Nigeria Economy | |
Nigeria Economy | |
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Thursday, January 16, 2020 /09:20 AM / By FBNQuest
Research / Header Image Credit: InfoGuide Nigeria
The
impact of the several government initiatives geared towards boosting job
creation is being blunted by the massive growth in the labour force. 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.
Chris
Ngige, the reappointed federal minister for labour and productivity, disclosed
that the country's unemployment rate is likely to hit 33.5% this year. The
shortage of critically needed skills and competencies is one factor behind
joblessness.
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.
However,
over the past few years many businesses have slowed down or, in some cases,
halted recruitment. In the country's choppy business terrain, many firms are
reluctant to take on additional labour. This is
borne out, for example, by our own manufacturing PMI.
It is
assumed that the finance bill signed into law this week could provide some
respite for small and medium-sized businesses. The bill states that companies
with annual turnover of N25m or less will be exempt from companies' income tax
(CIT) while companies with turnover of N25m - N100m are to pay a tax rate of
20% for CIT.
Previously,
a fixed CIT rate of 30% was applied to all company sizes. With the passage of
the bill, small and medium-scale enterprises should be better placed to grow
their businesses and perhaps boost staff strength.
Policymakers
worldwide list youth entrepreneurship and development as leading solutions to
high unemployment. The FGN's N-Power has supported the mass training of
Nigerians aged 18 to 35 years.
We
understand that plans to restructure this initiative are underway. This was
prompted after the authorities discovered that some beneficiaries were
breaching their contracts by refusing to exit after the stipulated two-year
duration.
To ease
pressure on the unemployment rate, state governments should consider
identifying their respective competitive advantages and use this information to
promote appropriate formal skill acquisition training. By educating the locals
as well as equipping them with new skills, this would boost employability.
In its
latest economic update on Nigeria, the World Bank estimated that, given the
high population growth rate, nearly 30 million new jobs would be needed by 2030
just to keep the current employment rate constant.
According
to the World Bank, 80% of new labour market entrants end up unemployed.
Additionally, over the past five years, the quality of available jobs in the
country has declined significantly.
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