High unemployment tips Nigeria into 6th most miserable country globally
Nigeria’s latest unemployment rate of 27 percent means Africa’s most populous nation now ranks among the top six most miserable countries in the world.
Nigeria, with a misery index of 39.66 percent, is not only reeling from rising unemployment but also a stubbornly high inflation rate which accelerated to a 26-month high of 12.56 percent in June 2020, an indication that there is a mismatch in between the cost of living and the earning capacity of people in Africa’s most populous country.
The above development means Nigeria has the sixth highest misery index in the world behind Turkey of 50.6percent, Brazil of 52.3 percent, Iran of 75percent, Argentina of 136.1 percent and Venezuela of 7,459 percent.
It also means Nigeria has the highest misery index of any other African country.
The misery index is an indicator that is used to determine how economically well off the citizens of a country are. It is the sum of the unemployment and underemployment rate and the inflation rate of the particular period.
These factors are important because they pose economic and social costs to the average income earner.
“Nigerians are actually going very difficult economic times; No wonder we have seen a lot of social issues in country like suicides, increased level of crimes and other negative social vices,” Johnson Chukwu, CEO at Cowry Asset Management Limited said.
He further explained that the figure should be a wakeup call for the government. “They should realize that for you to have improved level of social stability people must be engaged in society.”
“More than ever policymakers should intensify their efforts in implementing policies that will strengthen the SMES due to their contributions to employment,” Ayodeji Ebo, Managing Director, Afrinvest Securities Limited said.
Other economists expect consumers to face an even deeper dwindling in purchasing power, as their incomes, can only buy less of their usual consumption basket which implies the poor will become poorer in real terms, while the middle class will thin out.
“Climbing misery index implies declining economic activity and reduced consumption,” Charles Akinbobola, an analyst at Sofidam Capital said.
This is because unemployed people are underutilized and rising prices will discourage rational consumers from spending which can cause or complicate an economic slowdown or contraction.
When in 2015 Muhammadu Buhari was soliciting for votes from Nigerians, he said “Jobs, jobs and jobs” were going to be his focus. But five years down the line, the unemployment rate has continued to trend upward from less than 7 percent five years ago.
Instead, Nigeria overtook India as the country with the highest number of people living in extreme poverty with an estimated 87 million Nigerians living on less than $1.90 a day, coupled with her failure to enact some growth-stimulating reforms across key sectors of the economy.
Exacerbated by the impact of COVID-19, Fitch Solutions Country Risk & Industry Research, a subsidiary of Fitch rating expects Nigeria’s per capita income to slide further as it expects the economy to contract by as much as 6 percent in 2020.
“This will be mostly due to a sharp fall in private consumption spending due to lockdown rules, tighter fiscal policy, and declining oil income,” Fitch Solutions said, adding that activity will strengthen in 2021, “but growth will probably remain slow.”
In real terms, Fitch Solutions says output will not return to the level seen in 2019 until 2023. “We expect that headline growth will remain very weak over the coming years, with the country falling behind regional peers.”
Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants, and thus alleviate poverty
“To achieve a reasonable level of unemployment, the need to industrialize – adding value to our natural resources. Beyond this, with less number of labour force amidst rising population is a call for concern,” Ebo said.