By the middle of this century, Africa is expected to have a significant impact on the global population and workforce. Ajay Banga, speaking at the G20 Finance Ministers & Central Bank Governors Meeting in Durban, South Africa, highlighted that one in every four people on Earth will be African. The continent is poised to have the largest and youngest workforce globally.
Banga emphasized Africa's potential with its abundant land and water resources that could help feed a growing planet. Its critical minerals are essential for powering electric vehicles and solar panels. However, he noted that realizing this potential requires strategic investments focused on opportunity rather than need.
The challenge remains daunting as 1.2 billion young people will enter the workforce in developing countries over the next decade, competing for only 400 million available jobs. In Africa, nearly half of this generation risks being left behind, which could lead to instability and migration affecting various regions.
Banga stressed the importance of private-sector job creation, which accounts for 90% of employment through small businesses. He outlined how the World Bank Group supports this by combining public financing with private sector support across three steps: public investment through IBRD and IDA; policy reform via their Knowledge Bank; and access to capital facilitated by IFC and MIGA.
The focus is on five sectors with high job-creation potential: Infrastructure, Agribusiness, Healthcare, Tourism, and Value-added Manufacturing. These sectors are seen as growth industries capable of building middle classes without outsourcing jobs from developed countries.
To attract private investment where risk is managed and returns are possible, Banga mentioned initiatives like supporting governments committed to regulatory reforms through pay-for-results financing (e.g., M300), creating a single window for guarantee risk products, increasing local currency lending by IFC, launching the Frontier Opportunities Fund to absorb first-loss risk, and standardizing development loans for institutional investors.
Banga also highlighted the Compact with Africa initiative led by Germany and South Africa. The first phase helped 13 countries modernize systems to attract more private sector investment. Now entering its second phase, efforts will focus on countries showing strong reform momentum to create environments conducive to business growth.
"Each brings us closer to the scale of investment development demands," Banga said. "But no one player can do this alone." He emphasized collaboration between governments leading reforms while institutions support them so capital can flow effectively.