It is generally acceptable that one of the best measures of economic growth is the employment rate. In developed countries like the United State of America (USA), politicians’ performances are gauged by the number of jobs they have created.
The recent job creation report by the National Bureau of statistics (NBS), shouldn’t be construed as a sign that the economy is rebounding as the country’s unemployment is a ticking time bomb.
Before we elucidate on the recent unemployment and poverty data as the former is a solution to the latter, we like to break down the NBS job creation report for the first and second quarter (Q1) and (Q2) of 2014.
The report states that the total number of jobs created in the first half of 2014 was 500,224, which represents is a decrease of 30.36 percent or 151,851 jobs from the same period of the corresponding year (HY) 2013. (See table 3)
A further breakdown showed there was an increase of 7.67 percent to 259,353 jobs in Q2 2014, from 240,871 jobs in Q2 2013.
With a 30.36 percent year-on-year decrease in jobs created, it means the country has copious work to do in eradicating poverty and bridging the gap between the rich and the poor.
It must be noted that in Nigeria, Africa most populous nation with about 170 million people and the continent’s biggest economy, has over 70 million (40%) people living in poverty.
Additionally, 23 percent of the employable population are unemployed while 54 percent of the youth are either unemployed or underemployed.
The NBS data in recent times have been showing considerable improvement of the informal sector driven by agriculture reforms and Micro Small and Medium Enterprises (MSMEs). Of the total 259,353 jobs created in Q2 2014, the informal sector contributed 67.78 percent or 175,786, this compared with 30.37 percent or 78,755 contribution by the formal sector (See table 2).
According to the 2010 NBS/National Collaborative survey of MSMEs, 17.2 million MSMEs employed 32.4 million persons and over 99 percent MSMEs are micro-finance enterprises.
Two major constraints have been identified as major impediments to MSMEs development in Nigeria – they are unreliable power and access to finance.
In conclusion
Nigeria has surpassed South Africa as the largest economy in sub-Saharan Africa without corresponding reduction in poverty rate, which questions the recent Q1 and Q2 employment survey report by the NBS.
We believe that banks have a lot to contribute to employment generation and poverty reduction by allocating funds to key industries such as power, agriculture, medium and small scale industries, oil and gas and the health sector.
As of 2010, total lending to MSMEs stood at N468 billion, and only 5 percent of lending from deposit money banks went to MSMEs.
Patrick Atuanya and Bala Augie
