Nigeria Economy | |
Nigeria Economy | |
1248 VIEWS | |
![]() | |
PROSHARE | |
PROSHARE |
Thursday, May
21, 2020 / 09:33 AM / by FBNQuest Research / Header Image
Credit: Red Cheetah
Given
its hazy business environment, as well as its macroeconomic challenges, Nigeria
has struggled with reducing its unemployment rate. Over the past several years,
the rate has steadily trended north. Although lagged, the latest labour force
report from the National Bureau of Statistics shows a rise in the national
unemployment rate to 23.1% in Q3 2018 from 22.7% recorded in the previous
quarter. Labour markets have been adversely affected by economic shutdown due
to the Covid-19 outbreak, resulting in higher unemployment rates across the
globe.
In India recent data show that the unemployment rate has risen to 27%
(compared with 7.2% recorded in January), and in the US the rate is currently
14.7%, compared with 3.5% recorded six months ago.
The federal ministry for labour and productivity had disclosed that
Nigeria's unemployment rate is likely to hit 33.5% this year. We assume that
the ministry may be considering an upward review of this projection, given the
downturn triggered by the ongoing pandemic.
Small business is regarded as an engine of the economy, partly due to
its ability to provide jobs. Official data show that the 37+ million micro,
small and medium scale enterprises (MSMEs) in Nigeria provide over 59 million
jobs, and account for almost 50% of GDP.
SMEs are the hardest hit from the impact of restrictions and lockdowns.
For some, downward revisions of salaries have taken place. In worst case
scenarios, retrenchment exercises have been conducted.
In Nigeria's private sector, the banking industry is regarded as a top
employer of labour. Data compiled by a reputable research agency show that
based on companies listed on the NSE, banks make up a significant percentage of
the top employers. Some segments of the banking industry had begun laying off
workers due to current economic headwinds. However, this was muted following
CBN consultations with the Bankers' Committee earlier this month.
The CBN has also rolled out other measures to boost productivity, and by
extension limit job losses. These include: an interest rate reduction on
eligible CBN intervention facilities from 9% to 5%; the creation of a N50bn
targeted credit facility through the NIRSAL microfinance bank for SMEs; and
unspecified strengthening of the CBN loans-to-deposit policy, which has helped
with boosting credit to the real sector.
An obvious beneficiary of the coronavirus outbreak has been the
technology sector. Digitizing operational processes has assisted some companies
with maintaining workflow activities, keeping productivity afloat and avoiding
layoffs.
The shortage of critically needed skills and competencies is one factor
behind joblessness. This is likely to get worse as the future of work, which
threatens to render skills of some employees and jobseekers obsolete, comes into
play. The FGN should consider revamping curricula across all education levels
to properly incorporate technology, since artificial intelligence algorithms
will at some point become co-workers to humans.
Related to Unemployment
Related News - Nigeria Economy