21 February 2013

Kenya: Rwanda Reaps As Workforce Set to Grow

Photo: Shawn Phillips/USAID
Rwandan citizens.


From almost every point of view, Rwanda's performance over the past decade has been an unambiguous success story.

Between 2001 and 2011, Rwanda's economy grew by 8.2 per cent per annum, earning the country a spot on the list of the ten fastest growing countries in the world.

Poverty rates fell by 14 percentage points, effectively lifting more than one million Rwandans out of poverty. Social indicators followed the general trend: Net enrolment in primary school increased to almost 100 per cent, completion rates tripled, and child mortality decreased more than threefold, hitting the mark of two-thirds reduction as targeted by the Millennium Development Goals.

Yet buried under all this good news lies another maybe even more important evolution. After a decade-and-a-half, total fertility rates in Rwanda dropped from 6.1 in 2005 to 4.6 in 2010. This means that during a period of five years, the average number of children a woman of childbearing age can expect to have has declined by 1.5.

This is a huge drop, and an unprecedented one in the history of the Demographic and Health Surveys. This trend is being confirmed by other surveys: The child dependency ratio, which stood at one in 2001 dropped to 0.9 in 2011. Similarly, the 2012 census put Rwanda's population at 10.5 million, half of million lower than initially projected.

So what does this all mean? It means that after stalling for 15 years, Rwanda's demographic transition seems well on its way. That is good news: During any demographic transition there is a particular moment - the "Goldilocks" moment - where there is an exceptional bulge of working-age adults. Because fertility is falling there are relatively few children.

And since life expectancy is still relatively low, there are few elders to take care of. The result is a bulge in working-age adults and a dramatic decline in the dependency ratio, what is called the "demographic dividend".

To illustrate its potential, research shows the demographic dividend and explains up to one-third of the extraordinary growth many East Asian countries experienced between 1965 and the 1990s (the "East-Asian Miracle").

The bulge in working-age adults in Rwanda is approaching: Working-age population is set to grow by two million in 2022, hence increasing its share in total population to almost 60 percent (up from 55 per cent now). And the transition is projected to accelerate after 2025, when working age population will grow much faster than both the youth (younger than 15) and the elderly.

This provides a unique opportunity to Rwanda's development: Providing this large, young and energetic workforce with productive employment will boost output and put the country on a path to long-term development.

However, It also provides a unique threat: Failing to do so will not only mean foregoing this unique window of opportunity, but also the risk of social upheaval due to a growing mass of unemployed young adults.

The demographic dividend is not a given. But if it is well prepared for, and the right policies are in place, it may positively transform Rwanda in the decades to come.

Tom Bundervoet is a poverty economist at the World Bank in Rwanda

Source: The World Bank blog 

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