NIGERIA’s economic prospects are looking bleaker by the day. Not only are crude oil prices declining further, the national currency is taking a battering from major world currencies. Investors are fleeing the financial markets, while growth and unemployment projections by international agencies unanimously predict lean times ahead for the country. These portend a worsening unemployment time bomb waiting to explode, unless it is quickly defused.
Projections of global – and Nigeria’s – unemployment outlook released by the International Labour Organisation recently should jolt our policymakers out of their deceptive visions of success and back to earth where reality presents a starkly different picture.
President Goodluck Jonathan and key officials have been trumpeting job creation as an “achievement,” citing 1.4 million new jobs in 2014. This figure is neither supported by testimonies of the organised private sector nor, even if taken as accurate, anything to celebrate since the National Bureau of Statistics’ figure for the third quarter says 56.72 per cent of new jobs were in the informal sector – individuals or micro operations employing less than 10 persons “or operating with little or no structures.”
Typically, these are not stable jobs that guarantee tenure, adequate or regular pay. Despite the gloss she attempts to paint over our dire jobless level, the Finance Minister and Coordinating Minister for the Economy, Ngozi Okonjo-Iweala, admitted that 400,000 of the jobs claimed to have been created in 2013-14 were agricultural part-time jobs.
But the ILO report predicts that unemployment will likely continue to rise in Nigeria and other countries in the next five years on the back of slower global growth, widening inequalities and turmoil in the markets. For Nigeria, with its mono-product; rent-driven economic structure; poor governance; corruption and fiscal mismanagement, ruin and even higher unemployment are imminent, according to economists.
A report on Thursday revealed that foreign lenders had reduced short and medium term credit to Nigerian banks in the face of falling crude oil prices, naira exchange rate volatility and uncertainties in the domestic money and capital markets. Of the 212 million people that ILO said would be out of work worldwide by 2019 – up from 201 million – Nigeria may contribute a significant number. While the latest figure of 23.9 per cent unemployment rate may not reflect today’s reality, the Central Bank of Nigeria said last year that 80 per cent of our youths are currently unemployed, corroborating the Ministry of Labour that said two years ago that 41 per cent of university and polytechnic graduates could not find jobs.
The government should get serious and start implementing policies leading to jobs-led growth as opposed to the current job-less growth that our government loves to celebrate. While the East Asia region is bucking the global trend by targeting a reduction in unemployment from 50.2 per cent in 2007 to 38.9 per cent by 2019, sub-Saharan Africa that, together with South Asia, currently accounts for over 70 per cent of the world’s “vulnerable” employment, will see a further rise in unemployment.
Contributory factors to the adverse business environment and ensuing high unemployment in Nigeria, according to the Lagos Chamber of Commerce and Industry, are corruption, inadequate and unreliable power supply, excessive lending rates now at 25-32 per cent, rampant insecurity, multiple taxes and levies and poor policy formulation and implementation.
We cannot afford to carry on this way when other governments define their success by the number of jobs created and reduction in unemployment. The urgency of Nigeria’s situation is obvious in the reversal of the 41 per cent rise in the Nigerian Stock Exchange attained in 2013; losing 29.7 per cent in market capitalisation in 2014, while the All Share Index declined by 30.5 per cent in the same year, as foreign and local portfolio investors seek safer havens.
Jonathan and his ministers should liberalise power, steel, oil and gas, railways and mining industries, end rampant corruption and imbibe fiscal discipline to attract private investment and create jobs. Serious leaders like Barrack Obama brought unemployment in the United States down to 5.6 per cent as of December 2014, from over 9 per cent in 2008. Malaysia curbed unemployment to 2.7 per cent (October), and Singapore had only 2 per cent in 2014.
Okonjo-Iweala said in April 2014 that 1.8 million graduates entered the labour market here each year but reeled out contestable figures of jobs that only a few can see. Her figure of 5.3 million unemployed graduates accumulated over the years sits oddly with much higher estimates by local and foreign analysts.
While unemployment is a worldwide problem, our refusal to make the right policy choices exacerbates the Nigerian situation. Repealing the 1955 Railway Act that entrenches state monopoly and implementing already prepared liberalising reforms will bring in investment and jobs. Selling off the state-owned steel companies and refineries to reputable global sectoral leaders, as well as encouraging private investment in these sectors will achieve the same result. Our vast gas reserves, minerals and farmlands are left un-utilised or are not maximised, due to short-sightedness and state control, including the failure to pass the Petroleum Industry Bill that would facilitate new investments.
Oil prices hovered around $45.33 and $49.58 per barrel on Friday, worsening Nigeria’s economic outlook and putting fresh pressure of intelligent management. The 2015 national budget is unwisely anchored on assumed average crude prices of $65pb, meaning an upturning of the fiscal plan even before its take-off.
Jonathan should act today to stave off disaster by outlining an emergency economic programme that drastically cuts non-capital expenditure and seeks genuine private sector investment for massive job creation.
Punch.
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