Nigeria’s youth: Locked out of formal work

Nigeria appears to be a nation of industrious workers. Statistically, that is not entirely wrong. Our official unemployment rate stood at just 6.5% among youths aged 15 to 24 in 2024.

According to the National Bureau of Statistics (NBS), 93% of Nigeria’s entire workforce operates in the informal sector. Only 7% hold what can be described as formal employment. That is, structured jobs with contracts, social security, regulated wages, and career progression. For women, the reality is even starker: 96 out of every 100 employed women work informally. These are not fringe statistics. They describe the lived economic reality of the vast majority of Nigeria’s over 200 million people, including our most valuable asset, the youth.

It is important to understand what informal employment truly encompasses. It is not simply small-scale trade or self-employment. It is economic activity that exists largely outside the reach of structured contracts, pension frameworks, labour protections, and skills development infrastructure. A young graduate selling gala on the roadside is employed, as is a woman who plaits hair in a rented stall with no health insurance and no retirement plan. The NBS classifies both as employed. The economic system, however, offers them very little in return.

This distinction matters enormously when we talk about human capital, the collective skills, knowledge, health, and productive capacity of a population. Human capital is not just about how many people are working; it is about the quality, depth, and productivity of that work. A country rich in human capital has a workforce that is not merely busy but trained, retained, protected, and capable of compounding value over time. By that standard, Nigeria’s informal dominance represents a significant human capital deficit, even as our streets remain full of activities.

Education amplifies this gap. The NBS data shows that 99% of workers without formal education are in informal jobs. Even among university graduates, 26.6% end up in the informal economy, a figure that speaks to the disconnect between Nigeria’s educational output and its formal labour market’s capacity to absorb skilled workers. When a nation trains engineers who end up as logistics entrepreneurs because no structured firm will hire them at a liveable wage, human capital is being redirected inefficiently, and without the institutional scaffolding that multiplies individual potential into national productivity.

It would be intellectually dishonest to dismiss informality entirely. Many African economies, including some of the continent’s fastest-growing nations, have large informal sectors. In the Nigerian context, the informal economy has historically served as a buffer against state failure, absorbing labour that a chronically underdeveloped formal sector could not accommodate. It has produced genuine entrepreneurs in some sectors: fashion, food, electronics, etc. Undeniably, some informal operators have scaled into credible businesses. The informal economy is not static; it is a dynamic space, and some within it are building tomorrow’s formal enterprises today.

The real question, therefore, is not whether informality exists; it always will in developing economies. The question is whether Nigeria is building the conditions to progressively move its youth from survivalist informality into productive, protected, and scalable economic participation. That requires a deliberate policy conversation: expansion of credit access for small businesses seeking to formalise.

For the average Nigerian reading this, the point is not to despair. Many people operating informally are doing so with extraordinary ingenuity and resilience. The point is to name the structural reality clearly: a country where 93 out of 100 workers have no formal employment protection, no pension, and no clear pathway to economic mobility is a country whose human capital is undervalued and underutilised. That is a problem that no government programme, no matter how well-intentioned, will solve without a fundamental rethinking of how Nigeria structures the relationship between its people, its labour market, and its economy.

We are not short of capable people. Nigeria is short of the systems that convert capable people into sustained national prosperity. Until that changes, the streets will remain busy and the potential will remain largely untapped.

Deborah Yemi-Oladayo is the managing director of Proten International, a leading HR consulting firm in Nigeria, specialising in talent acquisition, learning and development, and HR advisory services. Email: Deborah Yemi-Oladayo