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Tackle high unemployment rate beyond policy statement

By Editorial Board
15 May 2023   |   4:11 am
Unemployment is a global phenomenon that is deep-seated in developing countries. Indeed, Nigeria, among other third-world States, is having more of the albatross than workable solutions.

Unemployment is a global phenomenon that is deep-seated in developing countries. Indeed, Nigeria, among other third-world States, is having more of the albatross than workable solutions. Yet, unemployment projections of agencies, including that of the National Bureau of Statistics (NBS), are grim and unsettling. But beyond another highfalutin policy by the government, it is high time Nigeria comprehensively reviewed the challenges and prospects of sustainable solution across all tiers of government. A headcount of the unemployed through the Agora policy is good, but not enough.

Unemployment figures have always been bad, and might have set out for the worst. The National Bureau of Statistics (NBS) had recorded an increase in the national unemployment rate from 23.1 per cent in 2018 to 33.3 per cent in 2020, with youth unemployment of 42.5 per cent and youth underemployment of 21 per cent. The Nigerian Economic Summit Group (NESG) in its 2023 Macroeconomic Outlook report, projected that the country’s unemployment rate would hit 37 per cent in 2023, while the country’s poverty headcount would also rise to 45 per cent.

Similarly, a multinational consulting audit and tax advisory firm, KPMG, in a new report tagged: “KPMG Global Economy Outlook report, H1 2023,” stated that the Nigerian unemployment rate had increased to 37.7 per cent in 2022 and would further rise to 40.6 per cent, due to the continuing inflow of job seekers into the saturated job market. The report also said that in 2024, the unemployment rate would grow to 43 per cent. The agency said unemployment would continue to be a challenge due to the slower-than-required economic growth and the inability of the economy to absorb the four to five million new entrants into the Nigerian job market yearly.

Perhaps, in an attempt to develop a database of unemployed persons, the Federal Government, between April 17 and April 28, 2023, through the National Directorate of Employment (NDE) carried out a registration exercise of unemployed persons in the 20 local government areas of Lagos State. These statistics may have informed the view of Agora Policy, a Nigerian think-tank in its policy memo that described unemployment as “undesirably high.” And there is no doubt that this magnitude of unemployment, especially among the youths, is deplorable and it should warrant a national emergency.

But it is not a mystery that there are no new jobs, even as more people are underemployed. It should be expected in a country where infrastructure is grossly inadequate, government policy flip-flops meet official bureaucracies to kill businesses, hostile investment climate continues to shrink the real sector, and there is general business depression in the private sector. Quite unhelpful over the years are population growth, neglect of the agricultural sector, rural-urban migration drift, ethnicity, corruption, and dysfunctional educational system that created an army of unemployable graduate youths.

In contemporary societies, industrialisation is synonymous with job creation. However, available statistics show that since 1995, about 150 multinational industries have divested from the Nigerian economy. The long list includes: Michelin, Dunlop, Pfizer, Leventis, Glaxo Wellcome (now GlaxoSmithKline), Hoechst, and Procter and Gamble. Many more are considering pulling out of Nigeria, and are on the queue of the “runway” emigrating firms in readiness for take-off to neighbouring West African countries because they could no longer bear the loss to business from the continued deplorable state of basic infrastructure, especially poor road network and electricity supply; inadequate physical security; corruption; weak enforcement of contracts; and attendant high cost of operation in the country.

Again, many of the cottage industries are practically dead and a lot of local industries, mostly medium and small scale enterprises, often described as the engine for job creation, have been folding up since 1986 when the Structural Adjustment Programme (SAP) was introduced. Today, many business enterprises have closed down. Among them are some 200 textile firms. And many more are still closing shop, leaving an army of despondent unemployed behind.

Clearly, the Nigerian business environment is toxic for both new and old investments, and the proper place to start fixing the problem. The Agora Policy memo rightly advised the need to create at least 3.6 million new jobs yearly to reduce the current high unemployment rate to about five per cent by 2033. But that is akin to the earlier plan of President Muhammadu Buhari-led administration, at least before it was rebutted, to create three million jobs yearly. It suggests that the government knows what to do, but how to do it. Hence, the Agora Policy has not proffered a solution to the weighty matter of unemployment.

Beyond mouthing the existential crisis and distribution of freebies under the guise of social interventions initiatives, Nigeria, more than ever, needs a workable plan to fix the broken business environment. It is a truism that the government has no business in business outside of creating an enabling environment. The government should concern itself with the promotion of policies and institutions that can improve opportunities and capabilities for Nigerians, while reducing vulnerabilities. There is a need for a coherent strategy that will lead to synergy between job growth and economic growth i.e. growth in labour-intensive sectors, which is job-led growth.

Government should play the role of enabler, facilitator, and regulator; helping the private sector grow, create jobs and generate wealth. Government should redirect its efforts to mainly providing a roadmap to productivity and basic services that will promote the enabling environment that would engineer growth in the real sector; and turning investment in infrastructure to employment creation.

Nigeria must be intentional in labour-intensive portions of the value chain to enhance export into global markets, by resolving broader macro-economic challenges that limit growth across the board. Government should target infrastructure spending in particular areas that increase the competitiveness of Nigeria’s exports, which includes electricity, transport, and telecommunications investments in export processing zones. Also, it should give incentives to private sector employers such as tax holidays. On the hike in the price of cement and other construction materials, the government must be willing to ensure that pricing is a function of free market forces, which was exemplified by the cement armada during General Yakubu Gowon’s administration.

Similarly, particular attention should be paid to those leaving school with poor or zero qualifications. Even those leaving with top grades should be trained to fit into the labour market, as the school curriculum must be revised for multi-skill and entrepreneurial skillsets. Industrial training must be encouraged for as many courses as possible to improve the employment prospects of young graduates, especially in entrepreneurship development. Corporate Nigerians should buy into this initiative because they need to help to ensure that their tomorrow’s labour force is skilled.

Reviving the agricultural sector, which is manifest in the Anchor Borrowers’ Programme of the present government, where the Central Bank of Nigeria has set aside N40 billion for farmers at single-digit interest rate of nine per cent, is commendable. However, the programme should be maximised because one of the features of current employment, especially in subsistence agriculture, is that some of the jobs do not result in enough income to lift even the employed persons out of poverty. Some of the states with the largest employment in agriculture also happen to be the states with the highest poverty rates, noting that many of the people who are employed are still living in poverty despite their employment. Thus, the government should not only concentrate on production, neglecting other aspects of the agricultural value chain such as storage, processing, and market development to avoid selling everything in their raw form, which is primitive. It is also important that the government provides grazing reserves and ranches for herdsmen because crop farming cannot take place in a state of insecurity.

Suffice to add that Nigeria is in a dire straits and the earlier there is a concerted approach to tackling unemployment, the better for peace and security. The groundswell of the unemployed youths roaming the streets famished and with nothing to do, is the tinderbox for insecurity waiting to explode. It is certain that Nigeria cannot afford another EndSARS episode. The earlier it starts tackling the problem of unemployment, the better.

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