Nigeria’s rising retail, trade jobs not translating to economic growth

New jobs created in the small-scale retail and trade sectors following the COVID-19 pandemic have not been productive with only a few yielding secure earnings, a recent World Bank report has said.

The report titled ‘COVID-19 in Nigeria: Frontline Data and Pathways for Policy’ noted that in February 2021, around 26 percent of the working-age population (15 – 64 years of age) were engaged in retail and trade activities, an apparent increase from 17 percent in January-February 2019.

“This shift marks a key difference with previous crises in Nigeria, such as the 2016 recession that followed collapsing global oil prices, where agriculture was the sector that expanded as households tried to cope,” the report stated.

It also added that the general shift towards retail and trade is unlikely to represent an acceleration of structural transformation or a true shift towards more productive work outside of agriculture.

Structural transformation is the transition of an economy from low productivity and labour- intensive economic activities to higher productivity and skill intensive activities.

It helps to ensure adequate quantity and quality of employment, equitable distribution of income and wealth, access to quality public services, and protection of the environment.

Developed economies like Hong Kong, Singapore, South Korea, and Taiwan also known as Asian Tigers are fuelled by exports and rapid industrialization, thanks to structural transformation.

These countries have consistently maintained high levels of economic growth since the 1960s, and have collectively joined the ranks of the world’s wealthiest and competitive nations.

But Africa’s biggest economy is yet to achieve structural transformation as it is still over dependent on oil despite its diversification efforts to non-oil. About 65 percent of government revenue still comes from oil, unemployment is at an all-time high of 33 percent and about 90 million Nigerians live in deteriorating conditions of poverty.

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An Abuja-based economic analyst who wished to be identified as Nosa said a lot of people lost their jobs and incomes due to the pandemic and thus in order to survive; they had to go into small scale retail businesses.

“The problem with these jobs is that they are not value adding ones because they can’t transform or develop the economy. So, it is highly unlike for structural transformation to take place,” He said.

He adds, “For Nigeria to develop there is a need to restructure the economy from oil into a productive and manufacturing economy.”

The report also highlighted that the shift towards retail and trade activities was particularly stark amongst women who rose by 34 percent in February 2021 from 19 percent between January-February 2019, while for men; it rose modestly from 14 percent to 17 percent.

Although small-scale retail and trade activities are not lucrative, they are easy to start quickly in order to try and supplement household incomes and cope with the economic shock caused by the COVID.

On type of policies for boosting livelihoods, the Bank recommends macroeconomic reforms that spur job creation and structural transformation through exchange rate policies, trade policies, and fiscal policies will be essential

Among the key priorities to support job creation will be promoting diversification of the economy away from oil, which has represented more than 80 percent of Nigeria’s total exports every year since the 1970s, the report said.

The report also added that structural transformation will take decades, so alleviating constraints on small enterprises will be crucial in the short and medium run: for farms.

“This means developing more resilient crop and livestock varieties and public investment in storage, transport, and market access for non-farm enterprises, alleviating credit constraints could support firm survival, profitability, and growth complementing investment in infrastructure and markets,” the report advised.