The slow growth in key sectors of the Nigerian economy is said to have worsened the unemployment crisis in the country.
Africa’s biggest economy recorded an all-time high unemployment rate of 33.3 percent in 2020 but no data has been released since then to show how the labour market is performing.
But analysts say the slow growth in major job-creating sectors of the economy such as agriculture, manufacturing and trade shows that fewer jobs have been created in recent years.
According to the recent 2022 Gross Domestic report by the National Bureau of Statistics (NBS), economic activities in 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.
“This likely portends a situation whereby the employment capacity of most of these sectors may have shrunk within these periods,” Ayorinde Akinloye, an investor relations analyst at Seplat Energy Plc, said.
He said most of the key sectors contribute to employment in the country and when activities in those sectors slow or contract, “we are most likely going to see a situation whereby companies operating in that space may have sort of cut down their labour, particularly with the recent surge in inflation.”
Damilola Adewale, a Lagos-based economic analyst, said agriculture, manufacturing and trade are employment-elastic sectors. “Their performance gives you an indication or idea of what unemployment looks like.”
The agric sector has the highest level of informal employment in Nigeria characterised by semi and low-skilled manual labour. Out of 100 percent, it takes 48.2 percent, followed by industry sector (7.1 percent) and services (44.8 percent), according to the NBS.
But since the COVID-19 pandemic in 2020, activities in the agric and industry sectors are yet to improve. In 2019, growth in the agric sector declined to 2.17 percent in 2020 from 2.36 percent in 2019 and the industry sector contracted for the third consecutive year to 4.62 percent in 2022.
“The headwinds such as insecurity, flooding, escalating prices due to Russia-Ukraine war, high diesel prices, scarcity of petrol, high cost of foreign exchange and monetary policy tightening affected the capacity of the agric and industry sectors to create jobs,” Adewale said.
The latest aggregate Manufacturers CEO’s Confidence Index of the Manufacturers Association of Nigeria shows that the employment condition (rate of employment) for the fourth quarter of 2022 declined to 51.3 from 51.9 in Q3. “Production level in the next three months scored above the benchmark points though with a decline in the period.”
Last year, BusinessDay reported that the country’s surging inflation, which is still at the highest levels in 17 years, was affecting the recovery and creation of jobs in its labour market.
Abdulrasid Yarima, president/chairman of the governing council of the Nigerian Association of Small and Medium Enterprises, said the country’s inflation rate reduced the number of Micro, Small and Medium Enterprises (MSMEs) by four million to 35 million in 2022 from 39 million in 2020.
“The manufacturing world has not yet recovered from the pandemic. And the rising cost of inflation has caused an increase in the cost of input, which will have a multiplier effect on the manufacturers’ cost of output,” he said.
He added that the inflationary environment, which has been intensified by the high cost of foreign exchange, customs duty cost, machinery and equipment to generate power, insecurity, flooding and the Russia-Ukraine war, has forced MSMEs to be closing shop or reducing staff.
Compared to other age groups, unemployment is highly felt among those within the younger population aged 15-34, which comprises over 60-65 percent of its more than 200 million people.
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A recent survey by Jobberman conducted between June and July of last year showed that 65 percent of 2,228 respondents between the ages of 18-35 years old were without jobs.
“Amplified by the global economic crisis, COVID-19, insecurity, and the current political landscape, Nigeria’s labour force is undergoing significant disruptions at all levels,” it said.
It further said that while there is a huge exodus of talent from the country, layoffs, retrenchment, and termination of contractual work arrangements are common in many employment sectors.
The high unemployment in Africa’s most populous nation is said to have contributed to the increase in crimes such as armed robbery, banditry and kidnapping, which have made it difficult for the government to attract the investments needed for job creation.
“When there is an increase in unemployment, a lot of insecurities happen which is also impacting on both domestic and foreign investments,” said Ayodeji Ebo, managing director/chief business officer at Optimus by Afrinvest Limited.
“So, there is a need to emphasise on producing and adding value to products rather than exporting raw materials,” he said.
Many Nigerian youths are seeking opportunities to travel abroad, fuelling a massive brain drain that is hurting the labour quality in the country.
According to the British government, the number of Nigerians given sponsored study or student visas rose by 768.7 percent to 59,053 in 2022 from 6,798 in 2019.
The number of new study permits issued by Canada to Nigerians increased by 17.8 percent to 16,195 as of December 31, 2022, the highest on record, from 13,745 in 2021.
