African economies face rising risks from reshoring

Significance

As the need for cheap and low-skilled labour falls, wage differentials between Africa and other regions will cease to be a major draw for multinational firms and foreign investors, who may seek to re-shore or near-shore operations, triggering job losses and dampening new job creation.

Impacts

• Job losses threaten to exacerbate youth unemployment and discontent in a continent where 70% of the population is under 30.
• The pandemic has increased the cost and risks of international supply chains.
• Africa’s tech sector will expand but its spread is regionally uneven and its impact on job creation will be limited for now.