Ngozi Okonjo Iweala, Finance Minister
Economists are insisting that the growing disparity between population growth rate and the present capacity of the nation’s economy for employment generation must be urgently addressed to achieve economic stability, reports Festus Akanbi
One area that seems to have defied the impact of the modest gains in the nation’s economy over the years is youth unemployment. Individuals aspiring to political offices have always put it at the top of their priority lists while negotiating for votes during election, but the problem of unemployment has continued to stare the nation in the face.
Perhaps, it was the World Bank’s report of May 13 that eventually roused economic affairs commentators to the latest debate on the severity of the problem of unemployment in the country.
The Report
The World Bank, in its report, noted that Nigeria’s annual growth rates that average over seven percent in official data during the last decade place the nation among the fastest growing economies in the world. This growth has been concentrated particularly on trade and agriculture, which would suggest substantial welfare benefits for many Nigerians.
The report noted that improvements in social welfare indicators have been much slower than would be expected in the context of this growth. According to the World Bank report, this is because poverty reduction and job creation have not kept pace with population growth, implying social distress for an increasing number of Nigerians. Progress toward the fulfillment of many of the Millennium Development Goals has been slow, and the country ranked 153 out of 186 countries in the 2013 United Nations Human Development Index.
The World Bank further notes that, “Job creation in Nigeria has been inadequate to keep pace with the expanding working age population. The official unemployment rate had steadily increased from 12 per cent of the working age population in 2006 to 24 per cent in 2011. Preliminary indications are that this upward trend continued in 2012.”
According to an Abuja-based analyst, Jide Ojo, youth unemployment in Africa has become a threat to socio-economic peace and stability. “Unemployment rate in Nigeria for the year 2011 stood at 23.9 percent with youth unemployment rate at over 50 percent.
“In comparison to other African countries, the story does not get any better. Unemployment Rate in South Africa increased to 25.20 percent in the first quarter of 2013 from 24.90 percent in the fourth quarter of 2012.
Kenya Unemployment Rate reached an all-time high of 40.0 percent in December of 2011.
Ghana, Nigeria’s close neighbour, had an unemployment rate of 11% in 2012. The population in the 15-24 age group had an unemployment rate of 25.6 %, twice that of the 25-44 age group and three times that of the 45-64 age group.”
Unfavourable Policies
Ojo believes government has part of the blame over the scourge of unemployment.
Painting a picture of gloom in the labour sector, Ojo said, “Since 1986, when the words, “rightsizing” and “downsizing” crept into our national lexicon, we have not yet done with it. Many private enterprises have closed shops in Nigeria due to the high cost of doing business in the country. “Individual entrepreneurs find it difficult to access soft loans at affordable interest rates. Often times, the interest rate is in double digits ranging from 15 to 20 per cent and above, yet you need to provide collateral, submit business plans and meet a long list of requirements. If you are eventually successful in accessing the loans, renting or leasing an office is very expensive.
“There is the need to interrogate many jobs referred to by the government as employment opportunities. In my opinion, there is actually under-employment. Take for instance the glamourised SURE-P and other youth employment schemes embarked on by some of the state governments where graduates of tertiary institutions are recruited as street sweepers and traffic managers only to be paid N10, 000 a month. This is pure under-employment.
“There is also increasing casualisation by many public and private companies. Under this inhuman policy, eminently qualified personnel are recruited under conditions similar to slavery with peanuts as salaries and without any other welfare packages such as health, transport, housing allowances, leave bonus etc.
This is one phenomenon that is being fought by the workers’ union of the Power Holding Company of Nigeria as government works towards consummating the planned privatisation of the company. A similar practice obtains in the banks, oil companies, telecommunications companies, among others. This is tantamount to under-employment as the workers in question do not get commensurate wages for their services.”
The Alarm
An official confirmation of the World Bank’s alarm was the figure that emanated from the Statistician-General, National Bureau of Statistics (NBS), Dr. Yemi Kale, in May when the current rate of unemployment in Nigeria was put at 23.9 per cent.
He, however, disagreed with the arguments that the growth recorded by the Nigerian economy had not in any way impacted on the lives of Nigerians by way of employment generation.
Speaking during a recent stakeholders’ consultative forum on the production and management of Ministries, Departments and Agencies’ statistics, the NBS boss also argued that while it could be admitted that economic growth had not brought about the expected impact, it was wrong to say that no impact had been felt at all.
Kale said: “It is impacting on the lives of Nigerians but maybe not as much or widespread as you would expect. You can’t expect a Shoprite to come and hire 2,000 people in one location in Lagos and you say it doesn’t impact on the lives of people.
“When you hear them expanding to other states, that is clearly a sign that they are making money and expanding their businesses. When they are expanding, they hire more people; so you can’t say it’s not impacting. It is impacting and jobs are being created in this economy. But the problem with jobs is that if you are generating jobs and more people are entering the job market than you can generate, you might have a problem.”
Another key economic manager who raised the alarm over the growing unemployment situation in the country was the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala.
Speaking a recent public function, the minister quoted the National Bureau of Statistics as saying that, each year, about 1.8m young Nigerians enter into our labour market and we need to ensure that our economy provides jobs for them.
“In fact, some people ask, ‘What keeps you awake at night, with regard to this economy?’ I say it is the issue of job creation. And I know this is what keeps Mr. President (Goodluck Jonathan) awake at night as well.
“That is why we have responded to the challenge of creating jobs by trying to transform several sectors of the economy; from agriculture, where we’re expecting to create 3.5m jobs and where the progress of reaching our goal of feeding this country is already well advanced.”
Speaker of the House of Representatives, Hon. Aminu Waziri Tambuwal, has also joined the list of public office holders uncomfortable with the present unemployment situation in the country, warning that the present unemployment rate in Nigeria is no longer intolerable.
He spoke at a two-day international conference on Emerging Democracies in Africa: Challenges and Opportunities.” In his presentation, Tambuwal said: “Youths play a prominent role in making or marring nationhood. We know that about 46.5 percent of Nigerian youths are unemployed, while general rate of unemployment increased in 2011 to 24 percent.”
Under normal circumstances, 10 percent unemployment rate is intolerable. Employment rates will not improve unless we are able to stabilise our polities, grow infrastructure, grow our economies and enthrone good governance. We need to engage our youths positively.”
Taking Advantage of Huge Population
Head Research and Intelligence, BGL Plc, Mr. Olufemi Ademola, who has presented several papers on the scourge of unemployment, told THISDAY that the key strength of the Nigerian economy is the size and the average of its working force. “The young workforce is expected to help the country’s production/developmental needs and to ultimately lead to economic growth, according to Cobb Douglas Production Function. However, the high unemployment rate, currently estimated at 23.9%, indicates that the labour resources are not being put to productive uses.
“Apart from the effect of unemployment on production and by extension economic growth, it also has serious implication on security of lives and properties. High youth employment will lead to heightened criminal activities such as thuggery, robbery, vandalism and hooliganism. It also expands the shadow economy to the detriment of the whole economy,” he said.
Job Potential in Agric Sector
When the prospects of deploying the youth to a job-yielding sector like agriculture were suggested, Ademola said, “It would be such a fantastic policy to deploy the youths to sectors like agriculture.
However, the sector needs to be made attractive to the youths. The government needs to bring ‘beauty’ back to agriculture by providing seedlings for plant, extension workers for training and advisory services to the farmers, access to financing to support mechanised farming, power to store and process produce into food products and road access to the markets. Agriculture needs to become a sophisticated industry to attract the youth.”
States, Local Governments
On the roles assigned to states and local government in the job drive, the BGL official explained that being the closest to the grassroots, the state and local governments have huge responsibilities in tackling youth unemployment. “With the dearth of basic infrastructure in the country, these tiers of government need to focus on development initiatives that could help employment. Required services in the communities such as refuse disposal, road construction and maintenance and community policing could be a starting point.
“To industrialise agriculture and attracting youths to the sector, the state and local governments have significant roles to play, making land acquisitions hassle-free and providing the necessary assistance to the farmers are direct responsibilities of these tiers of government,” he said. On the argument over the standard of education in the country, Ademola said, “Although our education system may be below global standard, it is not solely responsible for the high unemployment rate.
The recruiters always say that they “recruit for attitude and train for skills”; which means that in most cases, young recruits would need to undergo several training to be fit for the job.
“However, at the moment, even smart graduates who are employable and trainable couldn’t find employment. Those with inherent skills or with sound business ideas do not get the needed support to develop the ideas. Hence, I think the major challenge is about that of lack of infrastructure and financial support to spur business activities, which in turn generate employment.”
He is of the opinion that although financial institutions have roles to play in job creation, the bulk of the responsibility, according to him, rests with the government, which is saddled with the responsibility of providing good operating environment.
He said: “The banks can assist job creation through the provision of financing to bankable projects. They will only succeed in this if they lend against the business model rather than collateral.
“Risk management should be based on how we mitigate the risks of the businesses. Collateral may mean risk transfer through insurance (and thus boost insurance business in Nigeria) or through risk sharing through syndication rather than physical or financial assets. However, we must note the banks are also in the business to make profit; hence they make business decisions based on the operating and regulatory environment.
“The bulk of employment generation lies with the government who should provide infrastructure to help the operating environment and the industry regulators to help boost economic activities through policies and regulations”.
