BusinessDay

Frustration grows as lack of jobs rack Nigerians

Nigeria’s unemployment crisis, the worst since the country’s transition to democracy in 1999, is unrelenting and waging a continuous war on the people.

Some 23 million Nigerians are unemployed, according to the National Bureau of Statistics (NBS), the equivalent of the population of the Netherlands and Singapore combined.

The unemployment rate of 33.3 percent is the second highest globally after Namibia. What is worse is the forecast by economists that the rate could hit 40 percent by the end of 2021. Sadly, the pain of unemployed Nigerians is however not limited to simply having no jobs.

Unemployed workers do not only lose their income, but their minimum security and their health benefits. They lose the capacity to update themselves in their professions. They lose their identity. Their families are unstructured. Their lives are unstructured. A family in which all members lose their jobs lives the reality of hunger, lack of housing, illness and poor or no education.

Vou was sacked from her job in a bank in 2017. It was in the aftermath of Nigeria’s first recession in 40 years. She had spent 11 years with the bank working mainly in operations, she said.

“We came to the office one Monday and many of us found that we could not log into our systems. We later got our sack letters and were told to go home. They told us that if the economic situation improved, they would call us back,” she narrated.

The economic situation has not improved much since then. Over 8,000job losses were recorded among bank workers in 2017, the trend was similar with over 3000 employee layoff in the banking sector between 2015 and 2016, respectively.

About 44,664 contract staff on the payroll of commercial banks have been reduced by over 5,000 as well as over 2,000 junior staff losing their jobs, among others. According to the NBS, almost 8,000 job losses occurred in the sector in the first nine months of 2020.

Vow was paid her entitlements four months later. She moved to her hometown, near Jos in Plateau State and poured her entire savings into farming Fonio and Maize. It was a large farm, and Vou had plans to pour her accounting degree and financial management experience to turn it into a profitable agro-business outfit supplying Fonio, Corn and in the future, green vegetables to markets in Lagos and the South.

As the crops grew lush on fertilizer and care, the cows came. The cattle herders simply led their cows into Vou’s farm and ate up her crops.

“It was scorched-earth,” she said, “I watched them destroy my farm. They ate it all up. I called the police and they did nothing. Cows just come and eat up peoples’ sweat and livelihood and nothing happens to them.”

With all her savings gone, Vou lives with her mother in Jos and has spent the last four years applying for jobs. “It has been a terrible period. I have no income, no money. I depend on friends and family to survive. I have become a burden to my poor mother who I should be taking care of. The worst thing is that it looks as if I am lazy whereas I am willing to work. I just do not know where to start from”.

The absence of a functioning social security system capable of providing support to households that have lost jobs and income make job losses in Nigeria especially caustic. Nigeria’s constitution does not provide a legal right to social security, and as noted by Human Rights Watch, Nigerian laws create no entitlement to unemployment or child benefits. Nigeria does have a pension scheme open to employees in the formal and informal sectors, but enrolment is only about 40 percent nationally, according to the World Bank.

Jobless, with no incomes and battered by rising food prices, insecurity and the absence of any form of government support, more than 20 million Nigerians and their families are left hungry.

“A combination of rising unemployment, booming demographics, and unfulfilled aspirations is increasing the pressure on young Nigerians to migrate internationally in search for gainful employment,” a recent World Bank report noted.

“With limited legal migration options, young Nigerians are increasingly choosing irregular alternatives to find better work opportunities overseas.

Terver lives in Abuja. He worked for a Lagos-based FMCG manufacturing company for 14 years as a Sales Representative in Kano and Kaduna states. He was sacked from his job in mid-2019.

“They let us go two years ago after the company closed over 80 percent of its production capacity”. The company, he said, closed shop because the economic crisis led to poor sales and hence low production.

Terver has tried to find work, “any work,” he said. “I have three children; they are all out of school now. I cannot afford to pay their school fees, so they have had to stay home and be home schooled by my wife since last year.”

His wife also lost her job as a casual worker in a bank in 2018.

Terver said what he fears most is a health crisis in the family. “If any serious health crisis crops up now, I’m so scared that I would not be able to afford the money to deal with it. I am afraid to lose any of my children or wife to sickness. The thought keeps me awake at night.”

Terver’s fear for his family is driving him to consider making the long tortures journey to Europe via Libya. He fully understands the risk to his life. “What can I do,” he asked, his hands wide open, his face painted in frustration. “I just can’t stay here and mope around, always hoping to get an elusive job while my children go hungry. Nothing kills a man more than seeing his children hungry.”

Why is unemployment growing?

President Muhammadu Buhari claims his regime has lifted 10 million Nigerians out of poverty, the World Bank maintains that 7 million Nigerians became poor under Buhari in 2020.

The inadequacy of job opportunities in Nigeria, noted a 2015 World Bank report, “is at the core of high poverty levels, regional inequality, and social and political unrest in Nigeria.”

Having a job is often understood as receiving a wage, enjoying a minimum standard of living, and having some access to social security such as health and pension.

Nigeria’s economy has been in a macabre freefall since 2015. Driven by a salad of extremely unsavoury fiscal policies by a government more keen on handing out petty cash as social welfare schemes to drive growth, taxing a shrinking economic base to access funds, and a widely ridiculed monetary policy regime from a Central Bank that has woefully failed to maintain financial stability in over six years, President Buhari’s administration’s incapacity to stabilise and grow the economy has left most Nigerians befuddled.

Quick to blame everyone but himself, Buhari in an interview in July blamed Nigerian youths for the deteriorating rate of unemployment. The youths, he said, need to be of good behaviour so that foreign investors can come into the country.

“Nobody is going to invest in an insecure environment… If they want jobs, they will behave themselves,” he said.

Revenue declines and higher costs have negatively affected businesses in Africa’s largest economy, leading to unprecedented job losses, the highest ever.

Read Also: How age as job criterion worsens Nigeria’s unemployment crisis

Policy inconsistencies by the Nigerian government, says Ndubisi Nwokoma, professor of Economics at the University of Lagos, has led to a lot of uncertainties.

Since the Buhari administration came into power in 2015, he said in a report for the ‘Conversation’, “there has been a lot of policy change with the “command and control” posture adopted in managing the economy.

For instance, exchange rates were left fixed for the first year of the administration until the distortions in the market became chaotic before some form of flexibility was allowed in the determination of the exchange rate, following market forces. Also land borders were arbitrarily closed to imports, despite the huge damage it could have on the country’s trade within the ECOWAS sub-region. This had a direct impact on prices of items.

“These policy somersaults have caused capital flight. The political uncertainty played a role in the downward trend of markets. In the equities market, huge foreign portfolio investments were lost to the economy. There has also been a downturn in portfolio investments, fixed capital investment, foreign direct investments and capital importation. There was also a record decline in capital importation of about $1,548.88 million in the fourth quarter of 2016, a 15% decrease from the third quarter of same year. And in the first quarter of 2017, capital importation was recorded to be about $908.27 million.

“The result has been job losses and the dwindling capacity to create jobs.”

The government’s flamboyant claims of growth and ‘revolution’ in the agricultural sector has proved to be untenable with agriculture’s share of GDP falling, and farmers-herders’ clashes cutting food production across the country, leading to steep rise in food prices. Manufacturing and other sectors have also been adversely affected

Professional services firm, KPMG, in a 2020 report described the country’s policy environment as volatile, uncertain, complex and ambiguous. On the uncertain landscape of the economy, the firm stated that the uncertainty that surrounds the Nigerian economy limits decision-making capabilities. Some examples listed include the sudden border closure, ban of use of motorcycles as means of transportation in some states, etc.

On the other hand, the report noted, the complex environment reflects “in multiple taxation, stamp duty, increase in electricity tariffs and so on. While the ambiguous landscape is characterized by the exchange rate systems, which have made the economy unattractive for foreign direct investment.”

On the low level of productivity, the report revealed that low productivity was a critical problem limiting economic potential of individuals and firms in Nigeria, asserting that Nigeria’s productivity level had been trending below the country’s GDP, as labour productivity continues to slope to the negative region.

Nigeria, it noted, “has been faced with declining GDP per capita since the aftermath of recession in 2016,” and asserted that “limited income growth, increased taxes, electricity tariff hike, inflation and high unemployment are key issues that affect consumption power.”

The firm further noted that the social wheel of pressure in the country was spinning, as 31 percent of the youth-led labour force was unemployed, meaning the key engine for Nigeria’s growth remains grossly underutilized.

What must be done

Providing enough productive jobs for Nigeria’s young and growing population presents a particular challenge, especially at a time of weak economic growth.

As posited by the World Bank, labour is the main asset for the world’s poorest people. This means that the labour market is “the primary vehicle through which the proceeds of economic growth are spread to households and individuals. Therefore, understanding the labour market is crucial to achieve Nigeria’s aspiration to lift 100 million people out of poverty by 2030.”

It will be critical to invest in human capital, recouping learning lost due to insecurity and long years of poor investment in education by the state. Doing this will not only provide workers with the skills needed to prosper in the labour market and create jobs themselves, but as argued by the international financial institution, “could also aid the country’s fertility transition, so that the proceeds of growth are shared among fewer people, enabling a faster rise in living standards.”

Secondly, the policy framework has to be more stable. The Nigerian government needs to address insecurity so people can thrive in their business. The government must also undertake macroeconomic reforms around exchange-rate, trade, and fiscal policies to help the economy broaden away from oil and kindle the structural transformation needed to create good wage jobs.

There are quick-win strategies too. Nigeria, said Ndubisi Nwokoma, must also encourage investment. “There’s a very low level of deposit rates. And it is unattractive to invest even in treasury bills or other securities. The rates are low, and the inflation rate is much higher. So every day your money loses value. The infrastructure for small scale production, including electricity supply, is poor and people have to provide their own.”

While Buhari believes agriculture is the best route to reducing unemployment, this dated worldview is untenable. Better jobs are generally found in modern, productive enterprises.

Therefore, the only way to improve youth’s income-earning prospects significantly and sustainably is to improve all employment and earnings opportunities through economic transformation. Economic growth without transformation is much less effective.

As aptly noted in a 2021 Brookings Institution report, “transformation, through the creation of modern, higher-productivity firms, can gradually replace informal employment with formal employment.”

The best way to increase good formal sector wage jobs is to encourage the entrance and growth of large firms, since it has been proved that large firms play an outsized role in economic transformation and employment creation since they tend to use newer technology, pay higher wages, and are more likely to export.

They push transformation forward and support resiliency because they are better able to weather economic storms. They often structure the market for medium and smaller firms operating in related sectors who will be their suppliers and retailers, thus helping to ensure their survival as well.

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