By Ibrahim Shelleng
Unemployment poses significant challenges to any economy, and Nigeria is no exception. Nigeria, a nation blessed with abundant resources and a vibrant workforce, grapples with high unemployment rates. According to data from the National Bureau of Statistics (NBS), the unemployment rate stands at 33.3%, underemployment at 22.8%. Youth unemployment is at a staggering 42.8%, whilst youth underemployment is 21.0%. A report by global professional service firm KPMG, has estimated that unemployment is likely to hit 40.6% in 2023. With over 90% of the population between the ages of 15 to 64 and 4 to 5 million annual entrants into the labour market, it is a stark reminder of the need for urgent action. The scourge of joblessness poses immense challenges, not only to individuals but also to the nation’s overall prosperity. This article aims to shed light on the economic cost of unemployment in Nigeria. By examining the causes, consequences, and potential solutions to this issue, we can gain insights into the underlying factors contributing to unemployment and formulate strategies for sustainable economic growth. Let us delve into the challenges faced and explore pathways for progress.
Understanding Unemployment in Nigeria
To comprehend the economic costs associated with unemployment, we must first grasp the scale and nature of the problem. Unemployment is a vital economic indicator that measures the strength of an economy. The higher the country’s unemployment rate, typically means the lower its productive output. In Nigeria it is usually measured by the National Bureau of Statistics (NBS) and includes individuals who are actively seeking employment but are unable to find suitable work.
The causes of unemployment in Nigeria are multifaceted. Structural issues, including inadequate infrastructure, limited access to finance, and a mismatch between educational programs and industry needs, contribute to the challenge. Additionally, factors like corruption, rapid population growth, underdeveloped sectors, and limited job creation exacerbate the problem.
Unemployment affects various demographic groups and regions within Nigeria differently. Young people, particularly those with limited education or skills, face higher unemployment rates. Additionally, regional disparities exist, with higher unemployment rates observed in certain parts of the country, such as the northern states. Understanding these variations is crucial for developing targeted policies and interventions.
The Socio-economic Costs of Unemployment
The socio-economic consequences of high unemployment are far-reaching and impact various facets of Nigerian society. High unemployment rates lead to a loss of potential economic output and productivity. With a substantial portion of the workforce idle, the country fails to harness its human capital fully. This results in underutilization of resources, reduced innovation, and a lower overall economic growth rate.
Unemployment exacerbates poverty and income inequality, as jobless individuals struggle to meet their basic needs. The lack of employment opportunities restricts upward mobility and perpetuates a cycle of poverty, widening the income gap between different segments of society. This not only puts a burden on the government but on employed or financially buoyant family members and relatives. The “urgent 2k” is a popular colloquialism in Nigeria, in reference to demands from “broke” people that require financial assistance to solve pressing needs, to their more financially liquid family and friends (2,000 naira, equivalent to approximately $2.60).
Unemployment leads to decreased consumer spending, as jobless individuals have limited disposable income. This reduction in purchasing power negatively impacts businesses across various sectors, resulting in lower revenues and profitability. Moreover, reduced demand stifles economic growth and innovation, creating a ripple effect throughout the economy.
Unemployment is often linked to social and political unrest. Frustration, disenchantment, and a sense of hopelessness among unemployed individuals can fuel social unrest, leading to political instability. This volatility poses risks to investment, deters foreign direct investment (FDI), and hampers economic development. It also, can lead individuals towards illicit vices and means of survival. Do we wonder why it has been so easy for our young men and women (especially in the northern part of the country) to be easily recruited into criminal and terrorist organizations? This not only threatens public safety but also erodes the trust necessary for a thriving business environment.
Addressing Unemployment: A Collective Responsibility
To tackle unemployment effectively, a collaborative approach involving the government, private sector, and society at large is essential. Here are some key strategies that can promote positive change:
Economic Diversification: Diversifying the Nigerian economy is paramount to address unemployment. This entails reducing the overreliance on oil and encouraging the growth of other sectors such as agriculture, creative industries, construction, manufacturing, and the services sector. Sectors that can absorb a large number of the youthful population of Nigeria and creates ecosystems for sustainable growth. Diversification efforts must be accompanied by supportive policies, investments in infrastructure, access to finance, and the development of human capital through education and skills training.
Promoting Entrepreneurship and Small Businesses: Encouraging entrepreneurship and supporting small businesses can be a catalyst for job creation. Government should establish policies that facilitate business registration, provide access to capital, and streamline bureaucratic processes. Business executives can actively participate by mentoring aspiring entrepreneurs, sharing knowledge and networks to fuel economic growth. Organizations such as FATE Foundation have done great work in this aspect.
Enhancing Vocational Training and Education: Investing in vocational training and education equips individuals with the skills needed to thrive in the modern job market. Businesses can collaborate with educational institutions to develop industry-specific programs, ensuring that graduates possess relevant skills and knowledge. For example, at the Nigeria Mortgage Refinance Company Plc (NMRC), there is an ongoing initiative with the Industrial Training Fund (ITF) that provides vocational training to artisans in plumbing, tiling, POP and electrical installations. All key skills required for housing construction but surprisingly, in short supply in Nigeria. Furthermore, offering internships and apprenticeships can bridge the gap between education and employment, providing practical experience to job seekers.
Encouraging Foreign Direct Investment: Attracting foreign direct investment (FDI) can stimulate economic growth and create job opportunities. Businesses should advocate for investment-friendly policies and promote Nigeria as an attractive destination for foreign investors. By establishing strategic partnerships and fostering a favorable business climate, Nigeria can tap into the expertise and resources that foreign companies bring, leading to job creation and technology transfer. The unification of the exchange rate will certainly encourage that.
Fostering Public-Private Partnerships: Collaboration between the public and private sector is crucial for addressing unemployment. Government simply cannot afford to continually employ people in unproductive Ministries, departments and agencies (MDAs) but rather should engage with businesses to identify potential areas for partnership, such as infrastructure and affordable housing development projects. The creative industry could be harnessed to promote tourism in Nigeria. By pooling resources and expertise, both sectors can work synergistically to tackle the unemployment challenge effectively.
To conclude, unemployment poses a significant challenge to the Nigerian economy, with far-reaching consequences for individuals and society as a whole. By understanding the causes and consequences of unemployment, and implementing targeted strategies, Nigeria can create an enabling environment for sustainable job creation, economic growth, and shared prosperity. Unemployment in Nigeria is not just a statistic; it is the unrealized potential of millions, idle bodies and minds, the silent cry for opportunity, and the untapped wellspring of a nation’s progress. Let us not only measure the cost, but awaken the collective will to unlock the boundless possibilities that lie within our people, for in their empowerment lies the true wealth of our nation.
