Nigeria and other countries in the Sub-Saharan Africa (SSA) region have the highest rates of self-employment and unpaid family employment in the world, according to the World Bank.
In its latest Africa’s Pulse report, the multilateral lender said this ranking is leading to depressed worker productivity and limiting workers’ earnings for their skills.
“The urgent need for job creation is a pressing concern in the region. In SSA, only one in six workers has a wage job, compared to one in two in high-income countries,” the report said.
It said moreover, the lack of quantity contributes to poor job quality, as defined by unstable employment, inefficient use of skills, lack of appropriate equipment, or inhumane working conditions.
“This in turn is reflected in high levels of involuntary self-employment and the prevalence of informality.”
BusinessDay reported in August that Nigeria’s labour data depicts the country as a ‘hustle economy’ as the informal sector accounts for an outsized share of employment.
The data from the National Bureau of Statistics (NBS), shows that majority of Nigerians are self-employed while a much smaller proportion holds wage jobs.
“In the fourth quarter of 2022 and Q1, 73.1 percent and 75.4 percent of employed Nigerians respectively worked in their own business or farming activity for their primary job,” it said.
It added that the percentage of employed Nigerians engaged as employees (being wage-employed) in their primary jobs dropped to 11.8 percent from 13.4 percent.
Authors of the World Bank report said, lack of capital undermines the structural transformation required for good quality jobs.
“The development of labor-intensive manufacturing sectors seems to be missing in Africa, with improvements in agricultural productivity leading to service sector growth in urban areas. This translates into poor labor productivity and lack of investment in labor-complementing capital,” they added.
Over the past seven years, Africa’s biggest economy has slumped into two recessions owing to the collapse of oil prices, disruptions caused by the pandemic and an inability of the government to reform the economy.
The country’s struggling economy slowed the growth of major job-creating sectors of the economy such as agriculture, manufacturing and trade.
According to the NBS, the agric sector slowed to 1.88 percent in 2022 from 2.13 percent in 2021, manufacturing declined to 2.45 percent from 3.35 percent, and trade plunged to 5.08 percent from 8.62 percent.
Nigeria’s high inflationary pressures have weakened consumers’ purchasing power, throwing millions into poverty. Data from the NBS shows that headline inflation, which serves as a measure of consumer prices, rose to a 18-year high of 25.80 percent in August.
Last year, the NBS put the number of Nigerians living in multidimensional poverty at 133 million, compared to 82.9 million considered poor in 2019 by national standards.
The economic uncertainties are making many jobless Nigerians seek opportunities to travel abroad, fuelling a massive brain drain that is hurting the labour quality of Africa’s most populous economy.
A total of 40,875 Nigerian students as well as health and care professionals were granted visas by the United Kingdom in one year, according to the British government
And data from Immigration, Refugees and Citizenship Canada shows that the number of Nigerians moving to Canada rose to 10,180 in the first half of 2023 from 10,105 in the same period of last year.
“African policy makers need to design an inclusive growth strategy to provide steady and productive jobs for the more than 10 million youth that join the workforce each year,” the World Bank said.
It noted that current growth patterns generate only three million formal jobs annually, thus leaving many young people unemployed.
“Creating job opportunities for the youth will drive inclusive growth and turn the continent’s demographic transition into a demographic dividend.”
It recommends that countries should have an ecosystem that facilitates firm entry, stability, and growth as well as skill development that matches business demand.
“A strategy that enables firm growth and delivers high-quality jobs would rest on the following pillars such as fiscal stabilisation and debt reduction, political stability and a stronger institutional framework to support markets and demand-driven skills and improved organizational transformation of work,” the Bank added.