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Nigeria's leading finance and market intelligence news report.

Nigeria unemployment could hit 40% by year-end

Nigeria’s unemployment rate is projected to increase to 40 percent by the end of 2021, according to Doyin Salami, chairman of the Presidential Economic Advisory Council (PEAC).

This warning appears dire considering that the current unemployment rate put at 33.3 percent by the National Bureau of Statistics (NBS) is producing devastating consequences, with deepening poverty, rising crime rate and an exodus of skilled and unskilled workforce in a country where over 23 million people have no jobs.

Salami blames rising unemployment largely on the low capacity of the manufacturing sector.

Citing the Central Bank of Nigeria (CBN) July 2021 Purchasing Managers’ Index report, Salami said that the sectors’ employment indices at 46.5 remain constrained below the 50 points mark. A figure below 50 indicates contraction in employment levels.

President Buhari constituted the eight-member Presidential Economic Advisory Council (PEAC) in October 2019 chaired by Salami, a professor at the Lagos Business School. They were charged with developing reliable data and advice for economic development. But there’s little evidence to show the president is taking their counsel.

Experts who spoke to BusinessDay validated the unemployment projection adding that the impact of the coronavirus could worsen the situation.

Abidemi Ajai, HR manager at Nosak Farm Produce Limited a fully-integrated agro-industrial company said: “The effect of the Covid-19 pandemic and some of the policies taken by the federal government is still affecting businesses. “A lot of manufacturing companies are leaving the country for Ghana and other neighbouring African countries to survive,” Ajai said.

He adds, “The survival rate for manufacturing in Nigeria is something else and that also will have an effect on the rate manufacturing helps the unemployment situation in the country.”

Read Also: Low-wage manufacturing jobs can dent Nigeria’s unemployment

Manufacturing is known to be among the top job creating sectors of the economy. Although growth in the sector has improved over the last one year, it is still very weak along with other job creating sectors.

According to the recent second quarter 2021 GDP report by the NBS, the manufacturing sector grew by 3.49 percent from 3.40 percent in the first quarter of 2020 and a contraction of 8.78 percent in the second quarter of 2020.

Apart from the NBS data, the CBN’s manufacturing and non-Manufacturing Purchasing Managers’ Index (PMI) for employment level index has beenbelow 50 points since March 2020.

“We are not making enough efforts to create quality and decent jobs that the young people truly deserve. Most of what we are doing is expanding indirect jobs which are mostly informal in nature,” Ayodele Shittu, lecturer at the department of Economics, University of Lagos said.

The Federal Government recently announced the launch of a plan to tackle Nigeria’s youth unemployment crisis, called the Nigerian Youth Employment Action Plan (NIYEAP 2021-2024).

The plan is the government’s attempt to achieve its goal of creating 3.7 million jobs annually so as to achieve sustainable economic growth in the country.

“The plan would emphasize the 4Es, which are: employability, entrepreneurship development, employment creation, and equality and rights, with detailed actions required in support of employment creation for youths in critical economic and social sectors,” the Minister of Youth and Sports Development, Sunday Dare said recently.

The PEAC has suggested that for the Nigerian economy to rebound, there must be a massive investment in research and development, digitization of health and education and also empowering the youthful population with productive skills.

Experts have also advocated that the creation of low-skilled jobs inthe manufacturing sector that offers lower wages can help Nigeria temporarily tackle Nigeria’s unemployment problem.

“If you have an industrial or manufacturing revolution, it is going to be very critical in taking people off the jobless markets. Although the low wage jobs might not make them the richest, everybody will have the money to take care of their basic needs of life,” Ayorinde Akinloye, an analyst at United Capital Plc said.

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