Nigeria’s unemployment rate inches towards 40%, forecasts suggest

Nigeria’s unemployment rate may hit 38.8 per cent this year, forecasts by notable private sector institutions, have suggested. The figure is an average of the two most notable private sector-driven organisations that released forecasts on the likely state of the labour market this year, using different analytical techniques.

Data users have not had the benefit of knowing the actual number of Nigerians without jobs after the COVID-19 pandemic. The most recent official data were released by the National Bureau of Statistics (NBS) in early 2021. The data covered the last quarter of 2020 during which the economy was still battling with COVID-19.

In the past two years, the figures have been left to guess and forecast by non-governmental organisations, who have had to use macroeconomic data and the direction of the economy for their estimation.

Earlier in the year, the Nigeria Economic Summit Group (NESG) put the country’s unemployment figure at 37 per cent. The report, which also estimated the poverty headcount at 45 per cent in the year, said the services sector would drive economic growth, which falls short of the momentum required to generate significant jobs.

Last week, KPMG, a leading services company, estimated that the rate of unemployment would have climbed up from 37.7 per cent to 40.6 per cent this year.

Taking the mean of the two major forecasts as given, the country’s unemployment forecast for the year could be pegged at 38.8 per cent. KPMG highlighted the impact of the current inflationary pressure on the ability of the productive capacity of the economy. In February, the headline inflation hit a multi-decade high of 22.82 per cent, and the KPMG report expects the trend to continue into the year.

The supply-side economy is also burdened with high interest with the monetary policy rate (MPR) currently standing at 18 per cent. The inefficient power sector and high energy costs are among the constraints on the capacity of the real sector, which has buckled under services.

Last year, the real sector left gaping holes in the gross domestic product (GDP) with fear that the performance could be worse owing to the rise in the interest rate.

On the upside, a new administration takes the reins in two months. Hence, some analysts are optimistic that policies that could reverse the macroeconomic trend and increase economic activities are underway.

Otherwise, the restrictive environment could send the economy spiraling and put more jobs on the line. The country’s unemployment rate inched up from 23.1 per cent in 2018 to 33.3 per cent at the close of 2020.

The figure added over 10 percentage points in two years, about the same time the data have not been made public. With the recent naira redesign, which is said to have had a tone of impact on over 40 million small and medium-scale enterprises (SMEs) that create much of jobs, Dr. Muda Yusuf of the Centre for Promotion of Private Enterprise (CPPE) said the employment outlook would be worse than it was last year.

In Q4 2022, Nigeria’s unemployment rate rose to 33.3 per cent from 27.1 per cent recorded in Q2 2020. That was about the highest number of the unemployed that country has recorded in recent memory. The total labor force was estimated at 69.67 million with only 30.57 million fully employed.

The NBS has not released any labour statistics since 2020. But this is expected to happen this year. Recently, the statistics office explained that it is working on enhancing the methodology of the Nigeria labour force survey.

“We have started data collection using the new approach since the fourth quarter of the previous year, and we anticipate releasing national results quarterly and disaggregated state-level results by the end of the year,” it stated.