Nigeria’s high inflationary pressure which affects the recovery and creation of jobs in the labour market is making it imperative to find innovative and creative ways to keep Nigerians gainfully employed, experts say.
According to the National Bureau of Statistics (NBS), Africa’s biggest economy recorded an all-time high unemployment rate of 33.3 percent as at the fourth quarter of 2020. This means that 23.2 million Nigerians who are able and willing to work are without jobs.
“Going through the traditional ways to solve unemployment is not going to work because the numbers are too large. We need to look at the things that are scalable to take those numbers,” Pascal Odibo, group country director at Jeff & O’Brien Knowledge, Africa said.
He said the country needs big corporations and manufacturers that can hire those numbers, not small businesses. “Government should also empower youths and equip them with the capacity to play into the digital economy because it is scalable,” Odibo said. “The youths are quite tech savvy. Instead of them using their mobile phones and laptops to only access the internet, they can turn it into a business.”
He added that the youths should be encouraged to get into the digital space so that their skills can be exported to the world to earn foreign exchange inflows into the country that can shore up government revenue.
Damilola Adewale, a Lagos-based economic analyst also said it is vital to get innovative ways because the work system has evolved and that approaches to employment must be in tandem with trends.
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The country’s headline inflation rate accelerated for the eighth straight month in September to 20.77 percent, the highest in almost 17 years, according to NBS. The surge in inflation rate also led to a further increase in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria’s Monetary Policy Committee, otherwise known as interest rate, by 150 basis points, to 15.5 percent in September from 14 percent in July, the third hike since July 2016.
Inflation and unemployment destroys economic value, said Ikemesit Effiong, head of research at SBM Intelligence. “And the only way to break up from that loop is to imagine how value creation occurs in an economy.”
“Creating new products that stimulate consumer spending which guarantees supply, will lead to new demand formulation,” Effiong further said. He added that capital formation, demand creation and consumer spending will kick start the economy and get it out of the current inflationary trap.
Already, the country’s high unemployment rate has adversely affected the disposable income of families which has eroded their purchasing power eventually throwing millions of people into poverty. It’s no surprise that a 2021 Steve Hanke misery index ranked the country 11th out of 156 countries in 2021 from 15th in the previous year.
Apart from Hanke’s index, a 2022 World Happiness report showed that Nigerians are sadder now, than they were 10 years ago as it ranked 118th out of 150 countries.
While in 2021, the economy recorded a growth rate of 3.4 percent, the highest since 2014 but that growth has failed to translate in some of the major job creating sectors of the economy. According to NBS, sectors such as agriculture, manufacturing, construction which recorded a growth of 4.3 percent, 14.7 percent and 13.03 percent respectively in 2014 saw their growth plunge to 2.13 percent, 3.35 percent and three percent in 2021.
“The displacement of people from their farms due to high rate of terrorism, herdsmen and kidnapping crisis was not as serious now when compared to 2015,” Muda Yusuf, the chief executive officer at Centre for the promotion of private enterprise said. “These issues have led to serious implications to employment in the agricultural sector since it is the largest employer of labour.”
Apart from the agric sector, the manufacturing sector has also continuously faced several structural challenges leading to low productivity which has caused manufacturingcompanies to shut down, limiting growth and investment inflow into the sector.
Compared to other age groups, unemployment is highest amongst the young population aged 15-34, which comprises over 65 percent of Nigeria’s over 200 million population. Data from NBS shows that the number of unemployed young persons increased by 220 percent to 12.8 million in Q4 2020 from 4.0 million in Q2 2015.
The consequence of this is millions of unemployed young people, some of whom get desperate enough to turn to illegitimate ways to survive ranging from armed robbery, banditry and kidnapping, which in turn makes it difficult for the government to attract the investments needed for job creation.
While others who don’t want to result in social vices are seeking opportunities to travel abroad, this is also fuelling massive brain drain that is hurting the labour quality in Nigeria.
“Government needs to encourage a positive investment environment that will make private sector to want to expand locally and also bring more foreign participation in the form of foreign long term investments which will expand the private sector and bring about the employment of labour,” Ayo Akinwunmi of FSDH Merchant Bank Limited said.
