Making the Most of Demographic Change in Southern Africa

The countries of the Southern African Customs Union (SACU) have relatively diverse demographic and economic starting points. These economies have the potential realize demographic dividends, and experience an acceleration in their income per capita growth and poverty reduction progress through expected shifts in their age-structures. 35 to 75 percent of poverty reduction in 2015-50 in SACU economies could be attributed to demographic shifts in a business-as-usual scenario of economic development, if employment rates are at least maintained. However, due to their different demographic patterns and trends, qualitatively similar policy outcomes interact with their demographics to lead to varying growth and poverty outcomes. The magnitude of the demographic dividends could be higher if countries are able to achieve policy outcomes in parallel in the areas of education, savings-investment, and employment. Scenario analyses of these different policy outcomes interacting with the shifting age-structures in different ways, suggest quantitatively different economic impacts despite qualitatively similar policies. Improving educational attainment is found to be most important in Lesotho and Swaziland; mobilizing savings for higher investment can be most useful for Botswana; and improving employment rates, especially by closing gender gaps, can be most useful for South Africa and Namibia.