BusinessDay

How to dent Nigeria’s unemployment crisis

As many as 23 million Nigerians, a third of the 69.7 million-strong labour force in Africa’s most populous nation, wake up every morning with no job to do.

That is the population of 35 of Africa’s 54 countries, and the number will continue rising as population growth continues to outpace output expansion. Nigeria is expected to be the world’s third-most-populous country by 2050, with over 300 million people, according to the United Nations. The economy has however not grown in per capita terms since 2015, especially taking into consideration the government plan of lifting 100 million Nigerian out of poverty by 2030.

Job creation should be central to the government’s effort to eradicate poverty but there are impediments that need addressing.

Nigeria’s unemployment rate of 33.3 percent is at a record high, but that is not the only problem. Most people work in the informal sector, which makes it difficult for them and the economy to enjoy the benefits that come with working in the formal sector.

To create more jobs and reduce poverty, part of what is needed is for the informal sector to be formalised.

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“We need to formalise the informal sector through capacity building of workers so that they can develop soft and literate skills to understand the corporate working environment, in order for them to turn their craft into lucrative businesses that can generate revenue outside Nigeria,” Jennifer Oyelade, director of Transquisite Consulting, an international human resource consultancy, says.

Most Nigerians that are fully employed or working more than 40 hours per week have at most a Senior Secondary School Leaving Certificate (SSSC) and are between the ages of 35 and 44, with most of them in agriculture, trade and teaching.

An analysis of data from the National Bureau of Statistics (NBS) shows that there are 69.7 million people in the labour force or currently active population, out of which 30.6 million are fully employed, while those who are unemployed (work less than 19 hours or with nothing at all) are 23.2 million.

A further breakdown of the 30.6 million employed shows the most employed persons are those with SSSC (9.7m) followed by no education (8.4m) and First School Leaving Certificate (4.2m).

The listed education qualifications are the same in the unemployed category of 23.2 million people with SSSC, no education and First School Leaving Certificate having 8.2 million, 5.9 million and 2.9 million. Also, in the age category, people in ages 25-34 are mostly unemployed.

Kola, a 23-year-old SSSC holder, works as an electrician in order to sponsor himself to the university, likewise, Tunde, a 34-year-old graduate of Banking and Finance, who ended up doing menial jobs despite finishing university with good grades.

“After I graduated in 2013, I took up a teaching job, and then worked as an assistant fund manager in a hospital in Oyo State for four years. And since it was a contract job, I stopped, and then came to Lagos. But I could not get a job and since I don’t want to starve, I had to go for the only available job I could get, which is cleaning,” Tunde said.

Ayodeji Ebo, head, retail investment, Chapel Hill Denham, states that the government is not creating a lot of skilled opportunities.

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“The government needs to intensify its effort to begin to train them on certain skills so that they can be skilful in the areas they choose to be,” Ebo advises.

Labour is seen as the only asset that can be used to improve a person’s well-being, especially for the poor. That is why providing decent jobs that can both secure income and empowerment for the poor is critical.

Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), believes that creating an enabling environment for small and medium enterprises (SMEs) could create more employment opportunities.

“We have about 41.5 million enterprises, according to the NBS. Imagine 10 of them create one job that will be almost four million jobs created in a year. So, there has to be a framework or policy across the enterprises so that they can be able to expand, thereby employing more people,” Yusuf says.

He also notes that construction due to more buildings being built and the ICT sector are other areas that can create more jobs.

But Damilola Adewale, a Lagos-based economic analyst, doubts if the plan is achievable due to the implementation deficiency of Nigerian policymakers.

“Looking at the new strategy, the goal is kind of ambitious. Lifting 100 million out of poverty by 2030 seems unrealistic going by the current living conditions as poverty has elevated,” Adewale states.

President Muhammadu Buhari has on several occasions promised to lay the foundations necessary to lift 100 million people out of poverty within a decade. This means that for each year, an average of 10 million jobs has to be created to lift people out of poverty.

Africa’s biggest economy could take lessons in reducing poverty from other countries like China, Vietnam, Bangladesh, India, etc, where it shares similarities in terms of high population.

For China, the creation of a large number of low-skilled jobs in the manufacturing sector has lifted more than 800 million people out of poverty since 1978. Vietnam has also eliminated the extreme poverty rate from 36 percent in 2000 to 2 percent in 2015, thanks to light manufacturing, especially in the textile industry that emerged as an important source of growth and productive employment.

Also, Bangladesh’s 8 million people lifted from poverty between 2010 and 2016 can be linked to robust economic growth and an increase in labour income from the manufacturing industry.

“Low-value manufacturing, which was the forte for the development of South Asian economies, is a sector that Nigeria can look at to create more jobs because it has less complexity compared to high-tech manufacturing, and we can easily compete in that area compare to more complex manufacturing,” Omotola Abimbola, a macro and fixed-income analyst, says.

But Ayo Teriba, CEO of Economic Associates, believes that lifting people out of poverty cannot be done through creating more jobs but by trying to get money into their hands, particularly when you have the reality of lockdown that has displaced people who used to be employed.

“In many countries, the fact that you are unemployed does not mean that you are poor because they give unemployment and social security benefits so that the unemployed will not fall into poverty,” Teriba states.

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