The World Bank Group has warned that developing economies, including Nigeria, face a major employment crisis as millions of young people enter the workforce without sufficient jobs to absorb them, posing risks to economic stability, migration pressures, and global security.
In a blog post, the Washington-based institution described demographic shifts in developing countries as one of the most significant yet underappreciated forces shaping the global economy over the next decade.
It projected that about 1.2 billion young people in developing nations will reach working age in the next 10 to 15 years, while current trends suggest only around 400 million jobs will be created in the same period — leaving hundreds of millions without productive employment.
World Bank President Ajay Banga noted that while immediate crises like conflicts, technology disruptions, and market volatility often dominate headlines, slower structural forces — including demographics, food and water pressures, and globalisation — will have deeper, longer-lasting impacts.
“This challenge is not only a development issue,” Banga wrote. “It is an economic challenge and increasingly a national security concern.”
The bank warned that failure to close the employment gap could strain public institutions, fuel irregular migration, social unrest, and insecurity — especially in regions with rapidly growing youth populations.
It pointed out that the jobs issue received limited attention at recent global forums like the World Economic Forum in Davos, where more immediate geopolitical and economic topics took precedence.
The institution urged policymakers to prioritise job creation in upcoming international discussions, including G-7 and G-20 meetings, noting that early action could turn demographic growth into an economic advantage rather than a destabilising force.
To tackle the challenge, the World Bank is advancing a jobs-focused strategy with three core pillars:
1. Infrastructure development — Investing in physical (electricity, transport) and human (healthcare, education) infrastructure as the foundation for private investment and employment growth.
– Example: A skills centre in Bhubaneswar, India, trains nearly 38,000 people annually in programmes aligned with labour market needs, with most graduates securing jobs or starting businesses.
2. Business environment reforms— Creating predictable regulations and clear policy frameworks to encourage entrepreneurship and investment.
– The bank stressed that micro, small, and medium-sized enterprises — which generate most jobs in developing economies — depend on enabling conditions.
3. Private-sector support— Providing financing tools such as equity investments, guarantees, and political risk insurance to help firms grow and reduce investment risks.
– Example: A trade finance guarantee for Banco do Brasil in Brazil is expected to unlock about $700 million in affordable financing for small businesses, particularly in agriculture.
The World Bank identified five high-employment-potential sectors: infrastructure and energy, agribusiness, primary healthcare, tourism, and value-added manufacturing — based on evidence from country experiences showing where resources yield the greatest job impact.
It argued that addressing the jobs gap is not a zero-sum game between developed and developing nations. By 2050, over 85% of the world’s population will live in developing countries — representing both the largest future labour force and a major source of consumer demand.
Growing developing economies could become stronger trading partners and more resilient supply-chain hubs, benefiting advanced economies through expanded markets and reduced migration pressures.
The bank said the primary barrier to investment in developing markets has been risk — both real and perceived — rather than lack of opportunity. Development institutions can help by financing infrastructure, supporting reforms, and reducing uncertainty.
“If we get this right, demographic change can become an engine of growth and stability,” it concluded. “If we get it wrong, the world will continue reacting to crises that were visible years in advance.”
