By Nkiruka Nnorom
As Nigeria’s economy struggles with the year-on-year rise in unemployment, underemployment and youth unemployment figures, economists and the organised private sector have blamed the rising incidence on an uncompetitive and unsustainable operating business environment, which is made worse by the inflationary pressure.
They observed that the capacity of employers, mainly the private sector operators, to create jobs or sustain the existing jobs have been seriously impaired by myriads of challenges including huge energy cost, acute scarcity of foreign exchange, currency depreciation, high transportation cost, high-interest rate, tough regulatory environment and logistics challenges among others.
According to them, these challenges have either led to business closures and consequent loss of jobs or workforce downsizing at the best.
They also said the high inflationary pressure in Nigeria (20.52% as at August 2022) now worsened by the ongoing Russia-Ukraine war, has compounded the challenges following the supply chain disruptions emanating from the ongoing war.
The latest data from the National Bureau of Statistics (NBS) for the fourth quarter ended December 31, 2020 (Q2’22) puts unemployment at 33.3 per cent, underemployment at 22.8 per cent, while youth unemployment and underemployment are at 42.5 per cent and 21.0 per cent respectively. The figures are projected to rise further.
A university don, Uche Uwaleke, Professor of Finance & Capital Market at Nasarawa State University, Keffi, said: “I think the unemployment, underemployment and youth unemployment numbers should be higher than are currently being reported. This is because the NBS data on the labour market, unlike the CPI and GDP data, is behind now by many months.
“Therefore, it goes without saying that current unemployment figures are expected to be higher owing to a number of factors which include the lingering negative impact of COVID-19 on the Nigerian economy, rising cost of production and challenging business environment for many micro and small businesses, insecurity and its effect on the farming population as well as the associated decline in the real GDP growth of the agriculture sector which employs the bulk of the population.”
Speaking on the way forward, he said: “One way to reduce unemployment is to create a conducive environment for businesses to prevent shutdowns. This should involve, among others, improving electricity supply. This may not happen as long as the country keeps depending on the national grid. The constitution should be amended to enable states to go into power generation and distribution unencumbered. This would mean getting the National Assembly to remove it from the exclusive list.
“Also, the Central bank of Nigeria (CBN) should deploy more ways of getting the banks to increase credit to the real sectors of the economy. This may involve increased incentives to the commercial banks to do so.4
“On its part, the CBN may reconsider the decision to revise upwards the interest rate on its interventions in the real sectors from 5% to 9% against the backdrop of rising inflation not just in Nigeria but across the globe. With improved access to credit, more jobs are bound to be created.
“Furthermore, the prolonged ASUU strike is having a negative impact as the labour market is deprived of entrepreneurial skills. So, the government and all stakeholders should cooperate to ensure that our Universities are reopened without further delay.”
NECA calls for policy changes
Agreeing with the NBS that the unemployment figure is a fair representation of the reality, Nigeria Employers’ Consultative Association (NECA), the umbrella body of employers in Nigeria, said it would have been highly suspect if the unemployment figure is less than projected by NBS.
Speaking on behalf of the association, Mr Wale Smart Oyerinde, Director General, NECA, stressed the need for the government to address the foreign exchange (Forex) scarcity by blocking the leakages associated with oil theft, expand the tax net rather than over-burden businesses that are already in the tax net and also address the rising spate of insecurity that result in business closure and lay-off.
He said that is counter-productive for the government to over-tax organised and legitimate businesses in its bid to rake in more revenue and address its revenue shortfall. “Rather, the government should focus on more creative ways of generating revenue,” he said.
He said: “It is generally accepted that for every 10 new jobs created, the private sector creates at least eight. Thus, if the private sector’s capacity to create jobs is impaired by factors beyond its control as currently witnessed, then, its ability to create jobs will also be impaired.
“Jobs are not legislated and neither can they be wished to exist. Jobs are created when an investor starts any form of productive enterprise. For the enterprise to consistently employ workers, it must be productive, competitive and sustainable. Once these three elements are missing, the ability of the enterprise to create jobs will be seriously impaired.
“Organized businesses currently face myriads of challenges, which include, limited access to foreign exchange to buy input in the absence of local substitutes; high energy costs; inhospitable regulatory environment; multiple and duplicated taxes, levies and fees; non-aligned fiscal and monetary policies which create confusion and uncertainties, insecurity and many others.
“These factors make the business environment unfriendly. The combination of these stifles businesses and makes them uncompetitive.”
While stressing that Nigeria is not alone in the economic crisis that hampers business operations, he however, said that unlike Nigeria, the policy options in other countries of the world are such that they are navigating them towards stability and economic recovery.
To quickly resolve these challenges, he urged the government to speedily address the issues of forex scarcity by blocking the leakages associated with oil theft, saying that with millions of barrels of crude oil being stolen through the corrupt network of local and foreign collaborators, the needed forex can be generated to reduce the pressure on the real sector.
“Government should focus on expanding the tax net rather than over-burden businesses that are already in the tax net. It has been reported that there are hundreds of high-net-worth Nigerians and millions of other individuals that are not captured in the tax net.
Expanding the tax net will give businesses the breather to expand and create more jobs. Organized and legitimate businesses should not be made to suffer for the paucity of revenue faced by theg. It will be counter-productive to keep increasing taxes rather than focus on more creative ways of generating revenue.
“As banditry and insecurity ravage the North and some other parts of the country, the immediate consequences of these are business closure and the rapid de-industrialization of those areas. Government should step up the fight against insurgency and banditry to get the businesses in those areas back on their feet and thus, increase employment creation in those areas,” Oyerinde said.
Ex-LCCI boss blames disruption in agric sector
In his own comment, Muda Yusuf, the immediate past Director General of the Lagos Chamber of Commerce and Industry (LCCI) and the Founder/CEO, Centre for the Promotion of Private Enterprise (CPPE), argued that the unemployment status in the country could be worse with the recent economic crisis.
He blamed the level of unemployment on the state of the economy which is impacting on the level of investment, insecurity in the farming communities, which has disrupted agricultural activities and consequently resulted in massive job losses.
He highlighted the mismatch between the educational curriculum in the tertiary institutions and the needs of the economy, saying that there is the need for an urgent reform.
He said: “We need a robust economy to be able to sustain jobs and create new ones. Investors are grappling with the challenge of huge energy cost, acute scarcity of foreign exchange, currency depreciation, high transportation cost, high interest rate, tough regulatory environment and logistics challenges.
“The agricultural sector is the largest employer of labour. The sector has been devastated by the problem of insecurity. Many farmers have abandoned their farms and many others are in the IDP camps. Massive job losses have resulted from the disruption in agricultural activities.
“Structural issues especially, our infrastructure, power supply, road network, our ports, our railway system also exist; our waterways are grossly deficient. We need good infrastructure to boost employment growth and retention of existing jobs.
“Macroeconomic factors such as the foreign exchange situation, both the depreciation and the acute liquidity crisis, the high inflationary pressures, the high fiscal deficit and the current debt crisis all of these affect the capacity of the economy to create employment.
“Rising population, climate change especially desertification, flooding, erosion, this is particularly an issue in our agricultural producing locations are also major factors driving the growth of unemployment growth.
Therefore, to be able to fix the problem of unemployment, we should be aiming to fix the causes as outlined above.”