Nigeria has enjoyed very strong economic growth over the past decade and a half. Indeed, until the sharp decline in commodity prices over the last 18 months, seven of the 10 fastest growing economies in the world were in sub-Saharan Africa, inclusive of Nigeria which also became the largest economy in Africa after the rebasing exercise in 2014. This sustained growth helped to alleviate the burden of extreme poverty to some extent, with an appreciable reduction in the incidence of endemic diseases. As in many other African countries, Nigeria’s middle class is thought to have expanded somewhat even as environmentalconsciousness is becoming a topic of interest.
Evidence from Nigeria shows that the region has enormous capacity to extend the growth streak if it explores and leverages its exceptional demographic advantage. The International Monetary Fund (IMF) suggests that within the next decade, sub-Saharan Africa will be home to 25 percent of the global population of people aged 24 and below. In the same period and bracket, Nigeria’s youth population is projected to grow by 40 percent, according to UNPF data. It is also projected that by 2030, a mere15 years from now, the SSA region will need to expand its labour force more than the rest of the world put together. At its current estimated size of 180 million people and economic importance in Africa, Nigeria stands on the threshold of what could be the greatest opportunity in its history.
The foregoing could, however, become a double-edged sword, having equal capacity to save or destroy, depending on what the country makes of it. The United Nations Population Fund has estimated that without careful population growth, Nigeria could be the third most densely populated country with over 400 million by 2050. With a smart human capital development initiative Nigeria can successfully create needed jobs for its growing workforce, with the accompanying benefits of inclusive growth in per-capita income. Conversely, our inability to positively harness our youthful population could have unsavoury social-economic consequences such as we can’t even imagine.
To harness the growing population, experts say, the country will have to create about 25 million jobs over the next 10 years. That is a whopping 2.5 million of net increase in new jobs created annually from 2016 to 2025. Achieving this is evidently herculean from foreseeable realities, as this is orders-of-magnitude greater than the amount of new job creation currently happening in the economy. Indeed, the labour market currently has a low absorption rate into formal employment, with most jobs created through entrepreneurial self-employment or unpaid family work. A lot of these jobs are also in the informal sector where low productivity is a constant feature.
Today’s reality is that Nigeria’s youth unemployment is particularly acute and getting worse, with ever-diminishing prospects or hope. With an unemployment rate estimated at about 50 percent, the youths are disproportionately affected by the state of joblessness. This needs to change, not just because it condemns large numbers of young people to low living standards and represents a terrible waste of human capital that undermines future economic growth, but also poses a risk to social cohesion and economic stability.
One of the reasons for Nigeria’s stunning youth unemployment crisis is the limited opportunities in some of the most attractive sectors of the economy, compounded by the lack of basic technical and operating skills to be competitive in increasingly globalized industries. A good example is the oil and gas sector which, according to NBS data, accounts for about 9 percent of the country’s gross domestic product while petroleum exports represent over 90 percent of its exports revenue, but total employment is less than 1 percent of Nigeria’s working population of 33 million. For sustainable development, the country must continue supporting the oil and gas sector to continue investing in production and processing capacity in-country, while intensifying current efforts for diversifying the economy to job-creating sectors such as agriculture and critical infrastructure of power and transportation. These are the main job creation engines for countries that currently boast of sustainable development.
We applaud President Buhari’s focus on these strategic economic sectors. Our country’s urgent economic imperatives will not be attainable without significant focus and investments in the human capital requirements for sustained growth and national competiveness in an integrated global economy. By harnessing our exceptional demographic advantage Nigeria can quickly expand its productive capacity thereby safely situating itself in the future.
As partners in the development aspirations of Nigeria, GE Nigeria is very confident about the prospects of Nigeria becoming a leading force in the world, not just on the African continent. We believe this is achievable by leveraging Nigeria’s untapped human resources through the creation of a productive and globally competitive skilled workforce. Human capital is the most important natural resource and biggest enabler for growth, or biggest constraints to national aspirations.
We at GE recently conducted an in-depth analysis of skills gap challenges facing developing and mature countries alike and have come up with a White Paper titled “The Future of Work”, published by our chief economist, Marco Annunziata. This will be launched on Wednesday, December 2, 2015. We have identified a three-pronged approach which should help set the country on the trajectory of sustainable growth. These strategies are:
A stronger education system with closer links to industry. We believe that Nigeria’s education systems need strengthening with greater investment. There are insufficient colleges and technical schools to generate the needed skilled labour force. More students should be steered towards STEM subjects – science, technology, engineering and mathematics;
More open and flexible labour markets, and a broader talent localization strategy pursued in partnership with global companies. This includes providing the right conditions for domestic and international companies to invest and remain competitive in global markets. The creation of a level playing field without regulatory burdens and red tape, simplifying and streamlining administrative procedures and further improving transparency will most certainly congregate into a substantial acceleration in foreign investment and encourage global companies to scale up their operations and localize production in Nigeria with the attendant transfer of technology and skills; and
A stronger effort to build the pipeline of critical skills needed to successfully leverage the rapid technological advances of tomorrow. To remain relevant and competitive in the future workforce, our youths must become “digital natives”. Digital technology is integrating deeper into industries and promoting a new industrial revolution that will transform the way work is done, and redefine the competitive environment for companies and countries. Federal and state governments across the country should also encourage and leverage Nigeria’s entrepreneurial and innovative spirit, especially by solving the perennial challenges and constraints to growth, like power supply, transportation, education and healthcare.
GE is prepared to continue to partner with the people and governments of Nigeria on all these fronts as we have done over the years. We are confident that if all hands remain on deck, the future of Nigeria will be assured and secured in the hands of talented, confident and globally competitive workforce.
Lazarus Angbazo
Angbazo is CEO, GE Nigeria.
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