placed in a job[24].

Gender disparity

These statistics underline how there are no easy answers to seizing the demographic dividend – and that success is likely to come down to a complex interaction between connected factors.

In many countries, economists believe that gender is a crucial consideration. In India and many other countries with the potential for a demographic dividend, the participation of women in the workforce is low. The employment rate for Indian working-age women fell to 24% last year, compared to 29% in 2010. And there was a bigger fall for those under 25: from 20% to 12%.

Similarly, across Africa, more than a quarter of young people (72 million) are NEET (Not in Education, Employment or Training) – and two thirds of these are women[25]. In 2022, the NEET rate among young women in sub-Saharan Africa was 33%. And the ILO found that across seven countries it examined in this region, women aged between 15 and 29 had higher NEET rates and lower employment rates than young men.

These trends are influenced by social attitudes and practices. In sub-Saharan Africa, young women typically take on more household tasks such as cooking and childcare, leaving them less available to participate in education and the workforce. Social norms are also believed to be a factor in India – where in addition, there is a lack of jobs accessible to women, and safety concerns due to an increasingly urbanized population[26]. Many experts believe that overcoming such problems will be crucial to countries reaching their economic potential. As Radhicka Kapoor, a visiting professor at the Indian Council for Research on International Economic Relations think-tank, told the Financial Times, “you really cannot realize your demographic dividend with half of your population not even in the labor force”.[27]

Saudi success

One country that has seen a notable improvement in this area is Saudi Arabia – which with its median age of 22, is well-placed to reap a demographic dividend in the coming decades[28]. An analysis last year by S&P Global found that female participation in the country’s workforce reached 36% in 2022, nearly double its level of 19% in 2016. The change is believed to be down to factors including “improved access to education, declining fertility rates, and a more inclusive cultural environment”, according to Arab News[29]. In 2020, almost a third (32%) of women aged 25 and above in the country held at least a bachelor’s degree – a significant increase from 2017, when the proportion was about a quarter (26%).

The growth in workforce participation is expected to boost the Saudi economy by US$ $39 billion (3.5%) by 2032 and underlines the importance of government action in realizing the demographic dividend. The change follows the government’s Vision 2030 program, which among other goals, seeks to boost “women’s empowerment and youth engagement”[30]. A report this year from the World Bank[31] said the Saudi government’s “strong display of commitment and vigorous communication around female empowerment” was an important factor supporting the rise in participation.

It also highlighted the importance of “major legal reforms and new programs to promote female employment”, alongside structural economic changes and the impact of the COVID-19 pandemic.

Building partnerships

Although state activity is important, successful attempts to reap a demographic dividend will also need to mobilize the power of private investment. According to UNICEF, in MENA countries the necessary job creation must be “private-sector driven”[32] to reduce a previous reliance on the public sector to absorb new labor market entrants. Its report on the region calls for countries to “level the regulatory playing field” to support the growth of small and medium enterprises and position themselves to take advantage of the rapid changes in technology that constitute the fourth industrial revolution.

Education is one key area where the potential for partnerships between governments and businesses is being explored.

In Saudi Arabia, the government has recently been focusing on the potential of technology in transforming and enhancing the education sector, a ministerial adviser recently wrote[33]. The Saudi government believes the country’s sizeable youth population, combined with its prioritization of both digitization and education, offers a fertile ground for both local and foreign investors in areas including virtual classrooms, online learning platforms, and developing educational content. It is supporting the EduTech sector’s growth through initiatives such as regulatory reform, financial incentives, and working with schools and colleges.

Hicham El Habti, the president of Mohammed VI Polytechnic University in Morocco, believes the transformations needed within Africa’s higher education system must also involve the private sector[34]. Education programs “must be reimagined to nurture the entrepreneurial spirit that benefits society”, he argues, saying that any viable system “must harness multiple synergies between Africa’s universities, industry and business”.

A decade ago, his own university was established with a focus on the priorities of its industrial partner – the mining and manufacturing business OCP Group – but it now supports study in a wide range of areas across science and technology, business and management, and the humanities. Encouraging collaborations are also evident in India, where global firms including Microsoft and IBM are supporting programs to develop digital skills among young people in areas such as AI and cybersecurity.[35]^,[36]

Such partnerships offer exciting examples of how governments and businesses can work together to help unleash the capacities of youth populations – a task that will be crucial to many countries’ future prospects. Describing young Africans as his continent’s “most valuable asset by far”, El Habti writes that “only through embracing their drive can Africa truly reach its potential”.

The Jameel family is playing its part to enable young people in the MENA region and elsewhere to achieve their potential and make a meaningful contribution to the growth of their communities. Since 1994, for example, we’ve helped around 200 young people from around the world to achieve their potential by studying at the Massachusetts Institute of Technology (MIT) in the US, through Community Jameel’s Jameel-Toyota scholarship program. Many alumni of this scheme go on to successful careers in business and academia, where they can contribute to building a sustainable future.

In addition, Fotowatio Renewable Ventures (FRV) – part of Abdul Latif Jameel Energy – runs their ‘Talented Young leaders’ scholarship program at Spain’s Instituto de Empresa (IE) university. The initiative supports students from locations close to FRV’s sustainable developments to study at IE, covering all training and education costs across a four-year course.

Pictured (L-R): José Tomás Burguillos, Daniel Sagi Vela, Chief Execuitve Officer, FRV, Mara Sánchez, Gonzalo Garland, Executive Vice President, IE Foundation Javier Huergo, Chief Investment Officer & Treasurer, FRV, Diego Hernández and Milena Avagyan, at the event to award the 11th FRV Young Talented Leaders Scholarship at IE university in April 2024. Photo Credit © FRV.

Community Jameel Saudi, one of the global philanthropies of the Jameel family, also leads a number of programs aimed at younger people in Saudi Arabia. Bab Rizq Jameel (BRJ) or ‘beautiful gateway to prosperity’ in Arabic, helps young women and men in Saudi Arabia, to find work. It matches people to jobs and helps create opportunities for employment as a step towards economic independence. Today, BRJ offers vocational training programs and youth-oriented employment training programs for men and women and young entrepreneurs/small businesses.

The MIT Enterprise Forum (MITEF) in Saudi Arabia is part of a global network of chapters dedicated to the promotion of entrepreneurship and innovation worldwide. As a key partner, Community Jameel Saudi seeks to inform, connect, and train Saudi entrepreneurs, enabling them to rapidly transform their ideas into companies that can reshape the world.

Established in 2015, with the goal of promoting and enriching the entrepreneurship ecosystem, the forum aims to celebrate and support all potential startups, entrepreneurs, and social enterprises in Saudi Arabia through the start-up competition today known as SmartStart Saudi – across all fields and industries. And it has proven truly successful with over 9,500 applying to the competition, which has gone on to award SAR 1.91m in equity-free investment for project advancement. Some 120 start-ups have been born, creating mor than 200 jobs and overall, around 8,000 young entrepreneurs have benefited from the program.

At a regional level, MITEF Pan Arab’s main goal is promoting and enriching the entrepreneurship ecosystem in the Arab World, while supporting startups and entrepreneurs in the region through a diverse portfolio of programs and initiatives.

Within Abdul Latif Jameel, we recently relaunched our two-year Jameel Management Trainee Program to nurture the next generation of global leaders. The initiative blends elements such as mentoring, group coaching, and individual assignments to support promising young people in Abdul Latif Jameel locations across the world to realize their potential. The investment also gives us access to a larger talent pool of candidates who are both adaptable and tech-savvy – attributes that are increasingly important to our own business and the global economy. As Mariana Merino – who leads the center of expertise in Abdul Latif Jameel’s corporate HR and Kaizen department – has commented, the scheme helps build “versatile associates who can adapt to various roles and challenges”.

The trainee program also contributes to our wider efforts to instill a consistent, positive culture throughout the business. Based on our four core values – Respect, Improve, Pioneer and Empower – the Jameel Principles provide a clear framework to guide actions and decisions. They recognize that success requires people, not only with the right skills, but also the mindset required to make use of these effectively and responsibly.