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23.2m Nigerians should not be unemployed

Global skills partnership can fix Nigeria’s brain drain

Unemployment and poverty have a directly proportional relationship and new figures released by the National Bureau of Statistics (NBS) reveal that Nigeria’s unemployment rate, as of the end of 2020, has increased to 33.3 percent. This represents a 6.2 percent increase from the rate of 27.1 percent recorded in Q2 2020. The country has a labour force of 69.7 million people. Out of this number, 23.2 million people worked for less than 20 hours a week, making them unemployed, according to the measurement metrics applied. Another 15.9 million worked less than 40 hours a week, rendering them underemployed. The combined unemployment and underemployment rate for the period was 56.1 percent.

A 33.3 percent unemployment rate means that the economic outcomes of a staggering 23.2 million Nigerians have been further downgraded, lending credence to the World Bank projection of a 15 million increase in the number of people living below the poverty line in Nigeria by 2022. It is also worthy to note that these results make Nigeria the country with the second-highest burden of unemployment in the world, coming ahead of South Africa with an unemployment rate of 32.5 percent and behind Namibia with an unemployment rate of 34 percent. Both countries are significantly less populated than Nigeria (figures from Bloomberg).

Alongside rising unemployment and poverty rates comes a corresponding increase in inflation rates – further exacerbating their everyday realities. In Q2 2020, the inflation rate stood at 13 percent; in Q4 2020, it was 17.33 percent, and food inflation currently stands at 21.79 percent (for February). In fact, all indices – GDP growth, per capita income, unemployment, inflation, exchange rate and debt – are worsening, and these statistics have real human costs.

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These figures make the government’s 2030 goal of lifting 100 million Nigerians out of poverty not only unattainable but irreversibly so, if drastic measures are not instituted to nip the decline. While this decline can be partially attributed to the corresponding impact of COVID-19, as the pandemic triggered a drop in the price of oil, weakening the value of the naira, it’s worth noting that unemployment rates have been rising steadily for the past seven years, from 6.4 percent in Q4 2014 to 33.3 percent in Q4 2020. This current scenario calls for a critical reassessment of the nation’s policies and presents an opportunity for the government to redesign and implement economic recovery policies that favour vulnerable groups, like women, the youths and the informal sector in general.

The government has implemented pro-poor policies over the years targeted at creating employment and increasing financial inclusion for workers operating in the informal sector. Through interventions like the Government Enterprise Empowerment Programme (GEEP), farmers, traders and Micro, Small and Medium-sized enterprises gain access to interest and collateral-free loans, ranging from NGN30,000 to NGN350,000, to support their growth. Through the Special Public Works programme, the government ensures mass employment of skilled, semi-skilled and unskilled workers in utility, environmental, infrastructural development and sanitation schemes by attaching individuals to willing employers of labour for a short period of time. The programme is meant to increase employment opportunities by supporting capacity building and skill upgrading that eventually lead to permanent or self-employment.

To mitigate the effects of the pandemic, in July 2020, about 750,000 young unemployed people, 1,000 from each of the 774 local government areas in the country, were offered three-month placements with a monthly salary of NGN20,000 under the Special Public Works Programme (SPW). Although these efforts are far-reaching and commendable, the magnitude of the issue means that they offer only a small reprieve in the uphill battle Nigerians have to face in improving their socioeconomic outcomes. More Nigerians need access to opportunities to earn a stable income because short-term employment and small-scale loans alone will not solve the deteriorating problems of unemployment and poverty.

The government has touted agriculture as a viable solution to solving the unemployment crisis. Pre-oil, the Nigerian economy thrived on agriculture, making it an obvious choice for the government as it seeks to diversify the economy, and the sector continues to receive significant attention from the government at the state and federal levels. There continue to be major investments, policies and incentives designed to support players in the sector as well as encourage participation, most especially by the youths. The government through the Central Bank of Nigeria (CBN) has offered cheap credit, partnered with developmental partners and encouraged private sector investments, many of which target smallholders. Unfortunately, a myriad of challenges exists, preventing smallholder farmers from accessing these incentives at scale. These challenges include a lack of basic identity, a lack of credit history, porous security, inadequate infrastructure and other policy requirements that become barriers, preventing the sector from really exerting its potential for job creation. Solving these challenges, therefore, needs to be a critical focus of the government if we really intend to reap gains from this sector.

As has been widely recommended, leveraging the informal sector presents one of the most sustainable solutions to decreasing the rate of unemployment in Nigeria.

However, the sector is plagued with limited access to fundamental support, including access to finance, a necessary requirement for growth, thus inhibiting the growth and offtake of many businesses. Micro, Small and Medium-sized Enterprises (MSMEs), mostly operating in the informal sector, are the largest employers of labour in economies across the developing world. In Nigeria, many of them are unbanked and under-financed, partially due to the perceived increased risk from commercial lenders with limited information on their business operations or financial behaviours. This reduces their success rate, levels of resilience and contributions to economic growth indices like employment. Increasing access to finance for MSMEs means more growth and more employment.

Nigeria has a very active and large informal sector that makes up 65 percent of the economy. 23.2 million Nigerians should not be unemployed. As we look forward to recovery post-COVID-19, it will be important to intentionally institute policies that go beyond lip-service, to support our informal sector to deliver on its potential to create jobs and reduce the country’s unemployment levels.

*Bello, an independent journalist, writes from Lagos.