The way out!
By Peter Egwuatu, Assistant Business Editor, Tunde Oso & Nkiru Nnorom
Unemployment rate in Nigeria rose from 27.1 percent to 33.3 percent from December to March 2021, according to the National Bureau of Statistics, NBS.
The NBS explained that the number of unemployed Nigerians rose to 23.19 million in the fourth quarter (Q4) of 2020 on the back of job losses occasioned by the outbreak of COVID-19 pandemic and its stifling impact on businesses during the period.
The Q4 unemployment rate report titled: ‘Labor Force Statistics: Unemployment and Underemployment Report’, showed that the number is 6.5 percent higher compared to 21.77 million.
Ever since the report was released, there have been arguments back and forth on the true unemployment state in the country.
While officials of the Buhari administration argued that the situation wasn’t the fault of government, others blamed what was described as the failings of the regime.
However, in conversations with Sunday Vanguard, some experts presented the true state of unemployment in the country, saying the continuous increase wasn’t surprising. They identified reasons for the situation and proffered ways out.
Managing Director/CEO, Highcap Securities, David Adonri, said the socioeconomic conditions in the country are responsible for the situation.
Adonri said the increase in unemployment rate to 33 percent wasn’t surprising.
“The increase in the unemployment rate of labour to 33 percent in Nigeria is not surprising. The prevalent socioeconomic conditions in the country are precursors to this parlours situation. If things continue the way they are, the situation can get worse”, he said.
“Nigeria degenerated to this dangerous level of unemployment owing to the absence of population control and excessive supply of unskilled labour.
“As a result of population explosion due to lack of birth and migration controls, the economy is overwhelmed with excess liquidity of people.
“Then, concerning the demand for labour, the economy lacks the required capacity to generate productive employment that can consistently mop up labour.
“Due to the absence of engineering infrastructure, the economy is unable to sustain itself internally, thus exporting jobs through pervasive import dependence. “Nigeria is an agrarian economy, but the recent breakdown of the rural economy due to widespread insecurity has worsened the country’s unemployment rate.
“Challenges to tackling rising unemployment rate are mainly from population explosion, absence of engineering infrastructure to support production and pervasive rural insecurity.
“The first two are age-long while the third challenge assumed an unprecedented dimension since 2015.
“While the first two challenges are inimical to full employment of labour and capital, the third factor deals with the employment of land.
“Analysis of these factors shows very clearly that all the factors of production are massively underemployed in Nigeria.”
Speaking on the effectiveness of strategies deployed to tackle unemployment, he said: “The instruments and strategies deployed by government to create jobs are faulty. They are not formulated to address the inherent weaknesses in the socioeconomic fuelling unemployment. They are taking ineffective panic measures.
“They should start implementing policy on birth and immigration controls to lay the foundation for labour optimization.
“They must start bridging the infrastructure deficit. This will mechanize the economy and enable it to become internally self-sustaining with a high multiplier effect. “There should be no room for rural insecurity if agriculture which forms the natural base for employment is to be revived.
“Government has not been serious in these areas. The laughable policies of Tradermoni, meager cash transfer and temporary employment across all 774 LGAs are wasted resources.
“They cannot form the kind of capital that can generate massive productive employment on a sustainable basis.
Unemployment and insecurity
“High unemployment rate and insecurity are mutually reinforcing evils. One can lead to the other. They are two devilish brothers born on the same day but insecurity, which is elder, is the most terrible.”
On his part, Prof. Uche Uwaleke, a lecturer in Capital Market Studies at the Nasarawa State University, said since the GDP growth rate since 2015 has been weak and below population growth rate, the unemployment rate is bound to be high.
“First, we have to recognize that sustainable economic growth, measured by GDP growth rate, is a necessary condition for economic development and by extension low unemployment rates”, Uwaleke said.
“Sadly, GDP growth rate since 2015 has been weak and below the population growth rate. In this condition, the unemployment rate is bound to be high.
“Second, it is equally important to realize that the quality of economic growth is critical to job creation. Before 2015, GDP growth rates were relatively high averaging about six percent in the preceding five years.
“Yet unemployment and poverty rates were high. This is because the GDP growth rates witnessed during those periods were non-inclusive in the sense that they were powered more by the oil sector than the employment-elastic sectors.
“As you know, the oil sector employs an insignificant proportion of the labour force.
“Third, poor infrastructure, especially power, insecurity and general hostile business environment has not encouraged entrepreneurship and micro businesses.
“Fourthly, the educational system, which is non-functional and which promotes job seekers rather than job creators, is also to blame.
“These are some of the factors responsible for the high rate of unemployment in the country.
“This administration has launched so many job creation initiatives encapsulated in the Social Intervention Programmes.
“These are complemented by the CBN interventions, especially in the agriculture and manufacturing sectors. “Some progress has been made no doubt, but the impact is what I may liken to a drop in a bowl of water.
“The reach and coverage is far from what is desirable partly on account of government tight fiscal position.
“Nigeria is said to have over 40 million MSMEs. Against this backdrop, I see the role of government as focusing more on making the business environment conducive, especially in the area of enabling infrastructure, while the CBN continues to ensure enhanced access to credit by small businesses.”
Analyst and Head of Investment and Research, Fidelity Securities Limited, Mr. Victor Chiazor, said Nigeria’s unemployment figure shows the country is heading on a very dangerous path.
Consequently, he warned: “If nothing is done to reverse this disturbing trend, it may take decades for us to recover from the repercussions of this position.
“We got here by failing to build buffers around the Nigerian economy and eventually exposed the country to external shocks during the first term of President Buhari when we saw oil prices drop on the back of a massive oil glut and the rising efficiency in U.S. Shale oil.
“During the last two-quarters of former President Jonathan, unemployment rate stood at 6.4% and increased to 7.5% in Q1’2015.
“Ever since, unemployment figure has been on the rise, hitting a high of 23.13% in Q3’2018 close to the end of President Buhari’s first term and currently hitting a new high of 33.3% for Q4’2020.”
Continuing, he said: “The reality is that until we decide to become less wasteful with our scarce resources by using what we have judiciously and also blocking some visible leakages, we may never truly recover.”
On the reason for rising unemployment, Chiazor said: “The weak infrastructural investments, weak government revenue, weak manufacturing sector amongst other issues have all increased the level of unemployment in the country and all these areas need to be significantly revived to create jobs for the youths.
“In the end, getting out of this position will be a tough task but not an impossible one but if this is not nipped in the board as soon as possible, we may not see a decent drop in the level of insecurity as it seems most of the youths have all embraced self-help, which will only make things worse for the economy.”
Obstacles to investment growth, like insecurity must be removed –Yusuf LCCI DG
Director General, Lagos Chamber of Commerce and Industry, Dr. Muda Yusuf, also speaking, said the growing unemployment in the country reflects the state of the economy.
“It is difficult for an economy in recession or an economy that is stagnating to create jobs. It is therefore important to ensure an effective stimulation of the economy to ensure that the economy regains momentum and arrests the worsening joblessness in the country”, Yusuf stated. “There is a strong relation between investment growth and employment generation. And for investment to grow, the business environment must be conducive, and investors’ confidence must be restored.
“Obstacles to investment growth must be removed. These include the growing insecurity which is disrupting activities in the agricultural sector rendering many farmers across the country jobless.
“The agricultural sector is a major employer of labour. The disruption accelerated the rate of unemployment in the country.
“Investors are also grappling with numerous regulatory and policy challenges impeding the capacity of investors to create and sustain jobs.
“Most regulatory institutions are disproportionately focused on revenue generation which meant additional burden on businesses.
“It is important that we also have policy stability and consistency; we need to address the issues around foreign exchange policy and management, especially with respect to liquidity crises and exchange rate volatility.
“We need to ensure that we create an environment that reduces investment risks and addresses the structural challenges in the economy especially the high infrastructure deficit which has been inhibiting the growth of the real sector of the economy.
“Logistics issues and bottlenecks at the ports remain very big factors in the job creation equation.
“Above all, we need to fix the investment environment for SMEs. This is the segment of the economy that provides the largest numbers of jobs and is therefore very critical to accelerated job creation”.
Long term economic plan, the key, says Gimba, lecturer
In his own submission, economist and lecturer at College of Administration and Management Technology, CAMTECH Potiskum, Yobe State, Ahmad Suleiman Gimba, said many factors led to the huge unemployment situation and these include corruption, waste in public expenditure and short term approach to major national issues instead of middle or long term approach.
“The nation’s economy managers in the past had neglected other potentially job-creating fields in order to feed oil”, Gimba said.
“According to the World Bank, the oil sector provides for 95% of Nigeria’s foreign exchange earnings and 80% of its budgetary revenues.
“Degree-holding Nigerians consequently have trouble finding positions in their field, and others lack access to vocational training that should otherwise allow them to find work in a number of industries.
“In 1999, the unemployment rate was 3.79% and ten years later it reduced to 3.72%. However it continued to rise without any recourse.
“And governments did not take the real course to hamper it. At the end of President Buhari’s first term in 2019, it was 8.10%.
“This year, the unemployment rate has been estimated to reach 32.5% which is very outrageous. Government is doing its best; but, unfortunately, the rate is very high. “The President, in his 2021 budget speech, emphasized very well on Social Investment Programmes (SIPs) which is very good, but the methods of implementing it are not well articulated and advanced to meet up with the high unemployment rate.
“Government must expatiate and be very specific in order to be as accurate as possible.
“The specific challenges are the methods to reach the targets, and the targets are the unemployed portion of the populace.
“We expect to see positive impacts and a slight indication in the number of those targeted.
“How the government assessing the impact of the SIP on the unemployed is very relevant. What is on paper and what is practical are mostly different and amazes financial experts.
“Insecurity is mostly an offshoot of unemployment anywhere in the world.
“As a nation, we are not different and must take all the necessary precautions to avoid crime. “In fact, Nigerians must be kept well aware of the dangers of criminal acts. Presently there are many crimes exhibited such as online financial criminalities.
“Crime, as explained by experts, is always ahead of security. Government must encourage experts to come up with ideas that can be practicalised in order to arrest or curb fraudulent activities before they mature.
“Things can get better but, as a nation, our economic plan must always take cognizance of the global situations.
“We are in a COVID-19 era and we have a high inflation rate, therefore, government must be proactive and the private sector must also be objective.
“The country must work as a cell and ensure that the economy of the cell is safeguarded while the population gets protected.”
Vanguard News Nigeria
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Post author: Nwafor