Creating jobs a high priority for Nigeria

With a population of 184m, three-quarters of whom are under the age of 30, job creation is critical for Nigeria to sustain its headline growth. Unemployment is increasing rapidly. The official rate climbed from 8.2% in the first quarter of 2015 to 9.9% in third quarter and 10.4% by the year’s end. The ranks of the underemployed – those working less than full time or in jobs not commensurate with their skills and/or education level – rose to 18.7% in the fourth quarter of 2015, from 17.4% the previous quarter. Of the 77m Nigerians that comprise the labour force, 22.5m (29%) are either unemployed or underemployed.

Youth

While all age groups are seeing increasing levels of unemployment and underemployment, the youngest have been the most affected.

More than half of the 15-24-year-olds in Nigeria’s labour force were either unemployed (19%) or underemployed (35%) as of December 2015. This combined rate of 54% is especially concerning in light of the speed at which it has risen, from 44% in the first quarter of 2015. Similarly, female and rural Nigerians are, on average, more negatively impacted by unemployment and underemployment than their male and urban counterparts.

Recognising the growing need for jobs, the government has announced a three-year, 3m-job programme aimed at stimulating private sector employment in technology, retail, construction and agriculture. It expects to see the creation of 700,000 private sector jobs in 2016, primarily in agribusiness. Another 500,000 will be supported by the public sector through the employment of new teachers.

Structural Changes 

While it is a step in the right direction, this proposal will not address the structural changes necessary to accelerate employment. With 43% of the population aged under 15 and the overall population expected to grow by over 40% to 261.7m by the mid-2030s, Nigeria will need to make a concerted effort to accelerate job growth. The World Bank predicts that the country will need to create 50m new high-quality jobs by 2030 to support growth and keep pace with demographic shifts.

In addition to reducing broader hurdles to growth – such as poor infrastructure – the government has taken steps to encourage Nigerian banks to increase lending to the real economy, especially to small and medium-sized enterprises (SMEs) and start-ups.

Key Sectors 

One sector that the government hopes to revitalise is domestic manufacturing, which has the potential to employ large numbers of people and also turn the tide of the country’s dwindling exports. Automotive and component manufacturing (see Industry chapter) and agriculture (see Agriculture chapter) have both been the target of various reform programmes in recent years. The minister of science and technology, Ogbonnaya Onu, is hopeful that a pencil factory set to open its doors in 2018 is the first step in the development of a segment that could support 400,000 jobs and make use of Nigeria’s non-oil resources, such as wood and graphite, which have hitherto been underexploited.

The World Bank is also working with Nigeria’s Federal Ministry of Trade, Industry and Investment to develop a system of support targeted at SMEs and informal sector business owners. The $157.1m Growth and Employment Project, which offers training, grants, industry analysis and other support, has earmarked funds to support SME development.

The task of removing hurdles to growth and securing meaningful, long-lasting employment in Nigeria, especially for the young, will require constant effort and several years to bear fruit. The government has identified its priority areas and taken the first step in financing this drive with the expanded 2016 budget. It will now need to work with the country’s emerging private sector and foreign investors to provide the additional funding and technical expertise that is needed to make the government’s vision a reality.