Policy Action needed to curb long-run impact of the COVID-19 crisis on Nigerian households – World Bank

As nations gradually recover from the impact of the COVID-19 pandemic, the World Bank has said that Nigeria requires urgent policy action to curb the long-run impact of the covid-induced crisis on households.

According to the report titled ‘COVID-19 in Nigeria: Frontline Data and Pathways for Policy,’ the Bank noted that the pandemic which has led to market disruption could drive up commodity prices as has already been seen in Nigeria and reduce households’ purchasing power.

The report showed that while the resilience of the agricultural sector has proven essential during the COVID-19 crisis, the lack of opportunities in other sectors of the economy has forced households to engage in low-productivity and unstable activities which are misaligned with young people’s labour market aspirations.

“Young people also continue to aspire to good professional jobs; these aspirations are misaligned with the state of the Nigerian labour market, which could result in widespread disappointment and frustration, without appropriate
policies.

“In April 2021, most young Nigerians aspired to work in professions such as accountancy, the civil service, medicine, engineering, and teaching

“This was the case for young women and young men, and across the consumption distribution. Moreover, young people are very optimistic about their labour market,” it said.

These aspirations are at odds with the country’s labour market, which is dominated by work in small-scale enterprises.

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It stated that the COVID-19 crisis has led many individuals to enter work in non-farm enterprises in retail and trade and services, in which incomes remain uncertain, while people have also churned rapidly between different activities.

“Failing to meet young people’s labour market aspirations will have direct impacts on poverty reduction as Nigeria recuperates after the crisis.

“There may also be implications for social cohesion and civil unrest if unmet aspirations turn into disappointment and frustration.

“These data on youth aspirations, therefore, mark a serious call to policy action,” it stated.

The report further stated that as at March 2021, 13 percent of school children aged 5-18 dropped out of school with older children significantly less likely to return back to school.

The report noted that introducing macroeconomic reforms that can spur job creation and structural transformation through exchange rate policies, trade policies, and fiscal policies will be essential.

Among other key priorities to support job creation and create resilience growth in the Nigerian economy will be promoting diversification of the economy away from oil, which represents more than 80 percent of Nigeria’s total exports annually.

“Structural transformation will take decades, so alleviating constraints on small enterprises will be crucial in the short and medium run.”