Panetta: Job creation crucial for Africa's demographic dividend

Over the next decade, approximately 1.2 billion young people are projected to enter the labor force in developing countries, significantly outpacing current job creation rates.

Africa alone is expected to host a quarter of the world's youth population by 2050.

Governor Panetta stressed that whether this demographic shift becomes an economic dividend or a source of instability hinges on the ability to generate adequate employment opportunities.

Unlocking private sector resources at scale, he noted, depends on fostering an environment where firms can invest, expand, and absorb labor.

This rests on two mutually reinforcing pillars: strengthening productive capacity, particularly infrastructure and human capital, and establishing credible institutions with high regulatory quality.

In developing economies, the infrastructure financing gap exceeds 4 percent of GDP annually, with energy and transport identified as critical constraints.

Better business regulation, conversely, stimulates firm entry, investment, and employment growth.

Governor Panetta noted that global economic progress, once driven by globalization, has become fragile due to the pandemic, trade disputes, protectionism, and geopolitical tensions.

Rapid technological change, especially AI, also reshapes labor markets, creating both opportunities and challenges.

He emphasized that converting innovation into job growth requires robust infrastructure, digital skills, access to finance, and credible institutions.

These conditions are unevenly distributed, with many low-income countries facing severe fiscal constraints.

Such constraints limit public investment and reinforce the urgency to attract private capital.

This integrated strategy, supported by the Italian Government's Mattei Plan and analytical work from the World Bank and Banca d'Italia, aims to transform Africa's potential into economic opportunities.